Techie
Thanks, twice impeached, ex-President of the United States Donald Trump. I’m kind of an old school guy. I’ve done my best to try to keep up with the technological changes in our world. I’m typing this essay on a two year-old MacBook Pro, and there’s an IPhone 13 sitting on the table beside me. I’ve figured out how to “cut the cable” with my TV’s (though that isn’t saving the money it used to) and I can “stream”, “tweet” and “Facetime”. And while I only text with one finger – I am desperately show – I still hold my own there too.
But one tech aspect I really never got was “NFT’s”. In fact, for a long time I thought the letters “NFT” were some kind of new professional sports league – NFL, NBA, MLB and the rest. And when some of the “younger” folks I know talked about investing in Bitcoin, it all seemed like some kind of scam, like buying “lakefront property in Florida” or the Brooklyn Bridge.
This only got reinforced with the arrest of Sam Bankman-Fried in the Bahamas last week. He was the “golden boy” of crypto-currency (is that currency found in a pyramid along with the crypt of some Pharoah?), someone who looked like the guy who lived at the end of the hall in my college dorm: really smart, except for the drugs he was inhaling. “SBF” (more initials) was a multi-billionaire genius; and a genius grifter.
Crypto
But, to be honest, I never really understood what all of this was about until Trump made it “stupid-simple” to understand.
NFT – non-fungible transactions, sounds like something that went bad in the refrigerator. But it’s not. It investing your money, real money, cash kind of money, into something that doesn’t exist. You trade your cash for “tokens”, which are really just data-points on some giant spreadsheet. And just like the spreadsheets on this MacBook Pro, sometimes those data points get corrupted, or the formula becomes too complex, and they just “go away”. And so does your money.
All of this just sounded like financial gobble-de-gook, until the twice-impeached ex-President jumped into the “NFT” game. And that made it all clear to me.
For $99 you can buy a Trump “trading card”, just like the Pokémon cards the kid next store is so excited about. And, like those Pokémon cards, the Trump trading card has a “value” all its own, not determined by the $99 you paid for it, but for what it can bring on the market. And if no one wants Donald Trump as a cowboy, or race car driver, or astronaut; then you $99 investment is worth – nothing. The “trading card” is a “crypto” currency, a hidden form of Trump produced “money”. My wife Jenn has it right – it’s Monopoly money gone real, without having to buy the game.
Two Chickens
In history class we talked a lot about the development of trade. It all started with barter: two chickens for a bushel of grain. But those same two chickens could be used to pay for a day of labor, or a ride on a wagon to town. The chickens had “real” value, they could lay eggs, or serve as tomorrow night’s dinner.
But it was a pain to carry around a lot of chickens, so “symbolic” currency (fungible currency) was developed to make things easier. Here’s a coin, made of some metal we find valuable. This coin is worth two chickens at the chicken market. So instead of hauling chickens around, we had bits of metal that represented the ability to purchase chickens, or the equivalent bushel of grain, day of labor, or ride to town. And so money began.
But money had drawbacks too. As it was easier to carry, but it was easier to lose, or steal. And since money was symbolic, even as a valuable metal, it could gain or lose value. What if the “two chicken” coin was all of a sudden only worth one chicken because of a chicken shortage? So we developed other forms of currency, even more symbolic than the coins. I have an “old school” book of checks in my desk drawer. I can “create money” simply by writing a sum onto the check, and getting someone to accept my check for a more “fungible” form of currency. And we have laws that punish us if we create money that we really don’t have.
Tokens
So Trump’s cards are like taking a check that doesn’t have a value written on it. It might be a great investment, but it also might be a complete loss. But one thing’s for sure: Donald Trump got his $99 in real cash for a single card. He got his “fungible” from these Non-Fungible Transactions. And once he’s sold it, he is no longer responsible for its value, unlike my “bad” check.
There’s an ad on TV right now from the Liberty Mint. You can buy a silver half-dollar, minted privately by Liberty, for $12.52. It’s supposed to sound like a great deal – a “pure silver coin” for only $12.52 (supplies are limited). But what are they really asking you to do? They want you to pay $12.52 for a coin with the face value of – fifty cents. Just like Trump cards, they want you to invest in something that is a “token” with limited face value. Maybe someday it will be worth the $12.52 (or $99) you paid for it – or maybe not.
But they got their fungible cash. And now you own a Brooklyn Bridge.
