You can now become a millionaire selling your memes & digital art
How much would you pay for this digital character?
$2? $200?
Someone recently paid $2m. Yes, two million US dollars!!
This is one of 10,000 unique CryptoPunks digital characters which sold for $126m in total.
How much would you spend to own this GIF?
$6? $60?
This Nyan Cat GIF recently sold for nearly $600k
When you buy a piece of CryptoArt, proof of ownership is stored on the Ethereum blockchain. You own the NFT.
NFTs (Non-fungible tokens) are digital certificates for intellectual property.
It's the digital version of buying an autographed piece of merchandise.
The explosion of digital art has raised interesting questions over valuations, investing and human behaviour.
You own the certificate of the meme. Unlike music royalties - you can't stop people using your meme/ GIF.
Essentially you hope someone will pay more it in the future.
CryptoArt is both fast growing and pretty risky business
If you hold stock & a company you invest in goes bust, you may salvage a few cents. If the meme you hold becomes irrelevant or can't sell.. you have less options.
Ultimately, price is what you pay, value is what you get.
Here's how you can use NFTs & the power of blockchain to sell your tweets
You're essentially minting a tweet, creating a NFT, transacting on the blockchain & settling payment in ETH
NFT is a non-fungible token
Fancy term for a digital certificate for intellectual property. Think of it like an autograph. Someone pays for your autograph and keeps it as an investment.
Your autograph (NFT) here is a digital certificate of your tweet.
Instead of borrowing money from a bank, a company (or government) will borrow from investors. So investors will give the company money & in exchange they get paid interest (called coupons)
Fancy term for the IOU is "bond issuance"
I'm an investor, how do the mechanics work?
Company sells you a bond for $100 and promises you 5% every year for 3 years. They also pay you $100 at the end.
Yr 1: $5
Yr 2: $5
Yr 3: $5 + $100
That's $115 (or a 15% return) after 3 years. Right?
Quarterly earnings reports are a catalyst in rewarding short term-ism, introducing volatility, soaking up management time & distorting strategic focus.
Against the lifespan of a company, 3 months is inconsequential, yetyou're expected to deliver a certain outcome.
You're facing return hungry shareholders & Wall Street analysts with massive expectations.
It's the equivalent of stepping on a scale every single day on a diet.
The worst part of short term-ism are the incentives that accompany it.
Many exec compensation schemes are tied to targets short term in nature.
Rewarded for a higher EPS?
Ah, let's go out & trigger a buyback
Rewarded for scale?
Ah, less do some value dilutive M&A
The good side of debt. How using leverage & borrowed money can benefit you [Thread]
Debt is demonized thanks to many people using borrowings to fund consumption expenditure.
Borrowing cash to fund sneakers, savanna & sushi - bad debt. Using a loan to boost your company and increase revenue - good debt.
Debt as a source of investment capital can be powerful
If you purchased a house, chances you structured a leveraged buyout (LBO). You contribute a small deposit & use the bank's financing to purchase the house. You repay the bank across the next 20 years.
After 20 years, your house is worth more than you paid for it. An example:
Few things worth keeping an eye on in the next few weeks:
1. Increasing US Treasury yields & 10-2 spreads 2. $TSLA as an indicator for sentiment 3. Retail investor volatility 4. Discounts on IPO issuances 5. M&A premia ++ volumes 6. Crypto adopting by institutions
1. Surging yields
COVID delayed inevitable reflation trade. Inflation expectations are ticking up. Will rising yields trigger an equity market sell-off? Probably not- such a deep disconnect between valuations & fundamentals
BUT it will suffocate the MANY overleveraged companies
2. Bets on $TSLA
Some WILD writing on OTM put options - folks banking premiums that could smoke them if it goes badly. Nobody thinks gravity will kick-in.... until it does. It's also a retail favourite which makes it a great indicator. $800bn is an eye watering valuation.