Making NFT Investment Mainstream with Andrew Steinwold from Sfermion

May 21, 2021

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HOST:  Hey, everybody.  Welcome back to the Unstoppable Podcast.  I'm your host, Diana Chen, and I'm here today with our guest Andrew Steinwold.  He is the managing partner at Sfermion, and he's a podcast host as well and a content creator at Zima Red.  So, I'm very excited to chat with him more about all his past experiences and all of his knowledge about NFTs.  He is probably one of the most knowledgeable people about NFTs out there.  So, welcome, Andrew.  Thanks so much for being here.

ANDREW STEINWOLD:  Thank you so much for having me.

HOST:  So, let's start with just talking a little bit more about your background with crypto.  How did you get interested in crypto initially, and how did you start learning about NFTs?

ANDREW STEINWOLD:  Yes, so initially, I learned about bitcoin in 2013.  I was in college at the time.  I don't know where exactly I read about bitcoin, but I think it was probably Silk Road article somewhere, or something like that.  Then, I actually immediately was like, okay, I need to buy this, because I think it's going to go way higher.  I had no idea what it was.  I kept watching technology.  No idea.  So, I bought at around 200, went up to 1000 after like a couple weeks, two weeks, or something like that, and I was like, oh my gosh, I am amazing, like I'm so smart.  And, then, it quickly pops and went right back down to 200, and I sold it at the bottom, of course.  So, that was my initial kind of entryway into bitcoin and crypto, more broadly. 

After that experience, I was like, you know what?  People in the forums, because I was getting all my information from the forums, they were like, hey, bitcoin is dead, but blockchain will survive.  That's the real deal here.  I thought, okay, you know what, let me tap in to blockchain.  It took me about I'd say four weeks or so of reading, learning about it for it to really track in my brain about what blockchain is.  When it did track though, I was like, okay, wow.  This is some really special technology.  It's going to have massive ramifications for all sorts of different industries.  I want to dive in.  So, that kind of started the journey there.

HOST:  That's awesome.  That's a pretty crazy story, and unfortunate, but I think a lot of people can probably relate to that.  So, back in 2013, those were still like super early days.  How did you go about learning more about bitcoin and blockchain?  Like, what were your go-to resources back in the day?

ANDREW STEINWOLD:  So, it was bitcoin talk forum, and then just literally Googling bitcoin.  Like, what is bitcoin?  And, just finding all sorts of resources there.  It was a pretty slow process for me.  I'm definitely not technical.  I'm not a fast learner, so it was just kind of slowly, slowly digesting this information, and then like one day it kind of clicked, and I was like, okay, wow, this is it.  That's when I decided I need to get involved in this industry.  I want to go deeper. 

 In 2014, I tried to do a remittance start up utilizing like a ripple.  I was living in Dubai at the time, because after—I actually dropped out of college.  I moved to the middle east to go work for a Saudi hospitality conglomerate.  I was doing like restaurants, hotels, construction, really random, but nights and weekends were spent just diving deep in to crypto, blockchain. 

Living in Dubai, 90% of the population is from somewhere else.  So, on salary day, because it's once a month over there, you'd have everyone lining up around the block to send their money back to wherever they were, like the Philippines, India, wherever.  I would talk to people and say, hey, how much money does this UAE exchange, the remittance provider take.  They'd go like 10%, 5%, whatever, and I was just like that's crazy, because I just learned about Ripple, and I felt like Ripple is the future.  Like, I was obsessed with Ripple back in 2014. 

I was like, okay, I need to set up kiosks that utilize Ripple technology, and on the back end we'll convert like the UAE dirhams into Philippine pesos, and on the back end, it'll transfer to like XRP, and then into that baseline currency, and then, somehow, we'll figure out a way to distribute the pesos to people in the Philippines.  How is this all going to work?  I was going to figure it out.  I wasn't actually sure at all, but I remember meeting with multiple people that were developers and trying to pitch them the idea, because I needed someone to help build it with.  Anyway, it went nowhere, but it just kind of kept the fire burning of my interest in the overall space. 

HOST:  Got it.  So, how did you shift from working on that, which you were obsessed with Ripple back in 2014, you and everybody else, right.  A lot of people today, still.  But, how did you shift from working on that project to then learning about NFTs, which most people never even heard about NFTs until this year, until the last few months, but you actually wrote a whole piece about the history of NFTs, and it goes way, way back.  So, how did you discover NFTs, and then maybe give us like a brief cliff notes history lesson on how NFTs originated, and take us all the way back.

ANDREW STEINWOLD:  So, basically, fast forward to 2016.  I'm back in the States.  I'm back in Chicago.  I tried to do another start up utilizing blockchain as accounting for small local governments.  I wanted to track property tax dollars and see where they were going locally.  Because, my friends always complained, where are our property tax dollars going?  I thought if we can create like a synthetic token that tracks each dollar in, then we can monitor where that money is being spent.  Again, it went nowhere. 

Then, 2017, portfolio increased enough in value where I could launch a fund.  So, I launched a crypto fund, as you did in 2017, and I knew nothing about the fund, so I teamed up with a good buddy of mine, who's a private equity guy who knew all about funds.  He's still my partner today.  His name is Dan Patterson. 

So, we operated that, and we were successful with that.  But, we didn't crush it.  Like, we didn't become the polychains, the multi-coins of block towers.  We didn't become one of the dominant players.  If you're not one of these major players, you're kind of cut out of all the great deals and all the great access, and also, on the trading side of things, we weren't these professional quant traders.  So, our trading was good, but it wasn't—by no means, we're not like John Berg, E.R.W. (phonetic), who are like these very professional high-frequency trading firms here in Chicago.  

So, basically, we were looking at what niche within crypto can we enter and become the dominant players in? NFTs, luckily, that was kind of the niche that I stumbled in to after going to a conference in February of 2019.  It was NFT.NYC, which like the big NFT conference, and there was like 200 people there trying to figure what's going on, talking to people.  I meet one guy.  His name's Gen or like Bird, he goes by both monikers.  I actually don't even know his real name.  He was the one who was basically—he said this in different terms. 

But, what I got from the conversation was, okay, 4.6 billion internet users.  That's how you need to access this market.  Attached to a global un-censorable 24/7 financial system that is crypto.  So, anyone can transact with someone in China, UK, America, Venezuela, it doesn't matter, anywhere in the world.  Then, on top of that, we just created NFTs, which are like digital property rights. 

What's most exciting about that is it's like user-generated assets.  So, you don't have to be an institution to like issue this stock or this bond, and also, in terms of crypto knowledge, you don't need to be this really technical person to build a new blockchain.  You can just go on to a platform, like open - -, or whatever, and start like minting NFTs. 

That's really exciting to me, because that democratizes access to assets.  So, you're trying to like biggest population, 4.6 billion attached to crypto financial system, which is seamless, comparatively, to the traditional, and then user-generated assets.  I was like, oh my gosh, world's biggest market.  Got to dive in.  So, I started researching and investing like crazy.  Then, in September of 2019, I launched Sfermion, which is the NFT funds.  Then, in October 2019, I launched Zima Red, which is the content brand.  It's a newsletter, podcast, all about NFTs. 

I was actually trying to figure out—I think I wrote that history of non-fungible tokens post 2019.  I was trying to figure out, okay, because I was looking for that.  I was like what is the history of this stuff?  Like, how far back does it go, and what are the lessons that I can learn from this?  It didn't really exist.  I don't think it existed all.  So, I said, okay, I'm just going to figure it out and write about it. 

That's like what my process has been for the newsletter so far, is that I'll just have some like question or thought, and I'm like, okay, cool, I'm just going to write out this thing, because I want to learn about it.  It's kind of like learning in public.  It was really cool, because what I found was that the history of NFTs went way back, like way farther than I thought.  You had colored coins back in 2013, which is kind of like on bitcoin, and I think the - - was actually involved in that in some sense.  There were a lot of people involved, but the - - especially. 

Then, in 2014, I think we had a counter party, which is like a bitcoin fork blockchain, but it was supposed to be more programmable than bit coin.  Then, you had people that were issuing rare pepes on counter party blockchain, which rare pepes are like that meme thing, and people were trading those and stuff like that.  Then, I think we had some other stuff, like spells of Genesis, which I actually don't even remember what blockchain that was on, but it was a super early project. 

Then, recently, I learned about Etheria, which is a NFT product that was built on Ethereum back in 2015.  So, technically, that's a first, because I actually credit CryptoPunks as being the first NFT project, but I guess Ethereum is.  But, CryptoPunks kind of came in 2017.  That made it more popular, because I don't think Etheria really took off. 

Then, after CryptoPunks, of course, that was built on Ethereum.  After CryptoPunks came CryptoKitties, and that's what kind of made this space kind of explode and become much more well-known.  So, that's kind of my history of how I actually got to that post and how I learned about it and how I thought about it.

HOST:  Got it.  So, okay, put yourself back in the shoes of when you first heard about NFTs.  How would you explain NFTs at a very basic level to somebody who's in those shoes that you were in back in 2017 or whenever you went to NFT.NYC and learned about all this in the first place?  Like, what would be your 30-second or one-minute pitch about what NFTs are?

ANDREW STEINWOLD:  So, I would just say that NFTs are unique digital assets.  Non-fungible stands for basically just unique, and fungible means interchangeable.  So, like a fungible good is like a bitcoin or like a dollar, so it doesn't matter if I have your bitcoin, you have my bitcoin, or I have your dollar, you have my dollar.  They're both still worth the same.  They're the same asset, essentially.  But, a non-fungible token, a non-fungible good, means it's totally a unique good.  So, like, my computer, sure there's other Macbook Pros, but no-one else in the world has this exact computer, so technically, it is a non-fungible good.  That's really how I describe it.  It's a unique digital asset. 

HOST:  Got it.  I think for people who maybe have a hard time wrapping their minds around this, I think the hardest part for them to grasp is like why would I pay so much money for a JPEG, basically, something that I can just take a screenshot of or download on to my computer, or whatever the case may be, and I can just see it?  What is it about putting it on the blockchain that makes it like so much more legit and so much more valuable?  What would be your response to that? 

ANDREW STEINWOLD:  That's a really good question.  So, the answer is I don't think anyone truly knows.  I think it's up to the buyer and the seller, as to like why the reasons they're on these platforms and using these things, really.  But, for me, it's great, because there's increased liquidity.  That's number one.  So, if like I guy a piece of art, people spend millions and crazy amounts on art all the time, and no one really bats an eye at that.  I think Salvator Mundi sold for like $450 million.  Of course, that made headlines, but people were like, oh, that's normal.  It's a piece of art.  It's made by Leonardo DiVinci, or whoever, I don't even know.  But, anyway, people think that's totally normal.  But, when you digitize that, it's like suddenly more shocking, which is funny, because it's still like paint on a canvas versus like pixels on a screen.  So, it's not too dissimilar.  They both still are like why is that valuable? 

So, I think that, again, going back to the liquidity, it's like if I purchase a painting, it's harder for me to get liquidity, because I have to go to other people within the commercial art market and kind of showcase my piece and talk to them and make network, blah, blah, blah.  Here, it's all digitally native assets, so I can just post on it on Twitter, I can post about it on Facebook, and you can do the same with a physical piece, but the financial rails are internet native as well.  So, instead of building a relationship with someone and selling them your physical piece over weeks and months, if someone likes it, and they see it, they can buy it like immediately, and you can have that transaction go through right away.  You don't need to go through a gallery.  It's just direct peer-to-peer, so I think that increased liquidity makes people more willing to spend greater amounts. 

Then, on top of that, these things are bought and sold in crypto currency today, and people within crypto, they just quadrupled their net worth, roughly, in the past year or so.  So, it's like people have money to spend.  The rails, the financial rails, make it extremely easy, and easy to transact, and the greater liquidity makes it easier to transact, so it's like that's kind of why I think that we're experiencing this environment that we're in right now.

HOST:  Yeah, it is interesting how people don't bat an eye at spending so much money on traditional art, but then it's harder for them to wrap their minds around the digital art.  One thing that I've seen some people do, and I think Duncan Cock Foster from Nifty Gateway loves doing this.  He'll get these digital frames and actually upload his NFTs there, so it's hanging in his room on his wall, and he can look through all of his NFTs like in this frame on his wall.  I think that's like a good way for people to sort of like take baby steps towards transitioning into the world of NFTs for people who are like sort of stuck in that traditional art mentality. 

But, I've also talked to other people, like Yat Siu from Animoca, who say why do we have to keep making this comparison between traditional art and NFT art?  I think maybe what we need is more of a mindset shift.  An example that I've heard some other people say is like people that I've talked to on podcasts who have kids that are maybe like 10 years old or something, they'll explain all of this to their kids, like NFT art, like show them their NFT art and their galleries and things like that.  For their kids, it's like, yeah, this makes 100% sense.  There's no 10-year-old out there that questions it, because they sort of grew up in this different world.  For them, this is just more understandable innately, so some people say that maybe for us older people, it just requires a shift in mentality, and not so much like let's just keep like handholding and babying people and letting them take baby steps, like putting it in a traditional frame, and all of that.  Like, I'm just curious which side of the coin do you stand with that?

ANDREW STEINWOLD:  I mean [garbled].  That is difficult to answer, because it just kind of depends on whatever your objective is and who you're talking to.  So, I guess if you're talking to an investor, you want to kind of simplify what you're doing as much as possible and break it down in ways that are understandable to that person.  If you're talking to someone's little brother or little sister, I think what, 18 and 20, or something like that, they're pretty young, and when I talk to them about NFTs, they're like, as you mentioned, they totally get it.  There's no like, wait a second, so it's like a digital painting or like a digital sword?  I don't really understand.  Right away, they understand.  So, I guess to answer the question, it's really all about audience and what your objective is with that person.  It's kind of a - - question.

HOST:  For sure.  Alright, so last question about yourself, before we move on to talk about Sfermion.  So, you are obviously the go-to source for a lot of people to learn more about NFTs in the space, but I'm wondering who are your sources of truth for your learnings in this space?

ANDREW STEINWOLD:  That's a really good question.  I am a part of some discords that are great, and I also talk to a lot of people on Twitter, and also just talk to a lot of people on video calls, phone calls, stuff like that.  So, it's basically all the people that have been in this space for quite some time.  I find I just try to follow them, listen to them, and see what they're talking about and discussing, because I think with that experience, especially within crypto, when things are moving at lightning speed, not only moving at lightning speed, but changing at lightning speed, that's important, because a situation that you think is like, oh, this will never happen, but then it happens, it's already happened like four times, and then you can talk to someone who's been through that.  So, that's really advantageous.

But, in terms of specific people, it's like all the NFT OGs, Snowfro, Pranksy, Gen.  I mean, yeah, there's just so many.  We can go through my podcast list, my podcast guest list, just kind of go through them.  Then, there's going to be people that I didn't name who are like why didn't you name me, but there's—this space is filled with people that want to share information that they have.  So, I just think keeping an open mind, reaching out to these people, and seeing what the talk about, what they write about is the best way to do it.

HOST:  For sure.  Alright, so let's move on and talk more about Sfermion.  You already kind of gave us like the back story, how the idea came about, the genesis, all of that.  You invest in actually a couple of companies that we've had the founders on, Alex Mesmej from Showtime and Steven Young from Niftify, but talk a little bit more about when you get pitched an idea for an NFT project, because we're still in the super early days of NFTs, the metaverse, all of this good stuff, it's very hard to imagine all the use cases that can come about in the future. 

Like, if we think back to like the mid-90s, or even late 90s, when the internet was just becoming more mainstream, I don't think anybody could have envisioned social media at the time, let alone like Ubers or Air B&Bs, and look at how we've evolved.  So, when you get pitched a new idea for an NFT project, how do you—what's your process for thinking through whether this is a good idea and something that's going to catch on, or whether this is a bad idea and it's going to tank?  Can you share a little bit of your thought process there?

ANDREW STEINWOLD:  Really good question.  So, because the NFT ecosystem is very new.  It's very diverse.  It's kind of confusing sometimes.  What I try to do is I try to distill all the information down to its simplest form, or what I think is its simplest form, and look at team, product, token economics, community, market, data, risks and just basically assess each product on those core fundamentals.  It's a pretty simplified approach.  There's no rocket science in it.  Basically, doing that, especially with the team, is quite important, and looking the market.

So, for example, this is a really basic example, but if a great founder, a great team, comes to me and says, hey, we're going to build an NFT marketplace and none exists, it's like, okay, great.  That's something that I'm super interested in.  But, today, like a team comes to me and says, hey, we're going to build an NFT marketplace today, then it's a little bit of a harder sell, even if they are a great team, because, while totally qualified on the team side, but also on the market side, it's like there already exists quite a few marketplaces, not to say that there can't be more.  I'm sure that there could be many more.  But, it's kind of like an inundated space right now.  So, I think those core fundamentals, but the two most important being team and market is how I kind of assess each project.

Really, at the end of the day, a lot of this is venture-style investing, especially like, of course, on the venture side, it really is venture-style investing, but also on the token side.  There's two kind of types of tokens that we invest it, NFTs directly and then also actual tokens themselves.  So, we kind of use the same methodology, just because it's very, very hard to determine what's actually going to happen, except on the NFT side. 

We kind of like to bifurcate the NFTs directly in to five rough categories.  So, it's collectibles; these are assets with little-to-no utility, like CryptoKitties.  Number two is game assets; they're assets with high levels of utility within our universe.  It's kind of like Axie Infinity, where there's some sort of stats associated with your asset.  Number three is virtual land.  These are like user-owned social e-commerce gaming and creative platforms all rolled in to one, and the cryto box those - - Sandbox.  And, then, number for is crypto art; it's just art tokenized and put in a blockchain.  Number five is other; it's like domain names, property tiles, insurance, all these other random categories that are quite small today, but one day will be very large. 

So, out of that bucket, there are certain categories that we like more than others.  So, for example, as a firm, we really like to focus on collectibles, game assets, and virtual land.  We have very kind of minor allocations to art and other.  But, we can see that definitely evolving in the future.  But, yeah, we still take that same fundamental approach of looking at those basics for each asset.  But, when we do identify, less say for Axie Infinity, we're like, okay, Axie Infinity is great, fundamentally sound project. 

Now, we have to identify how are we going to make an investment in this project.  You have to look at what are the investable assets?  So, for Axie Infinity, they have Axies, which are the creatures.  They have items.  They have land.  They have this—I think it's changing lately from small love potion to smooth love potion.  Maybe it's always been smooth.  But, they have a liquid token called smooth love potion.  They have the governess token AXS.  So, you have to decide are we going to do equal weighted basket?  Are we going to double down on the Savannah land, because it produces more resources than Arctic land, or whatever, even though that's not true.  But, yeah, it's basically developing mini theses after you've identified fundamentally great projects, and then diving deeper.  So, that was a very long-winded answer, but that's what it is.

HOST:  I'm really glad you broke that down.  It's really helpful to understand like the categories of NFTs that you invest in or tokens that you invest in.  And, it's interesting that you say that the three categories that you're looking at the most are the gaming, virtual lands, and the collectibles, because I would say that gaming and virtual lands are sort of like just starting to rise up in the space.  When we think about like NFTs in the mainstream, most people think about NFT art, and that's pretty much like where the thinking stops.  So, right now, in this sort of like first really big NFT wave, we're mostly looking at NFT art. 

Moving forward, if you were to think about the next NFT wave, what's the next thing that you think is going to come up?  Is it going to be like games?  Is it going to be virtual lands or a new collectible, or what would be your prediction?

ANDREW STEINWOLD:  Obviously, it's a prediction, so I'm just guesstimating.  So, it's probably not going to be accurate, but I would say what we're seeing is we're seeing a trend towards more functionality, which I think is pretty cool.  So, it'll be like instead of just being, hey, this is a collectible or this is a piece of art, and it's fun to look at and fun to kind of collect, it's more so this is fun to look at, fun to collect, and it does X, Y, Z.  Right?  I think like Gary V just released his new—

HOST:  V friends?

ANDREW STEINWOLD:  Yeah, V friends.  Some people love them, some people hate them.  I don't really—it doesn't really matter to me.  But, I think that I love that he's adding in functionality that is very applicable, because I know he hosts a lot of like big conferences and stuff like that, and I know that a lot of people want to go to those.  So, I think it's cool that he's putting in functionality within these tokens.  So, yes, they are collectibles, and if you like Gary V, you should like these things, probably.  But, also, the increased functionality is very cool.  It's not just like tickets to the conference.  It's like all sorts of different things.  It's like one-on-one Zoom call, one-on-one in-person meetings.  There's like a tennis match or something like that.  So, it's like getting fun in and he kept kind of switching things up a bit, which I think is exciting. 

Also, Maddie DCL Blogger, who's kind of like a, I don't want to say influencer, but a thought leader in this space, I guess, he just released a product called Medi-key, which I think is really cool.  It's basically—it's almost like an access token, where it gives you kind of benefits and access to all sorts of different projects and ad space on his website and all sorts of cool use cases. 

So, I like the idea of a token that is maybe collectible, but also has some sort of increased functionality, and that's the direction that we're headed in.  Beyond that, I think it could really funky in like sci-fi, and I've talked about this quite often, but there's a project all Alethia (phonetic), Alethia AI.  What they're doing is they're training AI models, and they're kind of packaging that AI personality, if you will, like in to an NFT, and you can take that and plug it in to your NFT, so I can take my CryptoPunk and give it like Darth Vadar's like personality, and we can have a conversation, and there's like certain AI algorithms that will be trained for like a week.  Therefore, they'll be relatively intelligent.  Or, certain algorithms can be trained for like a month, and then they'll be much more intelligent than the week, the one-week-trained algorithm. 

So, I think that's super interesting, because it's like, okay, wait.  So, we're now taking personalities that are NFTs themselves, plugging them in to our NFTs, and now being able to create content by just talking to an NFT, and that's great for like Twitter, it's great for like marketing in general.  So, I think that, to me, is like the more NFT 3.0 use cases that are hard to imagine.  I think we're going to have more of those soon.

HOST:  Yeah.  A couple points that I thought of as you were talking about them.  The first is it's funny that you started by talking about like added functionality to NFTs, because one of the questions I got on Twitter when I announced that I was going to be interviewing you is what are his thoughts on NFTs for event ticketing?  So, I think the Gary V example that just came out today, we're recording this on May 5th, and this is when Gary V's NFT just dropped.  But, also, like I know there's been music festivals that have attached an NFT to their tickets.  Like, the first 500 people that buy a ticket will get an NFT, or something like that.  So, it sounds like you're pretty in favor of combining the traditional NFTs that we know of today with real-life things, like attending events or meeting with people or things like that.

Then, the other part of it, too, is like I know you guys are kind of deep, or at least like you are, pretty deep or pretty interested in the metaverse and how we envision the metaverse moving forward, and I just checked out Alethia AI, and that sounds super awesome and super cool, and also a little scary.  I think that sums up whenever I think about the metaverse in the future is like I'm super excited, but also like scared, because how—I guess like from the way you think about it, where do you draw the line between this technology, like combining NFTs with AI and VR, how do you draw the line between where this is really cool and really fun stuff, and where it sort of like turns in to like black mirror stuff and gets scary?

ANDREW STEINWOLD:  That's a really good question.  I'm all for experimentation, especially at this stage.  Because like NFTs didn't really exist let's call it like three or four years ago.  It's a totally brand-new technology, and we have to just kind of experiment.  We have to just try things and see what works, see what doesn't work.  But, we're at the stage where the stakes are relatively small, so if we mess up by making like an AI algorithm NFT, or whatever, that is like really rude and like maybe racist or something terrible like that, that's like okay.  It's like bad, it's very bad, but at the same time, it's like we're not going to—it's not going to massively effect Ethereum, and we're not going to make Ethereum break or anything like that. 

So, I think that there will be some black mirror-esque moments and things that happen.  But, overall, I think we're turning in the correct direction of making technology that is not so scary, in the sense that like—for example, we spend all day on screens.  We're on our computers, our cell phones, whatever, and we know it's not very good for us. 

In theory, if it was like 20 years in the future, what it would show, in like some Black Mirror show back then, would be us like having a screen attached to our forehead, and like we wouldn't be able to see anything, and we'd be like these screen humans.  It would make it really dystopian, but in reality, what's the real case is, no, we have the freedom to put down our phone or close our computer, or do whatever we want at any time.  We just choose not to, because we enjoy it.  So, that's not very dystopian.

So, like whatever we imagine that's dystopian is always less crazy and spooky than what actually is created, in my opinion.  Maybe I'm wrong.  Maybe this is the time where like it actually is black mirror, and it does get really crazy, but I think, in general, people that design products don't design them like that.  So, I'm just confident that we need to keep experimenting.  Yeah, there are going to be mess-ups, but that's just like how we move forward, and you learn most from your mistakes, obviously.  Just throw stuff at the wall and see what sticks. 

HOST:  Yeah, for sure.  You bring up a good point there, which is like we always still have the choice to put down our cell phones, put down the VR set, and go set outside, go play a game of soccer outside, do something in the real world.  I guess the tough part for me is like envisioning a world where, maybe in 20 years or maybe even more than that, everybody operates all the time on the metaverse.  It's like everybody, when you work, like say we're fully distributed, like there's no such thing as going into the office anymore.  But, then, every company has an office on like Decentraland or Cryptovoxels, and everybody just has like a VR headset on all the time, and they go and like hang out by the water cooler on Cryptovoxels in their office space, or go like to this co-working space that's like in the metaverse and all this stuff, which makes it nearly impossible to actually put down the technology and step outside and do something, because it's almost like that's not the place where you socialize, and that's not the place where—you know, you're going to be a loner, sort of like. 

It's sort of like back in the day where you picture these gamer geeks in their basement by themselves with a headset on playing games and not having friends, not going out and socializing.  And, then, I'm wondering will that narrative ever be flipped, where it's like the people that want to like go outside and play a game of soccer are going to be—like, they won't have anybody to play with, because everybody is going to be stuck inside on the metaverse. 

ANDREW STEINWOLD:  I would argue that the metaverse is already here in some sense, where we already spend—most people, in the U.S. at least, and the UK, they spend most of their waking hours on screens.  Right?  So, we're already doing that, but the internet that we're spending all of our time on today is value extractive, and the internet that we're going to with blockchain NFTs is value-additive.  So, we spend all this time on Facebook and Instagram or whatever, and Reddit, and those platforms are gaining massive value from us spending our time there. 

We're going to flip the current paradigm on its head to value additive, so we're going to be using all these protocols and all these crypto this and that and whatever and NFTs, and we're going to be earning value for ourselves and the protocol itself will also earn value.  So,  I think that's where we're headed, and it's a really good spot. 

So, I would argue that, yes, that is totally possible, and hopefully doesn't happen.  But, we're already doing that.  You know what I mean?  We're doing that today.  We're spending 12 hours, on average, on our screens per day.  So, if we can kind of flip the current paradigm of value-extractive to value-additive, that's the biggest plus that we could possibly do and the biggest value add that we can have for our time.

HOST:  I love that.  Yeah, that's super true.  So, when we think about like NFTs, obviously, we've had a whole conversation about NFTs already and how awesome they are and all the use cases that could come up in the future.  What are some of the things that you think are preventing NFTs from getting even more traction than they already have or preventing them from permeating into every aspect of our lives?  Because, right now, again, it pretty much is just NFT art that's out in the mainstream right now, but there are so many other potential use cases. 

So, other than just like time, like anything new is going to take time to come up, but what types of things can happen, in your opinion, that can speed up this cycle of having NFTs become more mainstream? 

ANDREW STEINWOLD:  I think what we see is that Nifty gateway and MBA TopShot, those are two platforms that went really kind of mainstream and helped facilitate the onboarding of tons and tons of people that had zero crypto exposure into kind of this crypto world.  The reason being is that those are centralized platforms, and I think that what they offered was like the Web-to experience.  So, you didn't have to like go to coin-base, set up an account, by a Ethereum, download meta-mask, set the meta-mask up, send you Ethereum to meta-mask, go to open sea, start buying stuff.  Right?  I think that I'm a huge fan of open sea and kind of the semi-decentralized nature that they built, but in terms of just onboarding the masses.  I think the best user experience always wins.  So, that's why you see Nifty Gateway and TopShot do so well.

So, I think that will be very helpful.  It's just making the use experience easier.  So, if we can have people log in to whatever platform, their meta-mask or whatever, and this would be like the best-case scenario, I guess.  Meta-mask, and you don't need to remember your - - phrase.  It's like a username and password, and if you forget, you can like email someone or email some robot or something like that.  is it decentralized?  Probably not, no, but I think that something like that would be great.  And, it would be awesome if you could buy Ethereum directly from that wallet, and then go to open sea and start buying stuff. 

Of course, that takes a lot of like what makes NFTs powerful away, which is like property rights, and I'm a big proponent of like NFTs are only important because of property rights.  But, most users don't care.  Most users are just like I want to have my digital stuff.  I want to be able to "own it".  It's not really theirs, if it's centralized.  And, I want to be able to make money from this thing.  So, yeah, I think that's what we can do in order to bring on more people.

What we've seen happen in the past couple months has been like astonishing for me, because I've been in this space full time since 2019.  I figured that like mainstream attention, from like celebrities and stuff like that, would happen like 2024, 2025, like it would take some years.  But, to see it happen so quickly, it was shocking.  I think that's a—even though we're seeing a lot of celebrities who do cash grabs and just low-effort NFT projects that getting bid up by crazy amounts, I think it's still important that they're kind of entering the space, that they're getting exposure to crypto.  All their fans are getting exposure to crypto, and it's just making crypto more normal and more mainstream, because in 2017, crypto was not mainstream.  It was still kind of this like weird thing, and a lot of people were like, oh, in 2018 especially, oh, the bubble popped in 2017, and we're entering 2018 now, and the price keeps going down, down, down, and people were like crypto is dead.  People already thought it was over. 

But, if you go out to like 2013, it's like, no, no, no, that was like when people were like saying—I thought bitcoin was dead back in 2014.  I was like it's over.  But, then, people that I was talking to, they were like no, no, that happened in 2011, like I thought bitcoin was dead in 2011.  So, it's just like this thing that just keeps on moving. 

But, I just really think it's great that we're getting celebrities and mainstream people to give all their fans exposure to crypto and the capabilities of what it'll be able to do.  I don't think that we're going to go—we're not going mainstream this year.  I think still we have some growing pains in terms of the UIUX and stuff like that.  But, I think that we're already—we took a huge step forward these past couple months that we can't go back now.  It's like the cat's out of the bag.  Everyone knows about this stuff.  So, now we can just keep building and keep bringing in more people.

HOST:  So, it's more like reacting on the super rapid growth from the last few months.  Where do you see NFTs being in another year, and then where do you see them being in 10 years?  Like, what are the use cases?  Like, how are we going to be using NFTs in 10 years?  One thing I always like to think about is like I get so annoyed that we still have like physical IDs and physical passports and physical birth certificates and social security cards.  I have no idea where my birth certificate is, to be honest.  I have no idea.  I don't understand why all of this can't just be digitized and can't be put on a blockchain.  We just have this like show our public key or our wallet or something, wherever we keep all of these unique assets, and we can just mint all of them, put it there, and then anytime we go out to the bar, they ask to see your ID, you can just flash something on your phone.  Anytime you need to travel, you need to have your passport, just like flash it on your phone.  You need to apply for something that requires your social security card or your birth certificate or whatever, like everything is just here.  I don't understand why all of this has to be physical pieces of paper still.

SO, like for you, what do you think about—I guess, let's start with the next year.  Probably nothing too crazy is going to happen in the next year, but then, when you think about 10 years down the road, how do you envision us interacting with NFTs?

ANDREW STEINWOLD:  Next year, you have to imagine that within the next 12 months there's going to be some sort of crypto market correction.  I would just assume, just because throughout crypto's history, we haven't really had these major kind of run ups without a pull back.  So, I would imagine that that's going to happen.  And, that, for me, is really exciting, because that's when all like the true believers kind of stick through it and keep building, or even people entering the space that decide, okay, now the hype is gone, now I'm going to start building.  That's even crazier, but more respectable, in some sense.  But, yeah, we're going to have the excitement die down, kind of come back down to normal, so to speak, and people will just continue to start building and kind of getting ready for the next hype cycle or next big product that people launch. 

So, I guess I expect there just to be more building and kind of the hype - - next year.  In the next 10 years, I think you are absolutely correct on like the ID kind of stuff.  I would expect there to be some sort of very usable, and that to me is like the key word, because I think we could put ID in the blockchain today, but it's not in a very usable format, and if you like accidentally got hacked and your ID got taken, it's like what do you do now?  It's kind of a pretty terrible thing.  So, we need something that's very user friendly and easy for people to understand, and even if they get lost, they can replace it, and all that stuff.

Yeah, I think NFTs right now, most of the use cases are like kind of toys, like collectibles, video games, art.  These use cases, by the way, are like multi—like hundreds of billions of dollars market that have just suddenly combined in to one liquidity pool.  So, that, in itself, is incredible and represents a massive, massive, massive market, into the trillions of dollars.  But, these are like the fun exciting stuff.

The more like boring things are like property titles, insurance, any sort of like capital market transactions, like IP.  There are just like a whole host of—it's almost like I'd be surprised at what cannot be turned in to NFT.  I mean there some instances where like I don't think certain NFTs should be trading for like crazy dollar amounts.  I think it'll be more of a normal thing for like you property title to be on as an NFT, so you can bypass all the other friction that goes with buying a home, like all your mortgage paperwork or whatever is just an NFT that's simplified, and you don't need all these kind of middlemen getting a piece of the transaction. 

It's just funny, because saying these are like the promises of 2017 when all these companies were launching.  They were like, hey, we're raising money for this project that's going to reduce the barriers for real estate investors to invest in real estate, whatever, right, and it was all about reducing friction and getting rid of all these middlemen, and I think that that's where we're headed for, and NFTs are going to be that actual asset, the actual like tool that people are using to bypass, to reduce friction in the system. 

So, yeah, I think ten years are going to look radically, radically different.  Like, I'm so bad at predicting stuff.  Like, in September 2020, I went on the Bankless pod, and I think they were like what do you think the NFT market is going to be in 10 years, or no, how long is it going to take for NFT market to reach like a billion, or something like that.  I was like I said something like 10 years, or maybe it was a trillion.  I forget.  But, anyways, I was like so off.  It happened like a few months later.  So, 10 years, I don't know.  Hopefully, we'll all be like living on Mars, like in our bitcoin citadels, but who knows? 

HOST:  Yeah, right, for sure.  Alright, so I want to talk a little bit about your other big project, which is Zima Red.  We talked briefly about it in the beginning.  Tell us a little bit more about that, and also I'm curious to know like where the name Zima Red came from.

ANDREW STEINWOLD:  Yes, so Zima Red is just a content brand, newsletter, podcast, all about NFTs.  The podcast is amazing, because I got to talk to the most incredible founders, the most incredible people in our community and just learn from them for like an hour, which is just like—it's like a cheat code on life.  Like, I got to learn from super smart people and just talk to them for a while, and it just is amazing.  I love it.  Personally, it's like selfish.  Like, I love it.

Then, on the newsletter side, also, some selfishness, because I get to think about some sort of topic and be like, cool, I'm going to write about that thing, and there's like no rhyme or reason.  It's very random, and it's always pretty—it's usually pretty deep in the weeds.  The ones that are like the most deep in the weeds get the least amount of views.  The ones that are the most basic, or like mainstream, get the most amount of views.  I'm always like tempted, I'm like should I like try to go for building a larger audience?  And, I do have plans to kind of increase the level of content, because I'm really slowing down on both sides, the newsletter and podcast, but, yeah, I want to increase the level of content.  I want to make it more appealing towards both sides, like more mainstream, kind of cover what's going on, just general news, kind of how-to guides, different projects.  But, also, I want to keep doing what I love, which is like diving super deep in a random topic, and just getting to learn about it myself.

So, I launched that in October of 2019, a month after a set up the firm, and, yeah, that's—Oh, yeah, where did the name come from?  Zima Red comes from Zima Blue, which is a love-death robots episode.  Love-Death Robots is a kind of an animated show on Netflix that is a series of short stories.  Zima Blue, basically, the moral of the story is that there's this world, the universe's most famous artist, and what he does is he forgoes all his fame and fortune in order to go back to doing what he loves, which is he's a pool cleaner.  So, he basically forgoes all that to follow his passion.

I thought, okay, what a cool name.  First of all, great for - -, great for searchability.  But, also, like what a cool name.  I'm talking to these people that are just super passionate about NFTs and have been in it way longer than me.  This is like 2019.  It's like people are like—I'm not an OG, right?  There's people that are way older than me and know way more than me, and I got to talk to them and learn from them.  And, I was like this is really cool.  I’m going to name it that.  So, that's basically where the name came from. 

HOST:  Nice.  I love it.  I feel like I already know the answer to this question, but do you like posting podcasts or being a guest on a podcast more?

ANDREW STEINWOLD:  Definitely hosting.  I don't like being a—it's not like I don't like it, but I'm much more comfortable asking questions.

HOST:  Yeah, I know.  I feel the exact same way.  I think most podcast hosts I've talked to feel the exact same way.  Then, last question about that, your top three favorite podcast episodes on the Zima Red podcast and why.  It doesn't have to be like overall top three.  You can just say like top three because like this specific reason, or whatever.

ANDREW STEINWOLD:  So, yeah, I mean I have one I've had on I'm super—I'm going to get in trouble.  I can't answer this. 

HOST:  That's why I framed this.  It's not like overall top three.  It's just like I love this because X, like very specific X reason I love this one.

ANDREW STEINWOLD:  I'll just like name some.  These are not my favorites.

HOST:  Yep, we're making it clear.  We're making it clear, not your overall favorites, not playing favorites.  Not making anybody feel bad.

ANDREW STEINWOLD:  So, okay, Pranksy's episode.  I mean, obviously, Pranksy's a legend.  He's an OG in the space.  It's actually a two-part series.  We filmed it over the course of like two days, and it took like—it was actually like four-and-a-half hours of actual audio recording.  I cut it down to like I think it was three hours, roughly.  But, I mean he's just like done everything you can think of, he's done it.  So, he's a great source of knowledge.  That's a great one.

John Egan was also great.  John Egan is the founder of L'Atelier which is like this subsidiary of BNP Paribas, which is like a large French Bank, and the subsidiary is all about being able to research kind of new emergent markets, and I've talked to him forever ago about the metaverse and his thoughts on NFTs, and we have very similar views on kind of where this is headed, and he's just someone who's very, very professional, from like the professional world, and has thought deeply about this, and that's rare.  So, I love that one, love his insight. 

Then, there are just so many other great ones.  I'll got Yat Siu from Animoca.  Yat, again, super OG.  He has been in the space forever, and he's been like—he was like at the founding of like CryptoKitties, like around the time when Axiom Zen, who was the company that founded CryptoKitties, when they were like not even - -.  So, he's been around forever.  He knows everything.  His background is incredible.  And, when you hear him talk, he's just like super eloquent, just—I'm like, oh my gosh, I want to—I need to be like that.  I need to level up my game in order to get there one day.  But, yeah, I think it's a really, really great episode as well.  But, they're all awesome. 

HOST:  Yeah, for sure.  Totally agree on Yat Siu.  He came on our podcast as well, and I was like I could talk to this guy easily for like four hours.

ANDREW STEINWOLD:  He's awesome.

HOST:  Awesome.  Okay.  A couple of final questions from Twitter that we didn't get to address yet.  I want to make sure we cover these.  First one is what's your take on NFT as IP? 

ANDREW STEINWOLD:  Okay.  So, I think that Jake Bruckman, he coined the term liquid IP for NFTs, and he also stated, and I agree with his kind of assessment here, he stated that all IP will end up on chain in the form of NFTs most likely.  And, I have to agree with that, just because you're basically making it, first of all, more liquid, so transferability is just off the charts, comparative to your regular IP. 

Also, it's programmable, so it's like say I have the rights to this like music, Taylor Swift's songs, like I know Scooter Brawn and Taylor Swift like have some sort of beef or something like that, where like Scooter Brawn owns Taylor Swift's songs, so she like, after the - -, she re-released her songs, so she could like own it and get the income from it. 

So, I really like the idea of having all that on chain, because you can make it programmable.  She could do some sort of crazy stuff, where, hey guys—I'm being Taylor Swift right now—hey guys, for like this next six months, anyone who owns my social token will get income streamed to them from my music rights, from my NFTs that are my songs that I have, or whatever.  I don't know. 

That's just a random example I pulled out, but I do believe that NFTs and IP are like made for each other, and I do agree with Jake that all IP will end up as NFTs.  

HOST:  Nice.  Then, the other question is have you tried Axie Infinity?  It sounds like you have.  You've mentioned it a few times.  Is that something that you play personally?

ANDREW STEINWOLD:  I wish I had more time to play it.  I think I would be—I did play it way back in the day.  This is probably 2019 or something like that.  Yeah, probably 2019.  It's truly addicting, and that's why I was like, okay, well, I can't get too deep in this, because I have to work.  But, it's a super fun game, and I think that it's great at adding depth to it over time.  Because, when it first started, it was—they've iterated greatly, because before, it wasn't that great, to be honest, and now they've built it up into something that's a really fun, enjoyable experience and a deep experience. 

So, you need that initial addictive kind of traction to encourage people to try it and to play it.  Then once you're in it, then you kind of meet all the community members, who are like Axie community members are like amazing.  They're like super hardcore, really passionate.  It's infectious.  But, then also, the game itself, it's like there's multiple layers.  So, you go in, and you're like battling, and you're earning some of the love potions.  And, you're like, oh, I want to check out the land, and you go to the land, and you can get items, and it's all—you just go deeper down the rabbit hole.  So, I'm a fan, but I have not played in a long time. 

HOST:  Makes sense.  Alright.  Well, this last segment, before we close out, I call this Explain Your Tweet.  This is where I dig through your Twitter account and pull out any interesting or cryptic Tweets and give you a chance to explain them.  So, we'll see how many Tweets we have time to get through in the time remaining.  But, the first one I've got, this is a very recent one from a couple days ago.  You said I spent around $10,000 minting meebits this morning.  Ask me anything.  So, lots of questions.  First of all, for people who don't know what me-bits are, give a little intro on what that is. 

ANDREW STEINWOLD:  They're these—I guess the best way to explain them is like these little Mindcraft-esque characters, meaning like they're kind of like blocky in nature, and they're like these basically avatars that can be used eventually.  They're open-source, so they can be used in any sort of virtual world.  So, what you can do, and what Ben Nolan from cryptovoxels is doing now, he's enabling people to bring their meebits, which are these little avatars in to cryptovoxels and use them as their character.  So, that's really cool.  It's like a metaverse native avatar that's inter- - for any world.  So, I think that's super exciting.  It's made by Larva Labs, who are kind of the OGs of the NFT space.  They created CryptoPunks, which is a massively successful project in June of 2017.  Then, they also created autoglyphs in maybe it was April of 2019, and that's also a massively successful project as well.  So, anything that Larva Labs does will tend to do quite well, and the market has just been going crazy over these things the past couple days.   

HOST:  Yeah, so, what makes it so that they're priced like so high right now.  Like, why did you spend $10,000 on them?  How many meebits did you get?  What do you plan on doing with all of them?  Tell us more.

ANDREW STEINWOLD:  So, I want to clarify.  I didn't spend $10,000 producing meebits.  I spent $10,000 minting meebits.  Because, if you are an existing holder of CryptoPunks or autoglyphs, you are able to mint one meebit per asset that you have.  Right?  So, if you have let's call it 100 CrytoPunks and Autoglyphs combined, you're able to mint 100 meebits.  So, these are assets for my firm, so I can't really talk too much about the specifics.  But, we have—because, people are like, oh, the meebits cost like $8000.  That means you've got like 1.5 meebit.  We do not.  We have more than that.  We're very happy to be owners of meebits.  I want to say more, but I can't.

HOST:  No, totally get it.  Okay, this next Tweet, this is from April 30th.  You said the three most important industries of our future are biotech, like new medicines, altered genes, longevity, space, multiplanetary species, unlimited resources, and metaverse, global access to education, economic opportunity, and new society.  Lastly, AI, but it's so binary.  Tell us a little more.  We've talked about the metaverse piece of that, but you've also got biotech and space thrown in there.  How do you—I guess what were you thinking?  What's like the bigger thought process behind that Tweet?

ANDREW STEINWOLD:  So, biotech will alter human species, because we'll be able to increase our life and also alter our genes, so we can live longer, healthier, happier lives, essentially.  So, that'll alter like homosapiens as a whole, which is super intriguing to me, and we're at the cusp now of biotech, where we're able to essentially create—yeah, it's almost like create a change at the pace of—not at the pace of a computer, but like near.  We're almost at the biotech computing level, where we can actually kind of enact these changes at a level where we were not able to before.  Where it would take like years and years and years of experimentation, but now we've gotten better at those processes.  I'm not expert in biotech by any means, but from like the research that I've done, it seems we are like near the crypto revolution, but in biotech.  It's coming very soon.  So, that’s kind of there, alter human species, longer, happier, healthier lives.

Space, so I'm an angel investor, basically through Republic, but I'm an investor in Relativity Space, which is a company that 3D prints rockets and made by these two incredible founders.  I think one was a guy from Blue Origin who worked on the engines, and then a guy from Space X who worked on creating new metals, creating stronger, better metals, and lighter-weight metals for the rockets.  So, that's a pretty great crew right there.  But, now they're like a multi-billion-dollar company, so it's like way bigger than that now. 

But, I've been really into space for quite some time, and I hate to say it, but I agree with Elon.  I think we should be multiplanetary species.  We've gone too far, done too much for us to mess it up and destroy ourselves.  Because, I do feel like it is very likely that we will, as human beings, just kill ourselves by just accidentally shooting some nukes or whatever, and then it's a whole thing, or kind of nanobots or whatever and eat the whole world and what not.  So, I think part of it will be an accident, but I do think that as our technology becomes more powerful, the likelihood of us not killing ourselves is very small and reducing.  So, I'd like to hedge our bets and make some human colonies on some other planets.  So, there's that.

Then, metaverse to me is NFTs, blockchain, crypto, just virtual technology, essentially, and I like the idea of the metaverse forming because, as I mentioned before, economic opportunity, we're now being able to attach this global and central financial system where anyone in the world can earn a living fully native to the internet.  You don't have to even have a traditional bank account.  I mean obviously there are some instances where like someone in like Kenya at the grocery store is not going to accept Ethereum for like your groceries or whatever, but I do think that we can get to a level where they'll accept like the digital version of the—I forget their currency, whatever their currency is called.  So, that's really exciting.  It's opening up the economic opportunity for everyone in the world to participate in this global economy.

Then, also, education, if I'm able to do an online course and be taught by someone from MIT or Harvard, and be anywhere in the world, that's also truly exciting, and it'll break down barriers for just like cultural barriers.  Because, right now, especially in the past couple years, with Trump and everything like that, nationalism was on the rise, still is on the rise, but I think it would be great if we could all hang out with each other in a virtual environment to get to know each other, because that will hopefully reduce conflict and reduce kind of nationalism.  So, there's that.   

Then, yeah, I think that's kind of where we're headed in terms of the metaverse.  And, you know, it's going to get more immersive.  We're going to have headsets, and we're going to be kind of plugged in, so to speak, where the computers will trick our brains, and actually feeling certain sensations, tastes, smells, etc., and that, again, is dystopian to talk about, but in reality, I think we're going to make it quite pleasant and less spooky. 

So, yeah, I think that those are the three most important.  Then, AI, which is the most important, but I'm not even—talking about it doesn't make sense in my mind, because either we're all going to turned in to paperclips, through some AI algorithm, or we'll turn in to gods.  So, it's like it's just too binary to even discuss.  So, yeah, that's my - - Tweet.

HOST:  Amazing.  I wish we had all day to go through more of these Tweets, because hearing the explanation behind the Tweet was even better than reading the Tweet itself.  But, I know we're at time, so I'll let you go.  Before you go, Andrew, just tell people where they can find you, if they want to connect with you personally.  And, then, go ahead and plug the things you're working on, Zima Red.  How can people sign up for the newsletter?  And, then, spur me on as well, if somebody listening is working on an NFT project of some sort, and they're seeking funding, how can they reach out?  How can they apply for funding, get in touch with you guys? 

ANDREW STEINWOLD:  Totally, yes.  So, I'd say go to my Twitter.  Andrew Steinwold, and you can just DM me, and we usually like to invest in companies and less so projects, but we will do projects, but not often art projects, because we've been getting a lot of art inbounds lately.  We like to do more of like on the collectible side, gaming side, and virtual land side.  In terms of my newsletter, podcast, just type in Zima Red on Google, and everything will pop up there.  And, yeah, then that's pretty much all I got.

HOST:  Awesome.  Well, thanks so much for taking the time to come on the podcast today, Andrew.  Thank you, listeners, for tuning in, and we'll be back again soon with another episode of the Unstoppable Podcast.