Big Brands and Big Banks Explore How to Play NFTs, the Metaverse, and Blockchain Tech
Ric Edelman: Welcome to the program. We all know the mess the world is in, so we're going to change it up this week and we're going to talk about the fact that the world's going digital. That includes the music industry and major retailers. DJ Justin Blau has teamed up with an electronic musician that goes by the name of Diplo. They created a song and sold 20% of the streaming royalties to fans via NFTs. Snoop Dogg sold an NFT attached to his latest album and generated $40 million in sales in five days. DJ Steve Aoki says he's made more money selling NFTs than he did from 10 years of selling records. And at Universal and Sony, they paid $500 million to buy Bob Dylan's songbook. And just as I predicted they were going to do; they are now getting ready to sell Bob Dylan NFTs. Spotify is going to add blockchain technology and NFTs to its streaming service to boost artists earnings. Snoop Dogg's a prominent NFT collector, Kings of Leon and Grimes have sold NFTs of their music. Warner and Universal have forged partnerships with NFT projects, including a virtual band featuring characters from the Bored Ape Yacht Club (very popular series of NFTs).
Meanwhile, Cult and Reign, which is a high-end maker of sneakers, sold almost 1200 pairs of real sneakers and then paired each of them with an NFT. The total price prepare for both the real and virtual sneakers? $1,635. $1,600 for a pair of sneakers. The digital luxury market is going to be $55 billion by the end of this decade. That's according to Morgan Stanley. That'll be 10% of all the revenues in the entire luxury industry. Gucci sold 400 digital versions of its famous handbags for $6 each. That sparked a frenzy, and online gamers started trading the Gucci NFTs. The price eventually hit $4,000 for a single handbag. That's more than what the real world handbags cost. So guess what Gucci did? They sold another set of NFTs - 500 “Super Gucci's”. They didn't sell them for $6, they sold them for $5,000 and they immediately sold out. Burberry created a collection of Sharky B characters for $300 apiece. They sold out in 30 seconds. They now trade for $1,000. Dolce and Gabbana produced the Genesis collection. They collectively sold for nearly $6 million. And this includes the Impossible Tiara, a virtual crown with digital jewels. It sold for 100 Ethereum about $300,000. $18 billion worth of NFTs were traded last year and this is just the start.
Will Instagram Become a Shopping Platform?
Mark Zuckerberg says NFTs are coming to Instagram, which Facebook owns in a big way. Over the next several months, you're going to be able to bring NFTs in and eventually you're going to be able to mint things within the Instagram environment. Zuckerberg says he's going to turn Instagram into a shopping platform.
Citigroup says the metaverse economy could be $13 trillion by the end of the decade, with 5 billion unique visitors. There's only 7 billion of us on the whole planet, and they're talking about 5 billion engaging in the metaverse over the next eight years, Citigroup says. A third of the digital economy is going to shift to virtual worlds and then expand 25%.
Ukraine Turns to NFTs To Help Fund War With Russia
And guess who's getting in on this action right now? Ukraine and their efforts to repel the Russian invasion, to raise the money they need to fund their military and to feed their people. They're selling NFTs, all of it inspired by the invasion. The proceeds are supporting the army and civilians. Each NFT is inspired by a news headline or a social media post tied to the invasion. The proceeds are going to the Ukrainian Ministry of Digital Transformation. I wonder if the United States has a Department of Digital Transformation. I think Ukraine's ahead of us. An NFT of the Ukrainian flag recently sold for nearly $7 million and the proceeds are supporting the armed forces of Ukraine.
Meanwhile, there's BNY Mellon, the oldest bank in the United States, founded by Alexander Hamilton. They are now the primary custodian for assets backing the U.S., D.C. stablecoin. It's a mix of cash and US Treasuries. $52 billion of this stablecoin are in circulation and Bank of New York Mellon is the primary custodian. They're also exploring opportunities to custody the crypto digital asset itself.
BlackRock is also exploring how to serve clients with digital assets. CEO Larry Fink confirmed that BlackRock, the world's largest money manager with over $11 trillion in assets, says that BlackRock is going to do this. Larry Fink used to be a naysayer about crypto, and he's the latest naysayer to change his mind. Last July, Larry Fink said he wasn't seeing much demand for digital assets. He now says the Ukraine war is changing everything. He just wrote his annual shareholder letter and he said, "A global digital payment system can enhance the settlement of international transactions while reducing the risk of money laundering and corruption. Digital currencies can also help bring down the costs of cross-border payments". Larry Fink says digital currencies could get a boost from Russia's invasion of Ukraine. He said, "The war will prompt countries to reevaluate their currency dependencies. A global digital payment system can enhance the settlement of international transactions while reducing the risk of money laundering and corruption". With all this client interest, BlackRock is studying how it can make use of digital currencies, stablecoins and blockchain technology. A year ago, Fink said BlackRock clients had shown little interest in this.
Looks like that has all changed. In fact, Goldman Sachs released a survey and found that investors are still very bullish about crypto. 51% of the clients that Goldman Sachs surveyed have crypto exposure, a 20% increase over last year, and more than half say they're going to increase their holdings over the next year or two. 32% say they're going to significantly increase their investments in digital assets.
And then there's something called ether rock. It's a series of clip art rocks painted; different colors minted on a blockchain. They sell for an average of $600,000 as NFTs. But recently, one owner wanted to sell his rock for 444 ether (about $1.2 million at the time). But instead of listing it on the digital marketplace for 444 ether, he listed it for 444 WEI. Ether and WEI are related kind of like dollars and pennies or in this case, fractions of pennies. It takes a quintillion WEI to make one ether. In other words, 444 ether worth $1.2 million, but 444 WEI are worth less than a penny. Instead of selling his NFT for a million bucks, he sold it for less than a penny. Demonstrating the risks that continue to exist in the world of digital assets and why you either need to be careful or be working with a financial advisor who can be careful for you.