geoff: Today there are thousands
of cryptocurrencies.
And every day, it seems, a new
nonfungible token, or nft, is
marketed.
Our economics correspondent Paul
Solman explores the digital
asset boom.
Paul: Asset inflation gone wild.
So-called hard assets like
housing, up 32% since the
pandemic began.
Stocks up 84%, at least until
Russia invaded Ukraine.
But consider digital assets.
Bitcoin is up more than 600%
since the pandemic. Ethereum the
other main cryptocurrency more
than 2000%.
>> What if you could own the
virtual world?
Paul: And what about unreal
estate?
The right to occupy and build in
virtual worlds known as the
metaverse?
Prices doubled to $12,000 a
parcel.
Finally, famously, the digital
artist beeple sold a nonfungible
token of a work of art last year
for $69 million dollars.
>> We need a banana.
Paul: Economist Craig palsson
explains the idea behind nfts
with an example from 2019 art
Basel.
>> When Maurizio Catalan went to
Miami and duct taped a banana to
the wall and this artist then
said the asking price for this
piece of art is $120000.
Paul: There were three buyers.
>> The next day, somebody came
by and ate the banana.
And yet that afternoon, the
museum had duct taped another
banana to the wall.
What these investors were buying
was not the banana, which was
going to go bad within a week
anyway. They were buying a
certificate of authenticity.
Paul: Which is all an nft is, an
indisputable digital certificate
of ownership, stored on a
computer network that anyone can
verify, but no one can alter.
In the digital world, then, a
rotting banana can be a digital
image like bat-chomping heavy
metal icon ozzie are born --
icon ozzie Osborne's cryptobatz.
>> As crazy as it is it is just
a jpeg of what looks like a
cartoon bat.
Paul: College students Jonah
katsenelson and Rhett fruitman
tried but failed to get in on
the initial release of ozzy's
nearly 10,000 digital images.
A friend hit paydirt, however,
and flipped his a week later.
>> For four ethereum, which is
the equivalent of 10,000 us
dollars.
Paul: More than 30 times his
investment.
But still, just a minor exhibit
in the nft menagerie.
>> I have bored ape 6176.
Paul: Nft entrepreneur Lin Dai
bought his bored ape in
December.
>> It's a very cool one that
looks very rock 'N' roll.
Reminds me of Keith Richards.
Paul: And how much did you pay
for it?
>> At the time it was probably
just under $200,000.
Paul: $200,000.
>> It's probably worth about
$200,000.
400,000 right now.
Paul: I know what you're
thinking, this is well, bananas.
Like tulipmania in 1630s
Holland, when a single bulb went
for more than a house.
>> ♪♪ What goes up ♪♪
Paul: Not to mention the more
recent dot.com debacle,
>> ♪♪ Must come down ♪♪
Paul: Mortgage backed securities
scandal, etc.
So is digital mania just another
historic bubble bound to burst?
May be.
Maybe not.
Professional stock market
investor vitaliy katsenelson is
a digital asset skeptic, but
even he sees why prices have
been skyrocketing.
>> We live in a world that's
right now overrun by liquidity.
A lot of money.
A lot of money in the market.
That money is just going to a
new level of crazy.
Paul: Money being created by
governments the world over, to
the point investors are scared
it will lose its value.
>> Inflation is always going to
be a concern because you can
always print more money.
Paul: Law professor Tonya Evans.
Tonya: You avoid that when you
have hard capped money like
Bitcoin, for example.
Paul: Because there will never
be more than 21 million Bitcoin.
>> Bitcoin is this form of money
that doesn't increase in supply
and you can send it to anywhere
in the world.
Paul: Crypto investor and author
Eric yakes.
Eric: I can send it from my
computer to your computer.
There's no institution that it
has to get checked by and
verified by.
Paul: Further, says yakes, it is
great for immigrants working
abroad.
>> For the purpose of remittance
payments and for the purpose of
using it as a store of value,
which is a very big issue in
some of these low income
economies.
Paul: Which may also explain the
appeal of digital assets to
black Americans, who feel
discriminated against by the
financial industry.
Tonya: Systemic racism has
prevented black Americans from
meaningless participating in the
banking system, even with
excellent credit and a great
history.
If I were pulling out equity in
my home I would have to come up
against perhaps redlining. I
would come up against predatory
lending.
Paul: No wonder 23% of black
Americans report owning crypto,
vs. 11% of whites.
Tonya: As a matter of economic
empowerment and generational
wealth.
Paul: But what about the
criminal activity crypto has
facilitated?
The energy all those blockchain
computers gobble?
Or is the newfangled nest
curbing your enthusiasm?
>> You are wasting your time and
it's sad.
Paul: Then Larry David's new ad
is for fuddy duddies like you
and me.
>> It is a safe and easy way to
get into crypto.
>> I don't think so.
Paul: So, are skeptics making
the same mistake about nfts?
Especially if an investor's
crypto currency has exploded in
value, how better to spend it?
>> There's a certain point in
which an additional dollar to
somebody who's very, very
wealthy buys you very little in
terms of a change in your
lifestyle.
Paul: Economist Matt Stephenson.
Matt: But what economists call
positional goods, which is your,
sort of status position relative
to someone else, you have new
ways to flex your taste, your
wealth and status and so on.
Nfts would be would be very
useful for that.
Paul: So say you take the plunge
for a one of a kind cryptobat.
A historically hip ape.
One of the new Donald Trump nft
collection.
Couldn't trump at Rushmore, say,
be the next Campbell's soup can,
which when first exhibited in
1962, was thought of as a joke.
And how much does a Campbell's
soup painting by Andy Warhol go
for now?
>> Many millions of dollars.
Paul: Contemporary art dealer
Alex glauber does not sell nft's
yet, but he knows that value
depends on belief, in dollars,
gold, art.
>> Value is socially
constructed, I mean, there's no
intrinsic value to art.
And it is based on consensus.
Paul: It does not have to be a
consensus of a whole lot.
>> No, the reality is a market
is only as smart as the people
holding the money.
When it comes to art prices,
especially at auction, it only
takes two competing individuals
to drive a price up.
Paul: Hey, there are
non-aesthetic reasons for nfts
as well.
To be part of a community, for
example.
>> It is an exclusive
membership.
Paul: Like the bored ape yacht
club to which Lin Dai belongs,
its images coming with
commercial rights.
>> I can actually make t-shirts
or hats with my ape design on
it.
Paul: And of course as
certificates of authenticity,
nfts can have more practical
uses, a deed to your home, a
college diploma.
So, investor katsenelson, still
a skeptic?
>> This is not a serious
investment because you have no
idea what it's worth.
Think about 1999 dot com bubble,
you were making a lot of money
until you lost it all.
Paul: Katsenelson worries most
about unsophisticated investors.
And indeed nft's have plunged in
value of late.
We know how famously volatile
crypto prices are.
>> A lot of times they're
putting their life savings in
this investment.
At some point they will lose
most of their net worth, and
that's what really pains me.
>> As an educator and a lawyer,
I would never tell anyone to
push all of their wealth into
this space.
Paul: So, too risky professor
Evans?
Tonya: I think the risk is it
not participating and that's
going to be critically important
for a nascent asset class like
crypto.
Paul: Still too nascent for me,
I should confess.
But then so it was in 2013, when
I first reported on Bitcoin at
$130 a coin.
Today, somewhere around $40,000.
For the pbs newshour, wiser
perhaps but not much richer,
Paul Solman.