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Are creators being used as cannon fodder in the NFT game? – Music Business Worldwide

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The following MBW op/ed comes from PPL CIO Mark Douglas. Below, he turns his attention, and bullshit detector, to the much-hyped but little-understood world of NFTs. It’s fair to say he has some questions…
In my last column, I tackled the subject of Blockchains and their relevance to the music industry. I wrote that piece with a degree of apprehension, aware that I was poking the nest of a vocal and passionate crypto community.
As it happens, that article garnered nothing but positive feedback, with many grateful that the topic had finally been explained in terms they understood, and that the emperor had at last been called out for his lack of clothing. Emboldened by this feedback, I’m going to dial it up a notch and dig into the topic de nos jours, NFTs.

NFTs have quickly (briefly?) become a multi-billion dollar thing (I hesitate to call it an industry), and there are a lot of heavily vested interests with loud voices.
For some creators, NFTs have been a godsend, a new way to generate revenue, and I certainly want to have no part in interfering with an artist’s opportunity to monetise their talents. To that end, I’m going to do what many commentators fail to do, and de-couple the revenue opportunity/fan engagement aspects of NFTs from the actual technology and mechanics that underpin them. By doing so I hope to show that the two are not mutually dependent and draw attention to the many risks of NFTs.

Let’s start with the phrase itself – Non-Fungible Token. Many discussions on NFTs start with an explanation of fungibility. It’s a word/concept I first heard back in the late eighties as part of my Chartered Accountancy training. For a long time, the word wasn’t really used outside the finance and accounting community. 
It’s a fairly typical trick of the crypto industry to use arcane, professional terminology to add legitimacy to their latest offering: ‘immutability’, ‘ledger’, ‘dis-intermediation’ – lots of serious sounding words, but ultimately their use is akin to a politician quoting public school Latin to try and convince you they are intelligent, when in fact all they have is a good memory.

At its simplest, a fungible asset is one that can be readily substituted by another. An ounce of 9-carat gold is a fungible asset because any one ounce has the same value as any other. Non-fungible assets, on the other hand, are unique and have a value that is unique to them. Whilst an ounce of gold may be fungible, a gold bar may not be, as the presence of hallmarks affords any one bar a special value to a collector due to its provenance.
One way to think of NFTs is to liken them to this gold example. At their simplest NFTs seek to add those Hallmarks to digital assets that are in all other regards fungible. Whilst the shift to digital has been very liberating, it has also had a very negative impact:  due to being expressed as nothing but a sequence of ones and zeroes, any one digital asset is literally identical to any copy of it.
When your primary output as a creator is a digital asset, it is all but impossible to create differential value in any one copy. Whilst special extended mixes or remixes can be created and sold at a premium, the ease with which exact copies can be made and distributed globally undermines the ability to create proper value. Mechanisms such as Digital Rights Management have been deployed in the past to try and prevent this widespread copying, but they put too many barriers in the way for legitimate consumers and ultimately failed.
“You can do much, if not all, that an NFT can do in much simpler ways.”
So how do you create that uniqueness in an otherwise fungible item? How do you create the digital equivalent of that limited edition, blue vinyl pressing of ELO’s Out Of The Blue that caused much excitement on my school bus back in 1978? The NFT solution to this is to produce not a special version of the asset, but to create a tamper-proof till receipt (I actually now think of the T in NFT as meaning exactly that).
But I’m getting ahead of myself. Let’s back up a bit and look at the mechanics of NFTs, because things should then become clearer.
At the heart of NFTs are blockchains. As covered in my last article, blockchains are all about providing a tamper-proof, public ledger of data. Step one of generating an NFT is to add a ‘smart contract’ onto a blockchain.
If you are imagining that a large, wordy document full of legalese has just been created, you would be mistaken. As it happens, a smart contract is neither particularly smart, nor a contract.
A smart contract is lines of computer code that specify some basic rules to follow when someone wishes to transact through that contract – rules to determine whether any inventory is available, to calculate the unit price and issue a purchase receipt. Think of it as a robotic checkout assistant and you’ll be nearer the mark. In practical terms, a smart contract is a series of ‘if/when…then…else’ statements along with some arithmetic operations, like you would see in a standard spreadsheet.
The crypto world loves smart contracts because they further their ideological pursuit of removing the middleman from the making and recording of transactions.
The role of a smart contract in the world of NFTs is to determine the availability of the item for sale, to compute the price payable, and to ensure that (cryptocurrency) payment is made. The smart contract then creates the actual NFT token by creating a new entry on the blockchain, in a process known as ‘minting’.
Contained within that token is typically little more than the ID of the contract that created it, the crypto identity of the buyer and a unique identifier. You will note that the actual digital asset that was being ‘purchased’ is not in that list of items.
There is a good reason for that. Adding data to blockchains is an expensive process (literally hundreds of dollars per transaction, depending on the prevailing value of the relevant cryptocurrency), and the cost increases with the amount of data you are trying to add. So the NFT is, by necessity, as small as it can possibly be. It’s a till receipt with a serial number, the price paid, and the digital wallet identifier of the buyer.
But we’re not finished yet. There are still more steps involved in getting to the digital asset. The first of these is to use the ID held in the NFT, along with data from the smart contract that minted it, to generate a URL to a small data file somewhere out on the internet. That file (technically a small JSON format file) contains the name of the item that has been ‘purchased’, a description of the item and, finally, the actual URL that links to the digital asset.
Why have I gone to these lengths to explain how NFTs work? Firstly, I think doing so makes it clear that what is actually being sold is nothing more than a glorified till receipt. A till receipt that proves you were willing to pay for something that in most regards is freely available to all.  Whilst the NFT itself is non-fungible, the asset to which it directs you is not and, to that end, NFTs create an artificial sense of scarcity.
Secondly, I think it will have come across that it’s a pretty convoluted way of doing things. You can do much, if not all, that an NFT can do in much simpler ways. British Airways and Hilton Hotels have been offering privileged access to their lounges and the like for three decades or more with not an NFT in sight. Eventbrite and Ticketmaster have been granting VIP access to concerts and backstage access for years.
But my issues with NFTs don’t end there. With its total reliance on crypto technology, possession of the digital keys is instrumental if you are to derive any value from the purchase in the future. Lose access to your digital wallet and you have likely lost every NFT you have purchased. Ask the chap in Newport how it feels to know that the keys to your prized crypto possessions are on a hard disk, buried somewhere in the middle of a landfill site…
“As it happens, a smart contract is neither particularly smart, nor a contract.”
Compounding this technology risk, there is no one standard for NFTs. There are literally hundreds of NFT marketplaces, and they all adopt slightly different approaches and use different underlying platforms. Many rely on the Ethereum blockchain, but not all.
The long-term viability of the underlying technology is critical if the buyer is to derive value in the future. Whilst they may still have access to the digital asset, as set out earlier, the value lies in the provenance provided by the blockchain-based receipt. If that blockchain ceases to exist, the value in the NFT disappears with it.
If these technology risks are managed, a further cause for concern is that trading in NFTs requires the buyer to embrace cryptocurrencies. As well as exposing them to all the price volatility risk that this entails, it is potentially discriminatory in that it denies access to those of lower economic standing.
These things in combination cause me to question whether this is the right way to engage with and monetise a loyal fanbase. The NFT landscape is a complex place with a great deal of marketing spin and hyperbole. If you are thinking about getting on board with NFTs, are you doing it for the right reasons, and have you thought through the long-term implications for your brand and for your fans? Or are you being played by big money backers that are desperate for their NFT platform to succeed?
You see, as I covered in my Blockchain piece in the last issue, the ideological objective of removing the middleman is a fiction; your average creator has no more chance of creating a smart contract and uploading it to a Blockchain than flapping their arms and flying.
There is a reason that marketplace platforms like OpenSea and SuperRare have risen to prominence. Someone needs to be there with the tools and templates to make it all happen. Middlemen they are, and they charge a fee for their services, just like traditional third-party service providers. Becoming established as one of the leading platforms is a high-stakes game with some very big players. Are creators being used as cannon fodder in this game?
“NFTs have become a multi-billion dollar thing and there are invested interests with loud voices.”
But above all, my issue with NFTs is that in the rush to jump on the bandwagon, the ‘creative’ space has become littered with people generating art and music with little to no effort – throwing random datasets at artificial intelligence routines and leaving them to come up with whatever.
This pains me, as it fundamentally devalues the creative process. When Geraint Thomas recently tried to launch an NFT of computer-generated art based on the power data from some of his biggest career wins, he was met with general derision from his fanbase and the wider cycling community. I fear not all fan bases are so clear in their feedback and get duped by those seeking to make a quick buck. I personally don’t think that’s a good look for the music industry.
Don’t get me wrong, I know that monetising talent in this overcrowded digital world is difficult. And there are many aspects of NFTs that I find intellectually stimulating. If the buyer of an NFT genuinely understands what they are buying, and the risks they are taking, then who am I to question whether or not there is real value in what they have purchased.
I can question all I like why someone would pay potentially millions of dollars for a glorified till receipt that gets you access to the very same item that the rest of the world can have for free. But is this any different from a collector spending hundreds of thousands of pounds on a designer brand Swiss chronometer that will likely have cost only a few hundred pounds to manufacture and tells the time no better than a £5 digital watch?
The reality is that the value of something is not a matter of fact. An item is worth what someone is willing to pay for it. As people spend more of their lives in digital worlds, perhaps it does make more sense to have a digital bragging token than a fancy car or watch that very few will ever see. In closing, and to quote my own bit of Latin, perhaps the real answer to all of this is simply caveat emptor.

This article originally appeared in the latest (Q3/Q4 2022) issue of MBW’s premium quarterly publication, Music Business UK, which is out now.
MBUK is available via an annual subscription through here.
All physical subscribers will receive a complimentary digital edition with each issue.Music Business Worldwide
The best of MBW, plus the most important music biz stories on the web. Delivered for FREE, direct to your inbox each day.

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Cardano (ADA) and Dogecoin (DOGE) Volatility Leads Investors To Buy Flasko (FLSK) | Bitcoinist.com – Bitcoinist

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Some cryptocurrencies are stable, but they are not capable of delivering the returns that investors are looking forward to having. Cardano (ADA) and Dogecoin (DOGE) are great examples of cryptocurrencies. Due to the same reason, investors are now looking for alternative cryptocurrencies like Flasko.
Dogecoin (DOGE) Is Hanging On
There is no demand at all for meme coins as of now. However, the best meme coin, Dogecoin (DOGE), is still hanging on.
Dogecoin (DOGE) completed a $44 billion acquisition last month. And Twitter is looking forward to working closely with Dogecoin (DOGE) as well. Hence, Dogecoin (DOGE) will be able to stay while other leading cryptocurrencies struggle.
Cardano (ADA) Might Bounce Back
Another major cryptocurrency that investors are mindful of is Cardano (ADA). Cardano (ADA) recently went through a massive update that helped investors to keep better hopes for the future of cryptocurrency.
Cardano (ADA) is gaining value along with the increasing popularity of Metaverse. At the end of the current bear market, Cardano (ADA) is expected to become one of the fastest-growing cryptocurrencies to be made available out there.
Flasko (FLSK) Is Doing Well
Despite the bear market, Flasko is doing good as a new project because of its unique and innovative concept. Flasko enables people to purchase luxurious and rare wines, champagne, and whiskey. The purchases are made digitally in the form of NFTs. However, there will be a physical allocation of the bottles, which users can get when they purchase the full NFT.
The phase 2 presale of Flasko project recently started at $0.085. This value is further expected to increase exponentially in early 2023.
Website: https://flasko.io
Presale: https://presale.flasko.io
Telegram: https://t.me/flaskoio
Twitter: https://twitter.com/flasko_io
 
Disclaimer: This is a paid release. The statements, views and opinions expressed in this column are solely those of the content provider and do not necessarily represent those of Bitcoinist. Bitcoinist does not guarantee the accuracy or timeliness of information available in such content. Do your research and invest at your own risk.
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Here's Why This Rare Bored Ape NFT Just Sold For $933,792 In ETH – Ethereum (ETH/USD) – Benzinga

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The Bored Ape Yacht Club (BAYC) is an exclusive community for holders of the ape and mutant themed NFT collections on Ethereum's blockchain. Commonly referred to as the Bored Apes, only 10,000 generative art pieces will ever be in existence.
What happened: Bored Ape #1268 just sold for 780.00 ETH ETH/USD ($933,792 USD). The value of Bored Apes is typically determined by the Ape's attributes, with the laser eyes, crown, and golden fur traits being the most coveted.
Here are a list of its attributes and how many others have the same trait:
Why it Matters: Bored Apes are the ultimate store of culture for NFT collectors. The NFT collection has gained huge influence in 2021, with an ever growing list of top tier celebrities making apes their profile pictures on Twitter. With the recent explosion in popularity surrounding the Metaverse, rare blockchain-based avatars are all the rage for those looking to flex online.
Being a member of the Bored Ape Yacht Club is not just about flexing online. Yuga Labs, the creators of the Bored Apes throw exclusive parties often with free private performances from members of the club such as Lil Baby. Other notable celebrities in the club include Post Malone, Stephen Curry, Dez Bryant, and Jimmy Kimmel.
Yuga Labs also created another NFT collection known as the Mutant Apes, which also provides membership to the elusive club. There are a total of 20,000 Mutant Apes, and the price floor is historically lower than the Bored Apes.

See Also: NFT Release Calendar and Best NFT Projects of 2021
Data provided by OpenSea.
Checkout the full Bored Ape Yacht Club collection
You can learn more about this NFT here.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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How to buy NFTs: Trojans' venture Moonlight aims to make it easier – USC News

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Blake Asherian realizes that most people don’t have a spare $60,000 just lying around — which is about what you’d need to buy an NFT (non-fungible token) of any real value. He also understands that at a broader level, most people don’t even know what an NFT is or how to buy one.
That’s why Asherian and three other Trojans — Gabriel Perez, Matthew Hausman and Can Toraman — have started Moonlight, a fractionalized NFT marketplace that allows users to buy, own and sell fractions of an NFT in a simple and user-friendly way.
Moonlight — Blake Asherian, CEO and founder; Matthew Hausman, frontend architect; Can Toraman, technical advisor; and Gabriel Perez, product and community (clockwise from top left) — allows users to buy, own and sell fractions of an NFT in a simple and user-friendly way. (Photos/Courtesy of Blake Asherian, Matthew Hausman, Can Toraman and Gabriel Perez)
Despite gaining significant traction within the last year, NFTs are still in their infancy, and there are financial risks involved given their uncertainty and high price tags. Moonlight hopes to remedy that, or at least help bridge the gap between most people and this emerging space.
“If the average personal income is 63K, and the average cost of a blue-chip NFT is 51K, that’s a big problem,” said Asherian, a business administration undergraduate in the USC Marshall School of Business.
“Part of the reason why people are not as prone to getting into NFTs is because there’s such a high barrier in terms of knowledge, and technology,” Asherian added. “We’re breaking down that barrier.”
The concept of Moonlight is simple: A group of people will choose an NFT they want to crowdfund, and once the funding goal is reached, each crowdfunder becomes a co-owner. From there, co-owners can buy and sell their fractions on Moonlight’s platform.
Though the platform might be simple — or at the least the goal is to make it as simple as possible for people — the concept of an NFT isn’t widely understood and can seem a little daunting.
Essentially, an NFT is a unique piece of digital art that is certified using blockchain, an immutable record of ownership. The non-fungible part means that no two items are alike or equal. NFTs function similarly to how people collect and sell art or trading cards. Some items are worth next to nothing, while others fetch millions of dollars.
Moonlight’s goal is for people to have the opportunity to own fractions of NFTs of real value, which is why the company focuses on “blue chip” — or most valuable — NFTs, like Bored Ape or CryptoPunks, which have the potential to provide long-term returns and can easily go for six figures.
But why would a digital image of an ape or a pixelated person be worth hundreds of thousands of dollars?
Well, why would someone pay over $7 million for a baseball card? Or thousands for any of the “contemporary art” listed on Sotheby’s?
All are fair questions, and the answers could vary depending on the person or item. The common factor is that collectors feel that these are assets that will increase in value. NFTs are just the newest version.
I would always argue with people: What is the difference between your trading card and an NFT? They took a picture of a guy and then put it on a piece of paper, and it has value somehow.
Matthew Hausman, Moonlight frontend architect
“I would always argue with people: What is the difference between your trading card and an NFT?” said Hausman, Moonlight frontend architect and 2021 USC Viterbi School of Engineering graduate.
“They took a picture of a guy and then put it on a piece of paper, and it has value somehow.”
For those who only read certain media accounts, it may seem like NFTs and the cryptocurrency used to buy them are a losing venture, and they might be for some. However, the creators of Moonlight were quick to point out that there are a lot of financial risks out there, and their platform’s crowdfunding feature can help eliminate some of those potential dangers.
With Moonlight, crowdfunding is key. Users select an NFT and then have a certain number of days to raise the funds. If the money is raised in time, the NFT is moved to the Moonlight platform where people can buy and sell shares. If the funds are not raised in time, then everyone who contributed gets their money back.
“No other protocol allows you to literally raise funds to buy cool stuff together,” Asherian said. “The secret sauce here is having a technology that can allow any number of people to put their money into something and as a group get anything they want.”
The next concept, fractionalization, is not necessarily new, but how Moonlight allows users to fractionalize is in direct response to a large issue within the NFT community. Right now, someone who owns an NFT can fractionalize it and sell those fractions at whatever price they see fit, regardless of the actual market value. People who are knowledgeable about and can afford a six-figure blue-chip NFT don’t have a need for fractionalization. So, the practice can take advantage of those who are new to the space — a problem that Moonlight wants to correct.
“For a bunch of people who are just entering the space of NFTs, how can they trust that that valuation is true?” Asherian said. “They don’t know enough about the protocols or the NFT collections. They’re kind of swayed in an untrue direction and it’s unfair to them.”
Asherian and his team at Moonlight emphasize that their platform is truly for everyone. NFTs — and even the cryptocurrency used to purchase them — might seem daunting for those who aren’t already in that world, but their hope is to take away some of that hesitance.
“At the end of the day, if you look at who’s into NFTs, it’s that 1%, right?” Asherian said. “We want to tap into the 99%, so we have to create a product that’s comprehensive for that group, which not too long ago included myself.”
The initial concept for Moonlight came to Asherian in late 2021, but his interest in NFTs started around two years ago when he was working for his cousin, Sean Rad, the founder and former CEO of the dating app Tinder. Rad — at one time at USC student — had invested in Genies, an avatar technology company, and Genies co-founder Akash Nigam started talking to Asherian about the company’s venture into NFTs. Though Asherian knew nothing about NFTs or blockchain, the concepts piqued his interest.
Soon after, he left his jobs to buy and sell NFTs full time. He admits that there were some definite growing pains early on because of the high barrier to entry, but those missteps put him in a position to succeed down the road.
He started drafting up the concept for Moonlight while studying abroad in Paris last year. He connected with fellow Trojans abroad which led to even more connections when he returned stateside. Asherian credits USC with introducing him to Perez, Hausman and Toraman, and making Moonlight what it is today.
Ever since I was a freshman, I’ve always heard that term ‘Trojan Family,’ but then I was really able to witness what it can do.
Blake Asherian, Moonlight CEO and founder
“I really believe in the Trojan Family and what it offers,” Asherian said. “Ever since I was a freshman, I’ve always heard that term ‘Trojan Family,’ but then I was really able to witness what it can do.”
A transfer student from the University of Wisconsin-Madison, Perez said his interest in NFTs has been a gradual progression since he was in high school. He started by selling stocks with his friends, and then in college he found a new interest in cryptocurrency.
“I kind of fell in love with the philosophy behind Bitcoin, which is a very anti-centralization of money, anti-central banks, power-back-to-the-people sort of thing,” said Perez, a junior economics major in the USC Dornsife College of Letters, Arts and Sciences.
“Then I learned about Ethereum, which was the first time I realized this has a huge potential to be the currency of the internet in the future.”
Ultimately, Perez, product and community lead at Moonlight, felt that if he wanted to further his career in the crypto world, he’d have to move somewhere where he felt it was more popular and valued. He found just such an innovative environment at USC, where USC Viterbi even offers a blockchain minor.
He came to USC before the fall 2021 semester and joined Blockchain@USC — a student-run organization that engages with blockchain-related topics, develops blockchain applications, and connects with industry professionals — as the director of external relations.
We started talking about fractionalizing NFTs and the ability for smaller capital players to be able to dive into these collections, and I was hooked from there.
Gabriel Perez, Moonlight, product and community
At USC, both within his field of study and social groups, Perez surrounded himself with other like-minded people that shared his passion, which is when he first heard about NFTs and eventually met Asherian.
“We started talking about fractionalizing NFTs and the ability for smaller capital players to be able to dive into these collections, and I was hooked from there,” Perez said.
By the end of the spring 2022 semester, Perez and Asherian had formed the Moonlight team formed and started the work to launch their idea.
The Moonlight crew is aware of some of the sustainability concerns with NFTs, primarily the proof-of-work blockchain system that is used by most cryptocurrencies so that transactions can be processed peer-to-peer in a secure manner without the need for a third party. Proof-of-work consumes a significant amount of energy. Rooms full of computers are needed to run complex mathematical equations, and coolers are needed to make sure those computers don’t overheat. By one estimate, mining 1 Bitcoin consumes as much electricity as a standard American home would use in nine years.
Most NFTs are part of the Ethereum blockchain, which currently uses proof-of-work. However, next month the Ethereum “Merge” will shift its blockchain to proof-of-stake, which uses 99.95% less energy by reducing the amount of computational work needed to verify the blocks and transactions that keep the blockchain secure.
“Fingers crossed that ‘Merge’ goes well because it’s a very anticipated catalyst in the crypto world,” Perez said. “If it does go correctly, NFTs are probably not going to have much of an environmental footprint at all, compared to something like a few office buildings downtown.”
But before they get to the point of using more sustainable blockchain, Asherian said they must establish their footing. Moonlight is projected to go live later this fall, and Asherian said once they’ve developed their community and built trust, they can influence people to move towards more sustainable methods.
“When you’re a huge marketplace that everyone starts suspecting has authority within the NFT space, then you’re able to sort of tell them what to do next,” Asherian said. “We really want to be able to gain that authority, and the way to do so is by being transparent, simple and fun.”
Trust and NFTs — or crypto, for that matter — might not go hand-in-hand just yet for much of the general population, but that’s exactly what Moonlight is hoping to fix. They see NFTs as an opportunity not just for those “in the know,” but for everyone.
“We believe there is power in numbers,” Asherian said. “At the end of the day, we want to give power to the people so they can own anything they want, together.”
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