Something Interesting

Share this post
Not investing is the riskiest decision
www.somethinginteresting.news

Not investing is the riskiest decision

also NFTs from Taco Bell and zen riddles for the property courts

KF
Mar 9, 2021
2
Share this post
Not investing is the riskiest decision
www.somethinginteresting.news

In this issue:

  • Companies keep moving their treasuries into crypto

  • NFTs are not ICOs just ask Taco Bell

  • Property rights at the edge of reason

Not investing is the riskiest decision

On Sunday Norweigan Energy conglomerate Aker sent out its shareholder letter announcing a new company called Seetee focused on investing in Bitcoin mining and infrastructure, which would be holding its entire liquid treasury in Bitcoin. They launched with 300M Krone (~$58.5M USD) which they used to purchase ~1170 BTC.

Twitter avatar for @Seetee_io
Seetee @Seetee_io
Today, we announced the launch of Seetee! We are a new company in the Aker group, and will invest in ex­cit­ing projects and com­pa­nies through­out the #Bitcoin ecosys­tem. Bitcoin is our treasury asset. Our first purchase was 1,170 BTC and our strategy is to hodl.
7:52 AM ∙ Mar 8, 2021
3,592Likes740Retweets

Aker is owned by Kjell Inge Roekke, the second richest man in Norway. Roekke’s shareholder letter makes a forceful financial as well as moral case for Bitcoin, arguing it serves as an economic load-balancer for the renewable energy systems they invest in. The line that stood out the most to me was this one:

Rather than thinking of Bitcoin as a risky element of their portfolio, a growing number of companies are starting to view Bitcoin as the hedge protecting them from other risks. That is a pretty profound change of perspective.

Hong Kong listed Meitu (~$10B market cap) also just announced they purchased $22M worth of ether and $18M worth of Bitcoin. And obviously no story about institutional demand would be complete without MicroStrategy - they bought another $10M worth of bitcoin on this dip. They now own ~91k bitcoin.

Twitter avatar for @michael_saylor
Michael Saylor @michael_saylor
MicroStrategy has purchased an additional ~205 bitcoins for ~$10.0 million in cash at an average price of ~$48,888 per #bitcoin. As of 3/5/2021, we #hodl ~91,064 bitcoins acquired for ~$2.196 billion at an average price of ~$24,119 per bitcoin. $MSTR
microstrategy.comMicroStrategy Acquires Additional $10 Million in Bitcoin at Average Price of $48,888MicroStrategy’s business analytics and mobility platform helps enterprises build and deploy analytics and mobility apps to transform their business.
1:10 PM ∙ Mar 5, 2021
20,040Likes3,992Retweets

Incidentally the US Government holds ~70k bitcoin from various seizures that it hasn’t yet auctioned off. So at the moment MicroStrategy holds more bitcoin than the US Government - or at least more than they acknowledge having. Hopefully the US Treasury has some squirreled away somewhere just in case.


Taco Bell NFTs are the way and the truth

The excitement around non-fungible tokens (NFTs) continues to surge - roughly ~$400M worth of NFTs have been traded in the last 30 days, most notably across NBATopShots (~$260M), CryptoPunks (~$89M) and Hashmasks (~$22M). A lot of comparisons have been drawn to the summer of Initial Coin Offerings (ICOs) in 2017 where dozens of projects raised literally billions from investors with little more than a website and a whitepaper.

I think those comparisons are overly glib. ICOs are strictly financial tools - they were a way of raising money from people who wanted to make money. NFTs are more complicated - most come with no implicit rights or future cash flows. They are more fundamentally aesthetic objects than economic ones. They may carry financial value, but their value cannot be fully understood through financial analysis.

NFTs are a much bigger deal than ICOs were. One way you can see this is by considering how abruptly searching for NFT has grown recently, even compared to the previous hype cycle around ICOs:

NFTs are reaching a fundamentally broader audience, one much further out from the crypto community than ICOs ever reached. In the late peak of the ICO cycle there were a handful of projects with minor celebrity endorsements - Floyd Mayweather, Steven Seagal, Paris Hilton - but ICOs themselves were not something ordinary people knew or cared about.

NFTs on the other hand are everywhere - artists like Beeple and musicians like Grimes are making millions from sales. Billionaires like Chamath Palihapitiya and Mark Cuban are buying them. Christie’s is hosting auctions for them.

Even Taco Bell is making NFTs:

Twitter avatar for @tacobell
Taco Bell @tacobell
Our Spicy Potato Soft Tacos can now live in your hearts, stomachs and digital wallets. rarible.com/tacobell
Image
6:16 AM ∙ Mar 8, 2021
1,734Likes371Retweets

They sold out instantly, obviously. Maybe people are buying Taco Bell collectible NFTs as an ill-considered financial investment but it seems a lot more likely to me they are buying them because they like Taco Bell and it seems like fun. NFTs are pure distilled brand affinity. They confer bragging rights.

Sometimes bragging rights can be quite expensive. On Friday Jack Dorsey (CEO of Twitter) minted an NFT representing his very first tweet. The current bid is $2.5M.

Twitter avatar for @jack
jack @jack
just setting up my twttr
8:50 PM ∙ Mar 21, 2006
151,997Likes118,017Retweets

Owning this NFT doesn’t mean anything for the tweet itself - Jack or Twitter can still delete it. In fact someone already bought a tweet for $639 only to have the author delete it. Maybe the NFT is more valuable now as a part of scam history?


Property rights at the edge of reason

NFTs are going to pose some fun new zen riddles for the court system over the next few years. Take this story:

Twitter avatar for @CoinDesk
CoinDesk @CoinDesk
JUST IN: An original Banksy artwork bought by a group of crypto-savvy artists, burned in a park and memorialized as an NFT has sold for 228.69 ETH, or roughly $380,000. @zackseward reports
trib.alBurnt Banksy NFT Sells for $380K in ETH - CoinDeskAn original Banksy artwork burned by a group of crypto-savvy artists has sold for 228.69 ETH, or roughly $380,000 at purchase.
7:50 PM ∙ Mar 7, 2021
312Likes96Retweets

On the face of it it seems like a modestly clever way to cash in on the moment. Fractional ownership of high-value art (including works by Banksy) is already a thing. Burning something of value to imbue some new token with value is an old tradition in the crypto community. But it is … probably illegal?

First off in America (where this took place) the law says that artists "shall have the right … to prevent any destruction of a work of recognized stature, and any intentional or grossly negligent destruction of that work is a violation of that right." I’m no legal scholar but it seems like burning a $380,000 piece counts as intentional destruction of a piece of recognized stature. So there’s that.

More interesting are the questions raised by the NFTs they created. When you buy a painting or other visual work you own the physical piece, but not the intellectual property behind the piece. That remains with the artist. So you can’t take a Banksy, put it in a different frame and sell it as a new piece of art - that would be considered derivative work and thus an unauthorized commercial use of the IP.

On the other hand artists absolutely can and do reference each other - Banksy himself routinely references other famous pieces in his art. So the question becomes, is destroying a work of art and creating an NFT to represent it a financial creation or an artistic one? Is it primarily derivative (like reframing a Banksy) or transformative (i.e. a legitimate new work of art in its own right)?


Other things happening right now:

  • A hypothesis from Willy Woo about where some of the recent sell pressure might have been coming from:

Twitter avatar for @woonomic
Willy Woo @woonomic
Who has been selling? Apart from margin longs liquidating, my guess from the data, it's hedge funds rebalancing for end of Q1 reporting. Many have mandates to rebalance when an allocation gets too big; BTC has outperformed incredibly. (Sell your winners, buy more losers).
4:06 PM ∙ Mar 5, 2021
2,590Likes349Retweets
  • Paypal is acquiring cryptocurrency security/custody company Curv:

Twitter avatar for @TechCrunch
TechCrunch @TechCrunch
PayPal to acquire cryptocurrency custody startup Curv tcrn.ch/3efvO1I by @romaindillet
tcrn.chPayPal to acquire cryptocurrency security startup Curv – TechCrunchPayPal has announced that it plans to acquire Curv, a cryptocurrency startup based in Tel Aviv, Israel. Israeli newspaper Calcalist originally reported the move. And PayPal has now made an official announcement. Curv is a cryptocurrency security company that helps you store your crypto assets secure…
6:11 AM ∙ Mar 9, 2021
101Likes22Retweets

Share this post
Not investing is the riskiest decision
www.somethinginteresting.news
Comments
TopNewCommunity

No posts

Ready for more?

© 2023 KF
Privacy ∙ Terms ∙ Collection notice
Start WritingGet the app
Substack is the home for great writing