NFTs haven’t just appeared out of the blue. Years of background and development have led to the innovations of today. With all eyes on this volatile market, it’s important to understand the background and fundamentals. Michael Terpin joins hosts Eathan Janney, Jeff Kelley, and Josh Kriger in this in-depth conversation about what’s happening in the world of NFTs. Michael is the Founder and CEO of the leading advisory and PR firm for the blockchain industry, Transform Group. He has been an active supporter and leader in the blockchain and crypto ecosystem in every way imaginable. Get to know more about NFT, Michael’s latest innovative projects, and what’s next in crypto in this episode of The Edge of NFT Podcast recorded live with Michael from his rooftop in San Juan, Puerto Rico.

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Crypto & NFT From OG To Avant Garde With Michael Terpin Of Transform Group & Aspire, Plus: Space Jam NFT, Twitter NFT Group, Notables Partners with CAA, UTA & WME + More…

This episode features guest Michael Terpin. He is the Founder and CEO of Transform Group, a leading advisory and PR firm for the blockchain industry. Transform group has worked with more than 300 clients in the sector since 2013 including the likes of Abra, Ethereum, Kraken and Tether. Michael also owns the blockchain accelerator Transform Studios and is a Managing Director in Transform Ventures, which invests in advises companies in the DeFi and NFT sector including Bridge Mutual, Launchpool, RARE WAX and YIELD App.

Michael is also the CoFounder and Chairman of Aspire, a leading digital asset creation platform, which has grown in under six months to a $50 million market cap across its platform tokens, ASP and GASP. Aspire allows for quick, inexpensive creation of full token ecosystems including unlimited NFTs with unparalleled speed and security as well as negligible gas fees. Michael’s list of other accomplishments is too long to list here but includes founding and exiting several successful companies and supporting the blockchain and crypto ecosystem in every way you can imagine. Michael, welcome.

Michael, it’s great to be here with you and to be able to do this episode in person in Puerto Rico. It’s been a couple of years since I was here. The first time we met was at one of your conferences in Puerto Rico back in 2018. Times have changed in terms of the blockchain landscape, the Puerto Rico landscape. NFTs are the talk of the town now. As usual, you’re early to the game and doing a lot in that space. We’re excited to get your perspective.

Thanks for coming down to the island again. There’s been a lot happening since 2018. In 2018, everything was about ICOs. You don’t even hear anybody use that term anymore. However, we did sell out every hotel room and Airbnb on the island whenever we came down to find out what was new and ICOs and some of the other things that were hot at the time. Ethereum had crossed $1,000 from being $10. It got over $4,000 after people were pronouncing it dead at $80. As Mark Twain said, “History may not repeat but it tends to rhyme.”

Now, we’re talking about Ethereum potentially flipping Bitcoin in the future. Hotels and Airbnbs are still hard to come by. Eathan and I had to scramble to find somewhere to stay. If people are wondering what’s going on in Puerto Rico, is it still alive and well? I have to tell you, the restaurants, bars, hotels are packed and the piña coladas are tasty. Wouldn’t you agree, Eathan?

I would agree. Thanks for sharing your piña colada with me and encourage me did drink more than I normally would. Michael, the next question I have for you is a bit about Aspire and how that as a decentralized asset creation platform plays into your vision for the future of NFTs.

Aspire is a company that I cofounded with Jim Blasko who is the technical whiz behind the vision here. People forget that NFTs predate Ethereum and the original NFT was Colored Coins. Back in early 2013 when you took a Bitcoin and then you put something in the memo to differentiate it from other Bitcoin and therefore, you get a single Bitcoin, which back then you could get for $20 or so. You could have 100 million NFTs because every single thing inside of a Bitcoin, you could go in and put a different memo field and say, “Playing card 1 of 10,000.” You could do it with Coloring, maybe 100th of a Bitcoin or 1,000th of a Bitcoin. That was the beginning of the whole non-fungible token concept.

I worked with Counterparty back in 2014, which was one of the earliest tokens. The first ICO was something called Mastercoin, which was built on top of Bitcoin. Counterparty was also built on top of Bitcoin. With Counterparty, they created the first playing cards where instead of putting a memo inside of Bitcoin, you created a token that was lodged on top of Bitcoin and used Bitcoin for gas. That’s 2014. At one point, Counterparty had 30 in the top 100 tokens on CoinMarketCap.

Flash forward several years, which in this industry is like 1,000 years in some other industries, Counterparty has died more or less. First of all, the three founders all left the project and went on to do other things. More importantly, the notion that everything should be on top of Bitcoin and use Bitcoin as gas became difficult when the price of bitcoin gas went up to about $20 a transaction before a SegWit. If you’re going and trying to create an NFT and every time you transfer it would cost you $20 and it’s a $5 NFT, that doesn’t work. We could see that that’s happening with Ethereum because people moved from Counterparty to Ethereum because the price of gas was low.

We’ve had times when minting an NFT could cost you $100. Now, people are looking at layer 2 solutions like Polygon that will dramatically lower those fees. It’s this never-ending chase for lower fees. What Aspire does is it takes the original open-source code from Counterparty and reworks it so that instead of having Bitcoin as gas, we have our own token, the GASP coin, Gas Protocol. That is designed so that it is built on a Litecoin standard. It can go on an exchange easily. You can go and get about one million transactions for a little over $1. Even if the price went up 1,000X, you’d still have affordable gas.

What do you have cooking in terms of projects on the roadmap with Aspire that you’re excited about?

One of them is called NFT Studios. That is a group that we did a little bit of seed funding out of Aspire. They’re going to be building their first game, it’s a game of studio. As you can see, some of the hottest tokens are gaming and metaverse studios.

Alien Worlds.

It’s number one with a bullet in the top 100. The first game is called ChiFiBots, fighting robots that look like Pokemons and have a lot of gamification around it. It’s a bright team of artists and programmers that are out of Mexico, Vietnam and a few other places. They’ve got a big team and they’re putting together these cool games that are going to run on Aspire. They approached us because they like the fact that you could go in and have these fractions of a penny for gas.

The evolution of NFT is going to show things that haven’t even been thought about yet. Click To Tweet

We’ve got Transformers and we’ve got Transform Group. Is there a Michael Terpin robot in the mix? Is that part of the deal?

I haven’t seen it yet but I’ll find out.

Michael, you outlined a tremendous history that you’ve had within the blockchain space and also with the evolution of NFTs. Was there a moment or a series of moments in which you identified that NFTs became a game-changing part of the blockchain landscape in your mind? What are your thoughts on that?

I’d say CryptoKitties. CryptoKitties showed that you could have something that would completely go viral to an extent that rare Pepe Cards on Counterparty didn’t quite get to that level. You can see that games have always been important in the evolution of blockchain. When you’re able to go and have this dynamic that’s been popular in non-blockchain games of being able to have something live and care for etc. and be able to do that on a blockchain where we had ownership as well. To me, that showed the potential. There’s been exponential growth. The Beeple moment is what got all the artists out of the woodwork. I have a concern that there’s such an explosion of supply that even a fast linear growth in demand means there’s still going to be a lot more out there than people are going to want to buy. This happens in any market, it happened in the dot-coms, it happened in the ICOs and yet blockchain and the internet keep on growing.

There’s always a build-pop-retest moment and people ask us a lot in the NFT craze. I feel like it is a retest moment where we’ve set the foundation. People don’t realize how much money has gone into the ecosystem that hasn’t been spent or deployed yet and how many cool things are coming up. What are your thoughts on that?

In terms of raw dollars, there were months that you didn’t even have six figures of NFTs. I don’t think you could count it in the hundreds of dollars. Now, we’re talking about $2 billion that has been spent on NFTs, which is an extraordinary growth in terms of dollars that is far faster than the fungible token marketplace grew and far faster than the internet grew. There’s something there. There’s an early adopter demand and we’ll see whether it crosses the chasm to the early mainstream and everybody wants to have an NFT instead of a collectible. Most people collect something. If you can have permanence and digital, that’s the magic equation that excites the creators as well as the collectors.

One of the coolest applications that we’ve seen of NFTs is the coming and already here, the metaverse and how people are going to apply NFTs in the future and what people are cooking nowadays. You’re working with NFT Studios and Upland as well. I’m curious how you see those two projects or other projects claiming and playing a role in the future of NFTs within the metaverse.

Blockchain is perhaps the secret ingredient to finally get these virtual worlds off the ground. I’ve been working with companies and virtual worlds going back over 30 years. I worked in the early ‘90s with my first VR from the Terpin Group with one of the first virtual reality headsets which was the size and weight of a football helmet. It cost about $2,000 and it gave you headaches. That was considered revolutionary as time. Now, you then went through waves of Oculus Rift, Samsung and some of the other VR platforms. You still didn’t have what at the end of the day that you have. The fact that you can go and own something inside of the game and trade it, that’s what exploded World of Warcraft and some of the other original virtual currencies before cryptocurrency. It’s got the potential to help gaming plus collecting plus virtual worlds all work together seamlessly.

We’re talking to folks that are doing holograms and all sorts of stuff to support this ecosystem. There’s a lot of energy and a lot of folks in the group who are traveling here who are into realistic three-dimensional worlds and what you can do. It’s exciting when you combine that technology with NFTs.

We’re also curious about the other cool projects that you’re seeing that are leveraging NFTs and maybe some things we haven’t heard about but should be paying attention to. Any insights there?

Not everything is art and digital. Sometimes NFTs are used to prove the provenance and make for easy trading of physical items. A good example is a company that I’m an advisor and an investor in called Icecap. It’s Icecap.diamonds. Icecap is a good example of having a physical good, a marketplace and NFTs work together. Also, it’s a good example of a giant industry, in this case diamonds, which is $90 billion a year and about $25 billion a year of finished diamonds, being able to go and use NFTs to make a global marketplace. There’s a lot of wealthy families that say, “I want to put a certain percentage of my money into gold, silver, crypto, real estate, stocks and bonds.” If you say, “I want to put 1% of millions of dollars for a family office or wealthy family or a corporation into diamonds,” how do you do it?

You can’t go and say, “I’d like to place an order for $1 million of diamonds.” What diamonds? Whereas you can do it gold because it’s fungible. What Icecap does is it takes the non-fungibility of diamonds and turns each diamond that’s an investment-grade diamond, which is calculated by nine different factors. There are the traditional four C’s, the Carat, Cut, Clarity, Color and puts it at the top of the line there. They’ve got another five that means the difference between can you sell to the industry versus do you have to sell it to a pawn shop and have what you paid for it? Because of this, it’s a professional-grade marketplace where you can go in and buy something and it may be 5% of what the industry is paying.

The thing that’s cool that they brought out in Icecap.diamonds is they have 500 different factors. You’ll say, “What is selling to investors?” You’ll say, “The thing that’s selling the most, therefore liquidity, is VS1 D-cut one carat.” You look and see what’s listed. What does it compare to other things in its category? It’s the value basis. Ever since that’s listed, everything at the top of the value starts selling. Icecap signed a deal with a group that’s going to be marketing this to thousands of family offices that already buy gold and silver. All of a sudden, now you have a formula.

What’s going on with RARE, one of those interesting NFT projects in your portfolio?

NFT Michael Terpin

NFT: There’s such an explosion of supply that even a fast linear growth in demand means there’s still going to be a lot more out there than people are going to want to buy.

 

RARE is an infrastructure and they’ve created the model. Everyone in Hollywood knows what Digital Asset Management is or DAM that usually involves big legacy computer systems, enterprise software, etc. What this is it’s D-DAM. It’s the centralized or distributed digital asset management around NFTs. A couple of problems exist in NFTs and one of them is when you have an NFT, how do you know that the link that you’re getting is something that is going to be there tomorrow?

There are several NFTs where the source file is stored on an AWS server or somebody doesn’t pay the bill. You spent $50,000 to a bridge to nowhere or a hyperlink to nowhere. Here, they’re able to have a suite where you go and you’re able to inexpensively mint by paying for it with RARE tokens, which is the decentralized server on the nose that creates this and then also it permissions us. If it’s 1 of 1, you’re the only one in the world that can see it.

Even when you have things that are stored on IPFS, they’re not encrypted. If one person ends up getting that link because they bought one of them, they can share it on a forum and all of a sudden one million people have it and it’s no longer rare. Here, you need a permission key. It enforces rarity and it enforces the fact that this is going to stay there. It enforces digital asset management. It’s a revolutionary set of tools. I’m an investor in the equity and then there’s going to be a token coming out in the near future.

That’s exciting. That’s a project I’ve been following as well. All the use cases around that, get pretty interesting. I’m imagining these special moments, these rare moments and experiences that occurred that you want to keep to a more select audience from the virtual moments like maybe the birth of baby Yoda, a real birth moment or some other NFT that you want to pass on to other generations.

It’s been noted that the most successful NFT product out there is going to be NBA Top Shot. In some cases, it looks like some of these things that you’re spending thousands of dollars for, the videos are available on the internet. You can find it on the web. How rare is that? This will allow so that if there are some never-before-seen footage of a Michael Jordan dunk or whatever, you can prove you only have 1 of 1. The problem of having an IPFS without encryption is you think you have 1 of 1 and then somebody shares it on a server and all of a sudden, 1 of 1 million is debased. Here, that can’t happen.

We’re going to be excited to chat with them in the future. They’ve been busy building but they’re looking forward to coming on the show. That’ll be great.

Michael, what else are we in the general public missing about NFTs? Are there game-changing categories of NFTs that we should be paying attention to but are not?

The evolution is going to show things that haven’t even been thought about yet. When the telephone came out, its original use case was supposed to be broadcasting opera. That’s not what people use the telephone for now. You’re going to find use cases that are built on top of use cases. With RARE, for example, they permit the ability of somebody to go and publish a book. Instead of giving 70% to Amazon, they’ll end up keeping 90% and the other 10% goes to a combination, the token holder, the distributor of RARE and the platform. You can go in and sell a $20 eBook that’s maybe a coffee table book and you open it up and there’s a photograph there. Within that page, you can then go and buy the NFT. Maybe there’s a different thing or there’s an artwork that will go for ten times as much or you can have different airdrops. The layering of NFTs inside of NFTs as an ecosystem is something that’s in its infancy.

We’re in the early days. A lot has happened and evolution and innovation are happening at a rapid pace. If we talk to you again, who knows what’s popping in this crazy world of NFTs. We’d love to get to know you more as a person, I’m sure our audience would as well. You do a lot of interviews about the industry. We want to know about Michael Terpin, the man behind Transform Group, the man behind the myth.

Michael, Edge quick hitters are a fun quick way to get to know you a little better. There are ten questions and we’re looking for a short single or fewer responses but feel free to expand if you get the urge.

Michael, what was the first thing you ever purchased?

I have to differentiate this from what I purchase versus what my family purchased for me. I’m thinking it probably would have been numismatics, rare coins. I collected coins when I was a kid. I had to take my allowance money and go to the coin store in downtown Buffalo, New York and buy Buffalo nickel or whatever the first one was at the time.

Many of our guests were collectors even as kids. It’s the theme.

Michael, what was the first thing you ever sold?

Creativity is what gets us past the problems of today. Click To Tweet

That also would have been coins. I collected coins from the age of maybe 6 or 7. I started buying them and would watch them go up in value. When I got closer to realizing I need to save up money for college considerably for that, I started a little mail-order company to sell coins when I was about eleven years old. It was funny because when we were cleaning out my dad’s house of some things a couple of years ago, my wife came across this little thing that had a business card that I had when I was about 12 or 13 and said, “Terpin’s coins.” Considering I got into crypto, it has a double meaning.

We need to NFT a photo of that.

I was thinking the same thing. Michael, what is the latest thing you purchased?

Some wine.

Red or white?

Both. Probably the last thing that I purchased is a Magnum Nuits St. Georges.

What is the latest thing you sold? Now we’re going to know the real Michael. Why is he trading crypto?

Probably Bitcoin. I sold some Bitcoin and then bought some back lower.

You’re still a Bitcoin maximalist.

That’s not true. You can still trade Bitcoin without being a maximalist.

Michael, the next question is what is your most prized possession?

I can’t say my lovely wife or anything like that because that’s not a possession, that’s a relationship.

She is lovely though.

I would say probably our real estate portfolio. We’ve got a couple of homes that my wife insisted on buying every time the price of crypto goes up but I don’t want to pick one of them. We bought a nice condo in Miami. That’s top of mind. It was originally owned by Don Johnson and Melanie Griffith.

NFT Michael Terpin

NFT: Not everything is art and digital. Sometimes, NFTs are used to prove the provenance and make for easy trading of physical items.

 

That’s cool. A good place to go if another level five hurricane comes through San Juan. I find this to be an interesting question to ask you, Michael. If you could buy anything in the world, digital, physical, service or experience for sale, what would it be?

My wife wouldn’t mind having a nice private jet. We’re contented simply to have friends who have private jets and/or occasionally go in and have a budget for when it makes sense.

Mooching off of others’ private jets.

Not in NFT yet. I will have to mention that I’m an advisor to a company that was originally called Airtherium. That was a cool name. It’s now called Fly App. It has blockchain-based private jet travel.

The next question is if you could pass on one of your personality traits to the next generation, what would that be?

Hopefully, creativity. Creativity is what gets us past the problems of nowadays. If you look at all of the inventions that change the world, it’s 1,000,000th% of the population that came up with the things that impact life today. For every Steve Jobs, Bill Gates, Da Vinci, Alexander Fleming or all the great inventors and discoverers, it’s a small number of people.

Little micro-movement to the left or right sometimes makes all the difference.

This is true. If you look at an inspirational character like Edison, how many times he had to fail before they were able to make the light bulb.

More than I would have.

The follow-up to that is if you could eliminate one personality trait from the next generation, what would you choose?

Probably impatience. Particularly in crypto trading but for many other aspects of life, you have to realize that life is a process. Sometimes, if you’re a type-A personality, you can get impatient. Sometimes, that’s not a good thing.

It took us an hour longer than we wanted to set up here and you were the most patient scholar and gentlemen in the room. You’re already in the process of eliminating that characteristic. What did you do before joining us on the show and waiting for the show to start?

I was on my computer answering emails.

What are you going to do next after the show is over?

Technology does not trump the law. Click To Tweet

I’m going to do push-ups because I got off the road where I ate way too much good food in France and I need to get back to my routine. My trainer is coming by and she’s going to kick my butt.

This is my first time seeing my co-host, Eathan, in person. We’ve been doing this show and he’s much skinnier than me. I’m going to join you for some of those push-ups because I’ve eaten a lot of mofongos.

I have to say that I have a daily push-up routine that I skipped so I might have to join you too.

We’re going to do a little video of all of us doing push-ups after this show is over.

We’ll mint the first workout video NFT.

That sounds good. Our last segment is hot topics. We like to share our perspective on what’s going on in the news, which travels quite quickly these days and also get your perspective. Our first hot topic is Space Jam: A New Legacy launch includes a 91,000 item NFT tie-in. Jeff, what’s all this about?

This is what NFTs and entertainment are all about here in the next phase. Instead of creating a ton of physical merch, we’re talking about NFTs collectible at the scale of 91,000. This is a significant number for a movie and a project. It’s the beginning of how we’re going to see NFT start showing up in media in a big way.

This one is around the Space Jam franchise, which is interesting. You’re getting quite a lot of Bugs Bunny trading cards. If you go to the Niftys.com website where they’re listed, it looks like it’s there to be sold out. I’m curious, Michael, any thoughts on Bugs Bunny NFTs?

I’ve been a big Bugs Bunny fan. I would say that this is another example of what happens when you have mass adoption at a scale of new technology. One of the easiest ways of doing this is to take an older technology that already has mass adoption like television and movies and adopt it. If you look at what helped accelerate the adoption of the internet from being used by practically no one in ’94, ‘95 to being used by everyone by the year 2000, it was when ABC, NBC, CBS started saying, “ABC.com. NBC.com.” Back in ’93, ‘94, one of those three-letter behemoths told me they would never be on the internet because their mom was never going to go put up with having a second phone line and having something go, “Bing, bing, bing,” in the middle of the night. They didn’t think about broadband. The same thing with NFTs, it will be a lot easier in the future than it is now to buy and hold an NFT.

I’m starting to see what’s happening here. Eathan, what else do we have going on?

The next thing in the news is NFT Startup Venture Notables Draws CAA, UTA, WME as Advisors. Of course, these are major talent agencies. We want to watch what’s going on there. We want to ask ourselves like, “Is this the key to NFTs?” We’ve seen a lot of ones that are attached to big-name stars and that’s behind the driving the value in it. Maybe we’ll even see some frustrated creators and individuals that don’t have a big name already who thought they’re getting something out of NFTs, the technology but maybe feeling like they’re losing out to the bigger players once again. Any thoughts on that, Michael, on the celebrity and NFT?

I did a TED Talk in early 2014 for TEDxHollywood where I talked about Bitcoin at the time and Hollywood. I spoke about the fact that the celebrity was going to drive adoption. Back then, there was a big scandal around Coinye West, which was a fake coin that Kanye and his managers sent a cease and desist order to an anonymous Gmail account. They had no idea who had put it up. I said that if Coinye West, the fake coin, can get this much attention, imagine if Coin-I-am happened. It was the real thing. We’re now seeing that.

Jeff follows to see pretty closely. Jeff, any other thoughts here?

There’s also this question of what strategic value do your partners bring? Is it a name attached to it? Is it for awareness? Is there also an opportunity to add strategic value? Some of these agencies are the biggest in the world. I do wonder, are they going to be getting in the mix and adding value beyond their client list? Is that where it stops?

NFT Michael Terpin

NFT: The layering of NFTs inside NFTs as an ecosystem is something that’s really in its infancy.

 

It’s a fundamental question about whether traditional agencies know how to sell NFTs. They know how to sell celebrity products in the physical world. Do you think that they’re going to move the needle more than a typical crypto advisor? What do they bring to the table in addition to what more traditional advisors and blockchain bring?

They have relationships with traditional money and traditional resources. They’re usually slow to get started. Any industry where they see the dollars starting to flow, they get into. Look how long it took Hollywood to get into the internet. All of a sudden, the agencies all had digital divisions. It was in the late ‘90s. You look at social media, it was LAFTA for a while. All of a sudden, the audience, which is a lot of traditional Hollywood agency players, became one of the biggest social media agencies. They said, “We need to go and be the ones that are controlling the social media accounts for Britney Spears and all these other entertainers.” You’re now seeing that with NFTs.

What’s our last news, Eathan?

The headline is that winners of the Twitter NFT giveaway have formed a group to retain their value. I’m curious if Jeff has any thoughts on this. I wasn’t aware that there was a Twitter NFT giveaway. Maybe it’s because I’ve been hanging out here in Puerto Rico to have some fun.

I thought the only giveaway on Twitter is with a contest that we run. What’s going on here?

They had this giveaway where there are several NFTs that they offer to folks. The people that won them have recognized that there’s a meaningful value associated with them. They’ve formed this group to come together and preserve or enhance the value of these NFTs in several ways. We don’t quite know yet what steps that it’ll be taking there. You can imagine from everything we see in the Meme coin community and other SHILL-related communities. There are probably several steps that they can take to get excitement built around these NFTs. The question is, what is that? What attention does that draw? Does it draw some negative attention from the SEC who are still trying to figure out what to do with NFTs? This is what comes to mind for me.

Is this the first NFT union? What’s going on here, Michael?

I wouldn’t say it has to do so much with SEC because it’s been pretty clear that unless you’re giving away something to identify as security like airdrop of stock or dividends, for the most part, the digital collectibles if they’re collectibles in the non-digital world or collectibles in the digital world. Even some of the opinions that the SEC had or maybe it was FinCEN were saying fungible virtual currencies. They still use virtual. This is more about rights. Technology does not trump the law as we’ve seen. One of them is you get an NFT and you think, “I now have this 1 of  1 NFT. I can do anything I want with it. I can go and print it out and sell copies of it.” You can’t unless you have legal rights. I suppose you get airdrop legal rights. If you don’t, this is where the IP lawyers fight things out. What’s happening here is what do you own when you end up getting something that may have some value beyond what you were given.

I’m also struck by the fact that it was completely a giveaway. Twitter did not assign any value to these. I also was curious if that was a little bit of a way of sidestepping any SEC oversight on these things and saying, “These are given away. We’re not necessarily claiming that they have any value.” That way, these people now are claiming that it’s their responsibility to carry that on or not. I’m also curious, we’ve had some of these discussions in some of our episodes especially with some artists of NFTs not being these things that have a monetary value but signify a connection for people. They want to claim ownership of something and it’s not something they’re looking to trade and think that it’s going to go up in value. Have you seen any of that purely wanting to own something and not wanting to trade it?

Having value does not make it a security. Otherwise, you would not be allowed to own antiques or classic cars without registering with the SEC. The Howey Test has been something that is, from the 1940s, interpreting a narrow component of the 1933 and 1934 acts as it relates to how orange futures are different than wine futures. The gist of it is the Howey Fruit company was where the Howey name comes from. Wine futures have historically been deemed to not be securities. Even though you go in with an expectation of profit, you give someone money to go and build something that does not exist before. They’re using your money to go build the wine and you don’t have any control over the process. You can’t go and tell the Rothschilds or Screaming Eagle to put in more low.

You have to have four things that mean something. If any of those are missing, it’s not security. The first three are expectations of profit, investment of money, which is why airdrops are not securities because there’s no investment of money and no control over the common enterprise. The last one is the trickiest one, which is if the price of something goes up or down, is it because of a change in the essential nature of the asset or because of the promises made by promoters or management? In the case of wine, the company goes out of business but if Robert Parker likes the wine, the price goes up as opposed to with the Howey fruit company. Because oranges don’t appreciate, they rot, they give you a dividend.

If you invest in the wine futures, they give you a dividend based on the yield of the crop. You’re putting your money in with the expectation that it’s going to be a good year and you rely on those expectations. That’s what made it security as opposed to you buying a product that’s delivered. You never get your oranges delivered. That’s fairly simple but it’s hard to then go and say that rule can then determine whether a utility token is a security or not or whether a platform like Ethereum is is is a security token. The ripple case where they’re hammering and saying, “How ludicrous is it that we’re using a 1940 Supreme Court case about orange groves to determine the whole future of the entire blockchain market?” I’m hoping they win that.

It’s such an interesting perspective you have on this topic that comes up all the time. I look at what Twitter did and the value that has been created from something that was airdropped. The fact that we know that Twitter and Instagram are thinking of creating their NFT marketplaces and getting seriously involved. Are you saying that the past performance of other NFTs created by a platform that has gone up is not enough to go beyond the Howey Test and say that there’s going to be innate potential value increasing for future NFTs that are created?

It’s irrelevant. That’s like saying, “Did the price of a wine bottle go up? Does it make it security?” I don’t think there’s anybody who believes that if you’re on Facebook and all of a sudden they say, “You can go and create your own NFTs,” and you sell them that there’ll be security. It’s a collectible. It’s an artwork.

NFT has no inherent value other than what a buyer is willing to pay for it. Click To Tweet

I agree but people make all sorts of arguments about NFTs being security. It’s important to have the conversation.

They’re wrong.

I’m curious about the second part of the question, which was meant to be unrelated to the regulatory question. I interviewed an artist and a scholar who’s working with some museums to have participants at museums create NFTs around items that they feel a connection helping them mint them but there are no purchases involved. She said that there’s not necessarily even any attempt at selling or exchanging them. An NFT can be a memento. I’m curious if you had any experience with that or if that’s new.

NFT is a technology. An NFT has no inherent value other than what a buyer is willing to pay for it. You could say I’m 1 of 1. For a completely unknown artist, you may have a problem getting $5 for it. On the other hand, if you’re Beeple, you market it pretty well and you say, “I’m 1 of 1 of these 5,000 photos,” and somebody paid $69 million for it. All of a sudden, it’s worth $69 million because you have proof that that’s what somebody paid for it. It doesn’t mean it’s going to get resold higher. That’s the mark to market.

NFTs, you’ve got some pretty big brands that are sold on WAX for $10 but they’re 1 of 1,000 or 10,000. You got still things that are going for $100,000 because somebody loves being like, “I have a 1 of 1 of something super rare.” We’re still in the early days. You have to look back at the early days of websites when it cost $1 million to make a website because there weren’t that many people who knew how to do it. Now, you can get a website for $10.

Normally, we like to end by asking our readers where they can go to find out more about what you’re doing. If people google your name, they’ll find you all over the place and all sorts of conferences coming up. Maybe you can highlight some of the key ways people can track what you’re doing and some of your plans. I know you have a big conference here in Puerto Rico. Tell us a little bit more about that. How else folks can stay in touch with what’s going on in your world?

The easiest way is I’m @MichaelTerpin on Twitter. I’m pretty much my name on every platform. If you see something with a hyphen, an exclamation or whatever, it’s somebody pretending to be me. Particularly on Instagram where there are all sorts of people who will go in and contact my friends and then ask them to invest in some scam. I don’t direct message people that I don’t know and be like, “Invest in this or that.” I don’t do that.

If you ever get somebody claiming to be me and saying, “Invest in some mining scam,” it’s not me. I put that usually on every single platform that I’m on because unfortunately, there are people who go out there and all they need is 1 or 2 people to give them a bunch of money and you can’t find where they are because they’re paying in crypto. CoinAgenda is what you’re referring to. I started the first blockchain and Bitcoin investor conference in 2014. It was a spinoff from the first Bitcoin Angel group that I started with David Johnston, who also lives in Puerto Rico, in early 2013.

The BitAngels is where we did some physical events. We also did conference calls. We find that we’d be trying to gather and meet at other people’s conferences and so I thought, “Why don’t I create my own conference?” I didn’t want to call it BitAngels because I wanted to be more than people who are members of the investor group. I called it the CoinAgenda. Our first conference was in Las Vegas in 2014 and the price of Bitcoin was $298. It’s come a ways. We’re a few years of doing CoinAgenda events in Las Vegas. We have four events but because of COVID, they’re all going to be in the final four months of 2021.

We normally had been doing the Caribbean events in the spring but it wasn’t possible. We’re doing it, which will probably be a permanent change to having it early December right after our Basel. Our Basel is a traditional art show in Miami. In the past several years, there have been some NFTs and some NFT side conferences. People can come to Miami and get their feel of the art world NFTs and then come down to Puerto Rico for Puerto Rico blockchain, which includes CoinAgenda in the Caribbean. This is December 6 through 8 2021. We’ve got CoinAgenda global, which is October 25 to 27, 2021 in Las Vegas. It’s the same time as the Las Vegas Blockchain Week activities and Money20/20.

We also have two international shows, CoinAgenda Europe, which is right after the Monaco Yacht Show. It’s from 25 to 27 of September 2021 in Monaco. We’re not doing CoinAgenda Asia 2021 because it’s too hard to go to any place in Asia without a quarantine including Singapore where we had our last one. That’s a great place to hold a conference. We’re doing our first CoinAgenda in the Middle East and North Africa. Africa is booming. I spoke at Africa Blockchain Week, which was virtual but it’s in Dubai and it’s a part of Dubai Blockchain Week. It’s from October 8 to 10, 2021. I’ll be on the road a lot in the last three and a half months of 2021.

For those of you that come to Puerto Rico, Eathan, Jeff and I are here will have a little push-up contest at the end of CoinAgenda and help everyone get fit from all the great events here in hospitality that I’m sure you’ll offer your guests.

I thought we’re going to do it now.

Both. I’m not punning.

NFT Michael Terpin

NFT: Having value does not make it a security.

 

I would like to see that.

We’ve reached the outer limit at the Edge of NFT. Thanks for exploring with us. We’ve got space for more adventures on this starship. Invite your friends and recruit some cool strangers that will make this journey also much better. Go to iTunes, rate us, say something cool and then go to EdgeOfNFT.com to dive further down the rabbit hole. Want to help co-create Edge of NFT with us? Got guests you want to see on the episode? Questions for the hosts or guests in NFT you’d like us to review? Drop us a line at Contact@EdgeOfNFT.com  or tweet us @EdgeOfNFT to get in the mix. Lastly, be sure to tune in next episode for our guest Yat Siu, the Chairman and Founder of Animoca Brands. Thanks again for sharing this time with us.

Thank you so much, Michael. Appreciate it.

Thank you.

This is Michael Terpin and I’m here in beautiful San Juan, Puerto Rico. When you want to learn about the greatest and latest NFTs, read the Edge Of NFT.

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About Michael Terpin

NFT Michael TerpinMichael Terpin has more than 25 years of PR agency management. He has directly supervised many renowned PR campaigns of the digital media era, including early-stage PR for America Online, Earthlink, Jupiter, Motley Fool, Match.com, and Shapeways, as well as full-service campaigns with established brands, including Alpine, AT&T, Diamond Multimedia, Fujitsu, JBL, Konami, Marriott, Memorex, Philips, Rackspace, Red Herring, and TEAC.

In the blockchain sector, Terpin has led the PR efforts for more than 100 blockchain companies and foundations, including some of the leading token crowdsales. Client successes include the launches of Augur, Counterparty, Dash, Ethereum, Factom, Golem Network, Lisk, MaidSafe, Tether, as well as ongoing campaigns for Bittrex and Shapeshift.

Terpin co-founded BitAngels, the world’s first angel network for digital currency startups, which now has more than 500 members globally.