This week, the crypto community headed to Nassau in the Bahamas for the inaugural Crypto Bahamas conference.
Like most conferences, panels fill up the agenda and on Wednesday the topics at Crypto Bahamas ranged from nonfungible tokens (NFTs) to crypto in sports and to asset allocation in Web3. During one particular conversation, titled “Evolution of NFTs: Culture, Utility and Regulation,” panelists had some insightful musings on the NFT market.
To put the Crypto Bahamas conference into context, Sam Bankman-Fried’s cryptocurrency exchange FTX moved its headquarters from Hong Kong to the Bahamas in September 2021. It recently inked a multi-year partnership with Anthony Scaramucci’s investment firm SkyBridge Capital and its events arm SkyBridge Alternatives, or SALT. They jointly presented the conference.
That’s why the NFT panel consisted of multiple perspectives from Tristan Yver, head of strategy at FTX US, Joseph Doll, attorney at Fenwick law firm, Roham Gharegozlou, the CEO at Dapper Labs, and Sarah Hammer, the managing director of The Stevens Center for Innovation in Finance at The Wharton School. Zack Guzman, writer for the Meta-owned newsletter platform Bulletin, moderated.
Gharegozlou pointed out how new the NFT market truly is when “most people have only been thinking about it for a year and a half,” making valuations “very immature.” As the CEO of Dapper Labs, the company behind NBA Top Shot, Gharegozlou recognized that “utility, rewards and the how you value and NFT is primarily based on the strength of that of the community.”
He added that a good way for an NFT collection to build a strong community is to have multiple tiers of scarcity. In the case of NBA Top Shot, at the higher price end, there is extreme scarcity, but there are also millions of “common” moments so that people can “get their first NFT and see how it feels without breaking the bank.”
Yver echoed that the current valuation and pricing model for NFTs are based on a collective perception of value based on the number of people willing to buy an asset for a certain amount. He anticipated a “movement away from this consensus view to a more unique singular view where people buy things that resonate with them rather than what resonates with a larger community.”
Doll chimed in to say that “communities need to be thoughtful about democratizing access.” There are some “massive” barriers to entry to certain projects, he said, including not being early enough or not having enough capital at the time. He questioned, “That’s not what crypto is about, right? It’s kind of about the exact opposite of that.” Democratization, he suggested, can come in the form of derivative projects at better price points.
Another important point brought up by Yver was the reality of scams, especially on Discord and Twitter. He said that “we need to move past security aspects to be able to really bring in the next large mass of users.” He recommended talking among family and friends or asking a Discord moderator to make sure “you click the right link when minting that NFT” because “wallet security sucks right now.”
Gharegozlou even said that Elon Musk, the new owner of Twitter, should use Web3 to fix Twitter’s fraud problem, just as Discord should use Web3 authentication and verification as well. “Once NFTs are the sort of identity bridge across all these different social networks, identity and assets, authenticity, provenance,” then the system can be more resilient he added.
When asked what “main alpha” the audience should bear in mind, Doll said to engage with and be part of these NFT communities even if it’s “scary” because getting scammed is a “part of the journey.”
Sarah Hammer, who leads the Cypher Accelerator at Wharton business school, said that the school is launching an incubator specifically for NFT projects in partnership with Dapper Labs because the “NFT model is a business model for the future.” She emphasized that the greatest way to grow and innovate in the space is to increase education efforts in order to get more people learning and working together.
Recently, the Bahamian government allowed residents to use digital assets, including the world’s first central bank digital currency, or CBDC, to pay for taxes in 2022.