Simple explanation_  
Non-fungible tokens (NFTs) are blockchain-based tokens that can be linked to anything from digital art to physical assets. Currently, the majority of NFTs are tied to one-of-a-kind digital collectibles (ex. art, playing cards). But the possibilities for NFTs are vast, and creators of all types have already started taking notice.

Slightly more technical_  

Within their code, NFTs contain:

• 1) uniquely identifying information like the creation date and metadata that defines characteristic of the asset
• 2) smart contracts that allow for seamless, friction-free transactions

This data adds value by 1) preventing forgery/copies 2) displaying a transparent, verifiable, immutable (unchangeable) history of ownership. 

Non-fungible vs fungible_

Non-fungible things are distinctly unique snowflakes. Everyday examples include plane tickets and your pet dog. Fungible things include subway tickets, US dollars, Bitcoin. In each of the fungible examples, any one of these can be easily exchanged for another one from the same category.

Skyrocketing valuations_  

NFTs can be linked to assets from diverse categories of collectibles – from virtual pets like Cryptokitties, to 3D artwork, to digital football trading cards. All around the world, thriving markets are rapidly evolving centered on highly sought-after assets. Through digital collectibles markets like OpenSea and SuperRare, creators, collectors, and traders meet to purchase and sell assets. Speculation, scarcity, supply, demand, and desirability are all factors that determine the value of pieces. Similar to traditional collectibles (like original Pokeman cards, Beanie Babies, and Picasso paintings), an NFT is worth as much as anyone is willing to pay for it.   

Let’s explore some impressive valuations being set by early adopters in this niche.  

• $21,350: for a digital artwork created by 17 y/o artist Fewocious   
• $47,500: for a tokenized video clip of a LeBron James dunk highlight   
• $65,000: for a Sorare trading card representing footballer Kylian Mbappé   
• $777,777: for a portfolio of work by digital artist Beeple  
• $9,000,000: for a collection of 16,000 pieces of NFT art on the Hashmasks platform  

The digital work above sold for 420 ETH (~$650,000) on Feb 4. Since blockchain is fully transparent, you can easily view the entire history of this digital artwork. The Switzerland-based Hashmask platform hosts a collection of 16,000+ unique NFT portraits created by 70+ artists. 

Underlying tech_  

NFTs are made possible by smart-contract-enabled blockchains. The first platform to support non-fungible assets was Ethereum’s ERC-721 standard. This tech was adopted earliest by CryptoPunks and popularized by CryptoKitties in 2017. Other platforms are emerging with NFT support, including FLOW, EOS, NEO, and TRON.  

How to buy NFTs_  

As this sector expands, a flurry of NFT markets is emerging. Examples include Rarible, OpenSea, and Enjin Marketplace. Once a user is registered to these platforms, the buying process is super straightforward. The user interfaces are clean, straightforward, and user-friendly. One small hurdle is that you will need an Ethereum-enabled wallet to complete transactions. This is how you will purchase and store your tokens. There are hardware and software wallets that work for this process. My favorite hardware wallet is Ledger Nano. If you use my link you can get one for 20% off. #shamelessplug  

What is next for NFTs_  

Let’s save that for another post, another day. But until then, let me know what you think about this nascent and growing market for crypto collectibles.  

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To track Pfizer’s COVID-19 vaccine storage, the UK’s National Health Service (NHS) is implementing an internet of things (IoT) solution built on Hedera Hashgraph. This is one interesting way that IoT is working with blockchain to facilitate COVID-19 vaccine rollouts around the globe.

TLDR_

• Pfizer’s COVID-19 vaccine must be stored at uber cold temperatures until it is administered
• Hedera Hashgraph is a decentralized public network that calls itself the “trust layer of the internet”
• Hedera Hashgraph is being used to track the temperature and journey of Pfizer’s COVID-19 vaccine through the healthcare supply chain

The majority of available COVID-19 vaccines require ultra-cold storage conditions. This poses a major obstacle for public and private health services around the globe. Pfizer’s vaccine (co-developed with German biotech BioNTech) must be stored between -80°C and -60°C initially, and between 2°C and 8°C just prior to being administered. If left outside those temperature windows, the vaccine must be thrown away.

Everyware, a UK-based digital asset monitoring company, is using Hedera Hashgraph technology to manage data related to COVID-19 vaccine cold-storage.

Hedera Hashgraph in a nutshell_

Hashgraph is a public distributed ledger network with:

• a high-grade of security
• extremely fast transaction speeds
• incredibly low bandwidth consumption

Blockchain meets IoT_

Everyware’s software can be programmed to continuously track multiple attributes of physical assets, including temperature. Hospitals will ensure that vaccines are kept at the proper temperature throughout the entire journey by leveraging Everyware’s asset management solution with Hedera Hashgraph acting as a secure, distributed trust layer.

• The Hedera base layer offers a verifiable timestamp and ordering of events around the supply chain of vaccines
• It enables healthcare facilities to exchange information securely with other vaccine distribution chain participants
• The network transparently and securely connects pharmaceutical manufacturers, centralized storage facilities, and transport companies
• In addition to the Hedera base network layer, this vaccine storage solution uses IoT hardware sensors to control aspects related to distribution and administration

To safely and transparently transport Pfizer’s COVID-19, Everyware will provide several NHS facilities with this blockchain meets IoT software solution. Initially, this will be implemented ata select group of NHS facilities in the South Warwickshire region. There are plans for a wider future rollout.

Blockchain has also been used in Brazil to ensure that the distribution of vaccines is transparent and efficient.

Excited about this project? Do you want to talk with a real person about this and other interesting applications of blockchain? Book a free (seriously, free) video coffee chat with Cryptonita.

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Why (some) economists believe $20,000 Ethereum is a realistic price target.

I typically skim past headlines with aggressively high price targets in crypto. Feels like clickbait. However, this simple analysis from macro economist DH Taylor caught my attention.

Earlier this week, as Ethereum rose to $1,439 per coin, it crushed its previous all-time high. Taylor suggests that this is just the start. In fact, he believes that a rise to $20,000 per token is totally feasible. Here’s the hypothesis behind this lofty price target.

TLDR_

• Taylor uses Metcalfe’s Law to derive a target price of $20K per Ethereum
• Metcalfe’s Law maps the rate of growth of a network using the square of the number of its users
• Using Metcalfe’s Law, the author believes Ethereum will repeat Bitcoin’s meteoric rise
• Bullish pundits, including Raoul Pal echo this sentiment
• Mark Cuban tweeted that he owns and HODLs crypto

While a rise from $1,400 per ETH to $20,000 may sound implausible, that would represent a 1400% gain. It should be noted that Ethereum had a similar run between May 2017 and January 2018.

Mark Cuban has entered the chat_

Last week investors Mark Cuban and Raoul Pal had a lively Twitter convo discussing Bitcoin, Ether, and other cryptocurrencies. Pal has been especially bullish (positive) about the industry overall. In a thread he echoed Taylor’s price target, suggesting that Ether could outperform Bitcoin this year and hit $20,000 in the future. 

In a related thread, Mark Cuban shared his views on cryptocurrencies and decentralized finance (DeFi). In it he compared the blockchain market landscape to the Dot-com Bubble.

Let’s see what the year ahead holds for Ethereum. I’m excited about its potential. What are your thoughts?

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Earlier this week digital assets manager Grayscale purchased a massive amount of cryptocurrency in a single day. On Monday alone, they bought 16,244 Bitcoin for a total of roughly $600 million.

To put that into perspective, that equals 18 times the number of new Bitcoin mined daily.  

This gives me some real Hungry Hungry Hippos vibes_

Why this matters_

As an investor, you have two basic pathways towards adding assets (like stocks or cryptocurrencies) to your portfolio. You can:

• buy them directly, or
• buy an investment vehicle (like a mutual fund or ETF) that purchases assets on behalf of investors 

Cryptocurrency mutual funds and ETFs do not currently exist. Until they do, Grayscale’s Investment products such as Grayscale Bitcoin Trust (OTC:GBTC) are bridging the gap, allowing (accredited) investors to gain exposure to these assets without having to buy them directly.

This aggressive crypto purchasing activity suggests a high demand from its clients (institutional investors, largely), for exposure to cryptocurrencies. Grayscale assets under management grew 900% in 2020.

Takeaways_

• Grayscale provides accredited investors with diversified exposure to the cryptocurrency asset class
• Their accelerated purchasing activity highlights an upward trend of institutional demand for crypto
• Grayscale’s investment products are only available to accredited investors, so if you are a regular civilian, you need to stick to buying assets directly

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Mike Novogratz’s Galaxy Digital has entered the crypto mining business with the launch of Galaxy Digital Mining. This new business unit will offer financial services (risk management, principal lending, equity investments, and M&A advisory) to Bitcoin miners.

Other notes:

• The unit will be led by Fidelity’s former director of mining, Amanda Fabiano
• Galaxy Digital Mining has also established its own proprietary bitcoin mining operation
• Galaxy Digital shares have more than tripled in the past six months

“Bitcoin mining is the foundation of the Bitcoin network … Going forward, we see major opportunities in mining project financing, equipment financing, digital asset-backed financing.” ~Amanda Fabiano

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After posting a massive gain of 26% (in just 24 hours) Polkadot’s DOT token surpassed Ripple’s XRP. As DOT rose from roughly $11 to an all-time high of $14.80, Polkadot became the fourth largest cryptocurrency project by market cap.

Ok, but what is Polkadot?

Polkadot can be thought of as an ecosystem of interoperable blockchains (called parachains). Parachains operate in parallel and transact with each other within a highly scalable framework. In other words, Polkadot is an internet of blockchains.

TLDR

• Polkadot facilitates interoperability, security, and scalability between different types of blockchains
• Interoperability is pivotal for the blockchain industry as a whole
• Polkadot has been nicknamed the ‘Ethereum killer’ (by some)
• DOT trading began in August 2020

What are parachains?

Parachains are individual blockchains. Here are some categories:

• smart contract chains – execute on-chain and cross-chain actions
• layer-1 chains – host decentralized finance (DeFi) DApps
• oracle chains – bridge real-world data to on-chain functions
• identity chains – link personal identity information across chains
• internet of things (IoT) chains – support IoT interoperability
• data chains – data curation across chains

What problems is this addressing?

Currently hundreds of blockchains exist in isolated silos, with little ability to communicate with each other. Polkadot addresses this by providing transparent a framework for interoperability. It is designed to make it easy for older, current, and future distributed ledger technologies (DLTs), to communicate. 

“A future of multiple blockchain networks is increasingly likely.  Not one chain to rule them all, but a world of diversity where individual chains serve specific use cases and specifications.” Paul Kohlhaas

How does it do it?

I recommend digging into the Polkadot whitepaper to begin understanding this project before investing.  

Here are some quick takeaways:

• Polkadot supports multiple blockchains (through parachains) and allows transactions to be processed in parallel #scalability
• Parachains can share information #interoperability 
• Parachains can be tailored to a specific use cases #specialization
• Polkadot can be upgraded and new features can be added without overhauling the network entirely #nimbleness

Parachains and staking

As mentioned, Polkadot encourages decentralized interoperability via “parachains”. Parachains can be public blockchains, private blockchains, or other sources of data. The data in the parachain is accessed via specialized nodes and sent to Polkadot. Parachains are then activated by staking DOT tokens, and removed from Polkadot by unstaking these same tokens.

The main chain of Polkadot supports smart contracts. It is secured by a type of DPoS (Delegated Proof of Stake), which Polkadot calls NPoS (Nominated Proof of Stake). The system is made up of nominators and validators: Nominators use their tokens to elect the validators, who in turn validate (mine) the new blocks. If a validator acts maliciously, he is punished along with the nominators who voted for him.

Some initial considerations to keep in mind

• More established incumbents already exist which could limit the extent of the Polkadot’s adoption
• Since it is still in such an early stage, real world adoption and tangible apps have yet to be realized

While I am personally excited about Polkadot’s mission, it remains to be seen whether or not it will live up to the hype.

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The amount of Ether held on exchanges has plunged over the past two days, with CryptoQuant data indicating that just 8.1 million ETH is currently sitting in the reserves of centralized exchanges.

The acceleration of ETH being taken off exchanges was highlighted by Nuggets News’ Alex Saunders, who noted a 10% drop in Ether reserves on centralized platforms on Jan.14 — from 11 million to 10 million over 24 hours. “Exchanges will run out of ETH in 10 days at current rate,” he predicted.

Earlier today, Saunders noted the decline in Ether reserves had escalated by a further 20% leading him to suggest that centralized platforms may run out of ETH in the next 48 hours.

Read more at CoinTelegraph.

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The NY based cryptocurrency exchange Gemini announced that later this year it will launch a credit card that allows (US) customers to earn bitcoin rewards based on purchases.

The credit card will offer up to 3% “cash back” (in the form of bitcoin) rewards on purchases made with the cards. They envision allowing users to to earn other crypto assets as well.

This isn’t the first company to announce a credit card with bitcoin rewards. For example, BlockFi already announced its own card back in December.  Lately I have been enjoying earning “Bitcoin Boosts” (5% cash back) on transactions that I complete using the Cash app. It remains to be seen if promotions such as these will persist through 2021

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I am utterly obsessed with Rick and Morty. As such, this bit of news makes me smile.

Nifty Gateway, a marketplace for non-fungible tokens (NFTs), is auctioning a collection of original digital art by Justin Roiland. Unlike cryptocurrencies, NFTs capture identifying information in their smart contracts. This makes each individual coin/token unique. Since they are not mutually interchangeable, owners of an NFT posses a scarce + singular digital asset.

“2020 was a huge year for NFTs, most notably the Crypto Art category … with over $20M of artworks sold. This is perhaps attributable to the clear value propositions to both collectors and creators …”

Piers Kicks, Delphi Digital

Roiland co-created the Emmy Award-winning series Rick and Morty, a show which is in heavy rotation for me and other optimistic nihilists across the globe.

Nifty Gateway is owned by Gemini (the NY-based crypto exchange helmed by the Winklevoss twins), is a massive broker of NFT art. So far in 2021, six figures worth ($ USD) of NFT art have already been sold, with one such artwork selling for over $373,000 last week.

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Cryptokitties is paving the way for Western blockchain projects to enter Eastern markets.

Cryptokitties is a blockchain-based distributed App (dApp) that allows players to adopt, raise, and trade virtual cats on the Ethereum network. As this viral platform attempts to expand beyond the US, it is finding out that China is the gatekeeper to the Asian market.

Perhaps you missed it, but the game is already fairly popular, with users having spent over $12,000,000 on digital felines. Talk about the cats meow. ZING!

Think: Beanie Babies meets Blockchain

Lets be clear: Cryptokitties are not currency. Instead, think of them as digital assets with values that are determined by the market. Each kitty is unique and non-fungible. Therefore they rely on their uniqueness and scarcity to create value.

The first Cryptokitty was born and adopted on December 2, 2017. Moving forward, a new cat was born every 15 minutes. This continued until November 2018, after which no new generation zero Cryptokitties were generated. Now, the population increases solely through breeding.

From the site:

There are two ways to breed a new Kitty: breed two of your own Kitties together, or breed with a public sire…. If you breed a Gen 3 and a Gen 4 Kitty together, you get a Gen 5 Kitty. If you breed two Gen 3s, on the other hand, you get a Gen 4.

There’s no theoretical limit to how many Cryptokitties can exist. Anyone willing to pay the transaction fees for breeding two cats, can create a new one.

Axiom Zen, the San Fran based company that launched the game in 2017, is now ambitiously pursuing expansion into Asia. Co-founder Benny Giang, believes Asia to be a huge untapped market, and sees China as their biggest hurdle. Yet growth in this arena will required a nuanced strategy and cultural sensitivity.  

“As Cryptokitties launched… the company saw competition and copycats (pun intended) from China moving quickly into the market” Tech Crunch reported. “Just as Cryptokitties launched in China, Xiaomi launched Cryptobunny, while Baidu (the Google of China) launched Cryptopuppy.”

Ultimately I see this wildly popular game as a fun speculation platform with cute mascots. If the company behind the dApp is able to successfully penetrate the Asian market, this could pave the way for other game-like dApps developed in the US to follow a similar roadmap.

What do you think about the platform? Do you own any kitties?

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