Investing in NFTs with Joel Comm
March 16, 2021 – By Simon Erickson
Non-fungible tokens are taking the world by storm.
These uniquely-identifiable and digitally-trackable NFTs are becoming a big hit with collectors across the world. Character cards, sporting highlights, and comic-book heroes are now being minted as NFTs. And due to their exclusivity, they’re often attracting top-dollar bids through online auctions.
But the ability for NFTs to be digitally-tracked throughout their existence could be an even more intriguing quality. That means the original content creators can be paid in the upfront sale, but also in all future transactions of the asset they created. That could have huge implications for larger markets such as music and entertainment. Square’s recent $297 million investment for a majority stake in TIDAL seems to suggest that NFTs could be disruptive to many industries.
What will all of this mean for investors? Where will NFTs most likely gain adoption, and are there specific companies who are best-poised to benefit?
For answers to those questions, we’ve brought in an NFT expert. In this 7investing exclusive interview, 7investing CEO Simon Erickson chats with Joel Comm. Joel is a New York Times best-selling author and international speaker. He has also minted more than 500,000 non-fungible tokens and has seen this trend evolve from the beginning.
In their conversation, Joel explains to Simon how to purchase NFTs and where they’re currently being used. He describes where the industry is heading and which companies are likely to embrace them. And finally, he even gives a live demo of his very favorite NFT purchase.
Publicly-traded companies mentioned in this interview include Alphabet, eBay, Disney, Hasbo, Mattel, and Microsoft. 7investing’s advisors or its guests may have positions in the companies mentioned.
00:00 – Introduction: What are NFTs and how do you acquire them?
07:31 – The importance of exclusivity and the evolution of the market
13:54 – The future for NFTs and key takeaways for investors
19:12 – Important questions investors should consider
20:57 – An look at Joel’s very favorite NFT…via live demo!
Simon Erickson 00:28
Hello everyone and welcome to the 7investing podcast. I’m 7investing founder and CEO Simon Erickson.
Simon Erickson 00:35
Today we’re going to be talking about non-fungible tokens, also known as NFTs. These are becoming the next big thing out there. And I’m really excited to chat with my guest today, JoelComm. Joel is a New York Times best selling author. He is the podcast host of the Bad Crypto podcast. And also self describes as an eternal 12 year old. So I think we’re going to have a lot of fun on today’s podcast. Joel, thanks for joining me at 7investing today!
Joel Comm 00:59
You’re definitely in danger of having fun with me. I like to clown around. You know, I’ve got this whole adulting thing figured out and can be a responsible adult. But the growing up thing that ain’t never gonna happen.
Simon Erickson 01:13
Looking forward to it. Joel. Let’s start at the 10,000 foot level. What is a non fungible token?
Joel Comm 01:18
So a non fungible token is an item that has a unique identifier. There is none other like it in the world. And the way I like to explain it to people is bring it to the physical space. Okay, so if I say, hey, Simon, hand me a $1 bill, well, you’re not gonna open your wallet and say, “Well, which one?” Because they’re all treated the same. $1 is $1 is $1.
Joel Comm 01:42
However, if I say, “hey, Simon, are you going to the Eagles concert?” And boy, I would do anything to go to a concert right now. And you would say, “Yeah, but where’s the seat?” Well, every ticket is unique. You could have a ticket to the Eagles concert that’s front row, or you could have one that’s back row. They’re not the same. They’re very unique tickets with unique identifiers. Well, in the non fungible token world, when we’re talking digital assets, every asset created on the blockchain has its own unique identifier. One can look like another, but each one is special, because it there’s none other like it.
Simon Erickson 02:24
And can you talk a little bit about more of what those assets are? And then also how you acquire these in the first place?
Joel Comm 02:30
Sure, well, they can really be anything can become a non fungible token. And really, what we’re going to see is anything that requires a title is eventually going to be a non fungible token or an NFT, as we like to call it without having to use as many syllables. So right now, what we’re seeing is a lot of artists are creating their artwork in a digital format. Which, unlike a static painting which you might hang on your wall, artists now can do all kinds of things with animation and 3d. Making these pieces of art living pieces of art, right? We see people taking video clips and turning them into NFTs. We see the so-called the collectible world, such as Topps is now in the NFT space, you know. If you’re old enough to remember when Garbage Pail Kids launched in 1985, that’s when they sprung on to the world. Atom Bomb and Nasty Nick and the set of trading cards in physical form. Well, last year, they revived those as NFTs and you would buy packs of cards, open them, and all kinds of surprises would come out. There’s been a lot of different brands since then, including ones that we’ve released called the Blockchain Heroes. And a lot of others are starting to enter into the space right now. And there was a question that you started with, and somehow I ended up here.
Simon Erickson 03:52
I think that said, the other one was, how do you acquire them? You know, blockchains. How do you actually go about buying one of these?
Joel Comm 03:58
Yeah, so there’s several different blockchains that that are unique from one another. One of them is called Ethereum. And there’s several places on the Ethereum blockchain. One site is called super rare. Another one is called nifty gateway. Another one is called Open. See, these are all marketplaces for NFTs and digital art. Personally, myself and my partner and my co host, which you can see over my shoulder here this is actually a blockchain here that’s inspired by myself and Travis, right, because it hosts the bad crypto podcast. The name of this hero is Soothsayer and they have the power of volume really, because they can share with the world the message of blockchain. We build on the Wax blockchain and we prefer the Wax blockchain because it’s instant. It’s super fast transactions. Really take a second, so the moment you purchase something, it’s an NFT in your wallet and there’s no fees for the buyer and those fees for the seller are so small as to be negligible. Whereas items purchase on the Ethereum blockchain carry fees that, depending how busy the blockchain is, can be really exorbitant.
Simon Erickson 05:16
Joel, our audience is individual investors, so I want to move a little bit from the “what” and “how” to the “why” of these. I read a great article you wrote about artists and how this is empowering them having an NFT. And something else you pointed out in that article was that, in the past, technology has been a net negative for a lot of artists, right? We talked about Napster and how that kind of just destroyed royalties and the way that people were getting paid. Just everything was out there. But you actually mentioned that you think that cryptocurrencies and blockchains, and the whole way that we’re heading here. Especially with NFTs empowering artists. Right?
Joel Comm 05:50
It really is. Because you know, just like now with technology, you can build a website and have your own gallery and showcase of artwork which you can market to the world. With NFTs there’s already platforms that are built that you can place your artwork on and put it up for sale. So you know, before it would be really hard to get recognized. You know, you’d have to schedule a showing with a gallery and market it. Now people are going out looking for interesting artwork on these platforms. And I run across things all the time. I’m like, “Oh, that’s cool. Who did that? What’s their story?” Right? And so there’s artists that are finding great success now by placing their artwork in the form of digital artwork and selling them on these marketplaces.
Simon Erickson 06:35
Can there be multiple owners of one distinct piece?
Joel Comm 06:39
Well, when we say a distinct piece, for example, if the piece that the artist created is minted one time, then that’s a one of one that’s a unique piece. However, many artists will say, “Okay, I’m going to create 10 additions of this, and they all look the same, but they each have a mint number.” Just like you might buy a piece of artwork that signed by the artist and numbered at the bottom. You know, 212 out of 500. It’s the same with NFTs. Each one has a unique identifier. And there’s something in the collector’s world and in our mindset that places a higher value on the mint number one of any particular item, even if there’s 1000 of them. So the collector mindset’s an interesting thing. What we put the value on. Because really a number one is the same as a number 1000. Except this one’s named number one.
Simon Erickson 07:31
But there’s some exclusivity piece to it. Right? So I think in terms of investing via eBay. And how all of a sudden, we’ve got a marketplace for something that you could only get on eBay. And somebody would sell an exclusive piece for more than something that’s completely commoditized. Is this the same concept of exclusivity? And there’s so much more demand than there is supply for these right now?
Joel Comm 07:51
Yeah, I think exclusivity is part of it. Also the security of it. You know, when you purchase an NFT, there is no…it’s trustless. There’s no intermediary that does the transaction. You have the buyer, you have the seller. In the moment that purchase is made the smart contracts inherent in the blockchain handle the transaction according to the code. So I can’t pay you cryptocurrency and not get that item delivered. You can’t say I can’t get that item from you without paying for it. It all takes place at the same time. And so you’re removing the intermediaries from the equation. Makes it so that we can trust the system more. You know, there’s endless stories of buying something on eBay and then getting it and seeing this is not what was promised or not getting it at all. And that doesn’t happen with NFTs. It’s just not possible. And every transaction being verifiable on a public ledger, you can actually point to it and say there it is. There’s the transaction.
Simon Erickson 08:56
Joel, you’ve minted more than 500,000 NFTs over the years. You were a super early adopter of these things. How have you seen this market evolve?
Joel Comm 09:05
You know, it started back in late 2017 when dapper labs came out with something called Crypto Kitties. And Crypto Kitties or basically, what’s the thing you used to be able to … crap my mind is in a gap because I’ve been talking NFTs all day with different people! Basically, they’re these cartoon cats that have different “cat-tributes” to them. Their color, their eyes, their hair. And you could take these Crypto Kitties and breed them and it makes a new one. Well, these guys were kind of amongst the first to do it and it was the first to get any real public attention. And so we’ve been following it since late 2017.
Joel Comm 09:50
And it was in January of 2020 when we started issuing our own NFTs for listeners of the Bad Crypto podcast. We thought “you know, this is an interesting way to provide them with a proof of loyalty, a proof of listening. A badge, if you will. Some sort of achievement.” And so if you listen to an episode, for example, we interviewed Ron Paul, who once ran for President of the United States, and we interviewed him on the show. And we made this NFT, featuring a drawing of Ron Paul. And we told our listeners, from the time this episode drops, you have 72 hours to go to this website and fill in your name and your blockchain wallet address. And we’ll give you this NFT. And that’s when we really started creating our own. And it wasn’t until May of last year that we saw Topps do the Garbage Pail Kids on blockchain. We thought, there we go. There’s the delivery mechanism we’re looking for. Where we can take a collection of cards, put them in packs, attach odds to them, so that when people open the packs, they’ve got a chance at getting something really rare. Something exciting. Something with motion and lighting effects. And it really appealed to our audience. We sold something like 12,000 packs in about 20 minutes of sale time. And it’s accelerated so much that we did a sale just a few weeks ago, of a smaller set of 6,500 3 card packs for $5 each. And we sold out in 35 seconds.
Simon Erickson 11:21
That sounds like a lot of demand is building up! These things are a hot commodity. What do we know about the buyers? Do we know anything about who’s typically buying these or how they’re using them? Or how often they’re transacting?
Joel Comm 11:33
Well, I think you’ve got a full spectrum. As more and more people enter the space, it depends upon what the collection is. You know, we know who our avatar is, right? And our buyers. And we can track and see who are the whales in the space that are buying a lot of our NFTs. Who are the ones that are just buying them to collect them because they like the way they look. Who are the speculators that are buying and flipping them for a profit, right. So you’ve got all that.
Joel Comm 12:00
But for example, dapper labs that invented Crypto Kitties also invented NBA Top Shot, which is all over the news. They’re basically packaging video clips of moments from NBA games. And they’re selling them in packs. You buy these packs, open them, and you get these moments. Sometimes they’re super rare. Sometimes they’re common. Some of them are fetching a high five figures, if you get something that’s super rare. And they did a sale today of a pack for $14.99. And they had about 200,000 people waiting in a line digitally online to be able to acquire one of I believe, 60,000 that were available. They’re in high demand. They sell out every time. They’re bringing in some serious cash.
Simon Erickson 12:50
As someone who collected football cards and baseball cards as a kid, I can see the appeal for this. And it seems like there’s a lot of removing the friction of getting those and actually having a marketplace out there. You can actually trade them.
Joel Comm 13:01
Very much. Yeah, and as blockchain evolves, and the tools become easier to use, I mean, there’s there’s still some friction there. And you know, teaching people how to set up a wallet to hold your cryptocurrency to be able to buy. There’s some Fiat gateways that people are using. But you know, the on ramps can be a little bumpy. But we’re making advances pretty quickly. We’re getting there.
Joel Comm 13:25
And we’re gonna get to the point where it’s like when you use your credit card. You don’t ask how that little chip works. When you put it in the reader, you just know that it does. Cryptocurrency is going to be the same way. And you know, we’re a few years down the road till it’s totally smooth. But right now people who like to get in at the beginning and pioneer and become an early adopter are learning the joys of digital collectibles and having an absolute blast.
Simon Erickson 13:54
As a show that’s geared for investors, how do you see this playing forward in a couple of years? Where corporations and publicly traded companies or even privately traded companies? Who do you think is really interested in this, that investors should be paying more attention to?
Joel Comm 14:07
Well, I’m not a financial advisor. I could say I’m an NFT advisor, because that’s not really a thing at all. [laughs].
Simon Erickson 14:14
Another title I’ll introduce here for the next one.
Joel Comm 14:17
Nobody could hold me liable for that. But I think what’s going to happen is we’re going to see more of the bigger brands, as the road is more paved and more proven. We’re going to see Disney. We’re going to see Major League Baseball. We’re going to see Star Wars. They’re all going to start coming in with digital collectibles. And one of the reasons they’re going to come in is once they understand that the revenue streams can go on in perpetuity. So for example, if you know if you happen to get that Mickey Mantle card, that 1955 Mickey Mantle card where most of them were dumped in the river because they thought they overproduced that now sells for millions of dollars. Every time that card changes hands, Topps doesn’t see a penny of that.
Joel Comm 15:03
But with digital collectibles, the creator gets a residual every time that item goes is sold from one wallet to another. So you know, we will earn from Blockchain Heroes, as long as people are trading them buying and selling them online. Well tell that to Disney and you know, Star Wars. And Hasbro and Mattel. And any of these companies that have IP that are not used to earning the residuals and they’re going to be “Hmm, what you have my attention.” That’s going to happen. They’re going to come on board. They’re going to be marketing to their unique audiences. We’re going to see musicians and bands do it.
Joel Comm 15:42
In fact, today — as of this interview — the Kings of Leon, which is a very popular band released their album as an NFT, and it came with bonuses and you can buy additional NFTs if you’re a fan. Our digital collectibles, we’re going to see a lot more of this. It’s going to become ubiquitous. Like I say, this is just the beginning.
Simon Erickson 16:03
And there is still IP behind it too, right? Like if you’ve got the rights or contracts to a sports star through a team, you’ve got Disney IP stuff, that still has to be blessed. And is there a relationship with those companies to that, that hold before you can create an NFT based on something like that?
Joel Comm 16:17
Sure. You can’t, you know, you’re not under license to sell a T shirt with Mickey Mouse on it unless you have the license to do that from the Walt Disney Corporation. And now you might go to some flea markets and find knockoffs, but that’s stealing. And so it’s the same thing in the NFT world. Only a difference here that makes it better is because you can tell on blockchain where that digital collectible originated from. It’s easy to spot if it’s authentic or a fake.
Simon Erickson 16:48
Because you’ve got the ledger tracking back everything. So you know, this is actually certified. This is authentic versus a copycat knockoff. That’s right.
Joel Comm 16:56
We had that happen multiple times where somebody took some of our rare assets and they copied them and they tried to republish them on their account. Well, here’s the thing, the community instantly spots that they look at the name of the account and say, “That’s not a verified account. This is the official account that these NFTs come from.” And of course, that fake account was blacklisted and they can’t sell anything and their NFTs don’t show up in the markets.
Simon Erickson 17:21
Is there a high correlation between the volume of NFTs being sold and the price of Ethereum?
Joel Comm 17:28
I think it definitely has something to do with it. You know, Ethereum in and of itself is a great chain for creating anything that needs a smart contract. And there’s many applications that go beyond NFTs. And I think there’s a lot of people that are expecting that Ethereum is going to go much higher still; just based on those merits alone.
Joel Comm 17:50
In the NFT arena, it actually is a little bit of a liability, because you can’t do what we do on Ethereum. You could sell higher priced items on Ethereum. Because the fees that go with it, then are kind of a smaller piece of it. But you couldn’t sell trading cards like we do. You know, somebody gets a card they want to sell for $1.75, the gas fee is going to be $20. That’s the fee that Ethereum can charge. Sometimes those fees can go as high as $100, depending on how clogged up and backed up the Ethereum blockchain is. That’s why we use Wax. It’s made for tickets of any size. And because there’s no fees and it’s fast, we don’t have to deal with that issue.
Simon Erickson 18:36
Joel, my last question for you is I kind of consider you to be the global expert on NFTs. I really appreciate your time to chat with us. And I know you do interviews and public speaking events all over the place all the time.
Joel Comm 18:48
As much as last year. Unfortunately, it’s been a lot. Which has actually been a blessing in disguise, Simon. Because it was COVID in the lockdowns and me not being able to travel and speak that caused me to go “Well, I’m not gonna sit around here and do nothing.” And we ideated and we created and we built something new. So for me and my partners, it ended up being a huge blessing in disguise.
Simon Erickson 19:12
What questions are you not being asked as often as you should be right now? What are we missing out there?
Joel Comm 19:17
That’s that one. Right. We’re not paying attention to that question right there. I think that we’ve kind of talked about it because I talked about Wax. We were so successful with our project that Wax invited us to be on their Advisory Council. So we’re on the same council with William Shatner, who produced a set of digital collectibles on Wax and leaders from Topps and Google and Microsoft and Animoca Brands. And the list goes on.
Joel Comm 19:46
And so a lot of people think that Ethereum is the NFT world. And while it has a huge portion of the market cap and gets a lot of press attention, Wax in my opinion is the sleeping giant that is about to come to life. And this is why I’m doing calls all day with people who are reaching out and saying how are you doing this? How are you avoiding the Ethereum fees? How do we do this, and I find myself eating, breathing and sleeping digital collectables now. And I’m not complaining because in 26 years of doing business online, I’ve had a lot of fun. I’ve done a lot of fun things, but I am consistently having more fun now. Because this totally appeals to the eternal 12 year old in me. Not only do I get to collect NFTs, and I do. I buy all kinds of different collectibles because I have fun with them. Just like I did when I was a teenager. But I also get to create products and hypee that just gives joy and delight to so many others. So it’s like full circle. And even though I’m NFT’d out at the end of the day, I’m ready the next day to do it all over again.
Simon Erickson 20:57
And Joel, final question, what is your favorite and most prized digital collectible that you have?
Joel Comm 21:03
You know what I bought this on nifty gateway. I’ll actually show it to you if you’d like to see it.
Simon Erickson 21:07
Sure. And let’s do this live demo.
Joel Comm 21:10
Do I have screen share capabilities here? Let me see. Let me go ahead and do this if I can. And then it should say I do.
Joel Comm 21:16
So nifty gateway is run by Duncan and Griffin Cock Foster. And they are twins. Their site was purchased by the Winklevoss twins. And now they’ve become a gateway for artists of all kinds to get their work out there. They sell out regularly. They’ve done a really great job of marketing the items that they put on there. And I saw a piece you’re going to totally say “yes, you’re such a child, Joel” when you see this. [laughs]. I bought this piece from an artist named Wisbey several months ago. And it’s called the Vandal Gumby. That’s him right there. There’s actually audio to go with it. Here we go, turn to the right. Turn to the left. There he goes, gets his picture taken. He actually made a bunch of these in different colors, nine different colors, and there’s only nine of each. So I have number six of nine. And what’s really interesting about this is somebody I paid $999 for. Somebody bought one for almost $18,000.
Simon Erickson 22:27
In less than a couple of months there.
Joel Comm 22:29
Less than a couple of months. I’m not selling mine. I love it. And I can’t wait to get a display that is made to display NFTs. Because instead of just hanging a static picture on my wall, you know, imagine the day where you go to your app on your phone. You say “oh, I want this piece of art and this piece of art and I want them to sequence every 15 minutes.” Right. And it’s up there on your wall and it’s a beautiful HD display. And it you’re going to be able to personalize the experience that you have and that your guests have in your living space. Buy the art that you own on the blockchain that you can display.
Simon Erickson 23:08
Joel I’m looking forward to this. Seems like there’s a lot of creativity about to be unleashed through NFTs I appreciate your time here with 7investing.
Joel Comm 23:15
Sure thing. And I’d like to mention that we actually cover and FTS every week on a live show called The Nifty Show. It’s every Friday at 5pm Eastern; Two o’clock Pacific at nifty dot show forward slash YouTube. And we’re interviewing people in the space and seeing what the latest projects are all the time. And we’d love to welcome your your listeners as well.
Simon Erickson 23:39
Yeah. And you also have another podcast. Your Bad Crypto as well, right?
Joel Comm 23:42
Yeah we do. All of these things you see around me are brands that we are producing. And there’s so much happening right now. And it just seems to be multiplying pretty soon. It’s going to take over the screen and I’ll just walk over there and just talk so you can see all the cool stuff we’re working on in smaller font as they start building out more and more.
Simon Erickson 24:00
Joel, thanks very much for the time.
Joel Comm 24:02
And 7investing, I really appreciate you having me on the show. Thanks, Simon.
Simon Erickson 24:06
And thanks for teaching us about NFTs today. Thank you for tuning in to our 7investing podcast. We are here to empower you to invest in the future. We are 7investing!
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