NFT Ramblings 1 1

[vodou]

23 minutes ago, LastRaven said:

Well... It won't draw money away from vintage.  The reason being that there's a lot of people with a lot of wealth parked in cryptos.  That's what's needed (to a degree) to buy the art. It's easier to exchange like for like. 

Right. I forgot. You know everything.

 

[exitmusicblue]

Prediction:  In the long run, NFTs will supplement -- not disrupt or harm -- our traditional OA market.  Much as digital cards have done vis-a-vis the sports card market.

There's room enough for everyone under the kumbaya tent.  Party on, pardners.

[LastRaven]

9 minutes ago, vodou said:

Right. I forgot. You know everything.

 

I have a reason for saying that.  Removing money from the crypto system may cause capital gains or other taxes to kick in for US folks.  Leaving the money in crypto has value.   A lot of people don't have crypto and most (until recently) comic art vendors don't take crypto either. 

If I want to buy something with crypto gains, it gets sticky.  It's like selling stock to buy a car.  You end up losing money to taxes because of the way it's currently taxed.  

Literally every time you turn crypto into USD to buy something, it's a taxable event.  In fact, up to 20%. Even buying on a website (for example) that takes crypto would be the same thing.  You get taxed on top of whatever state's sales tax. 

https://news.yahoo.com/irs-taxes-cryptocurrency-avoid-paying-113330009.html

https://blog.blockonomics.co/do-tax-rules-apply-to-bitcoin-purchased-items-d95f212d2145

So... Let's say you want to buy that sweet vintage OA with your crypto, you have to take an up to 20% hit on your crypto profits, which could be a sizable amount of the sale.  Do taxes, etc.  That kind of sucks. Depending on how long you held the crypto it affects the tax rate. 

 

 

[Kohei]

https://www.axios.com/nft-digital-crypto-art-de03ee9f-9819-4d53-bb11-8e03c415f0f9.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosam&stream=top

[vodou]

11 hours ago, LastRaven said:

Leaving the money in crypto has value.

People that believe transacting at all "inside" the cryptosphere is any different than "outside" (converting to sovereign currency and then...) are just an audit away from all the risks of undeclared income and tax evasion. Naturally, DYODD is applicable here along with "don't take my word for it, consult your own tax advisor" but I can quote the IRS here:

Tax Consequences

The sale or other exchange of virtual currencies, or the use of virtual currencies to pay for goods or services, or holding virtual currencies as an investment, generally has tax consequences that could result in tax liability.

Source: Virtual Currencies

Further:

Bartering is the exchange of goods or services. A barter exchange is an organization whose members contract with each other (or with the barter exchange) to exchange property or services. The term doesn't include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis (for example, a babysitting cooperative run by neighborhood parents). Usually there's no exchange of cash. An example of bartering is a plumber exchanging plumbing services for the dental services of a dentist.

and

Reporting Bartering Income

You must include in gross income in the year of receipt the fair market value of goods or services received from bartering.

Source: Topic No. 420* Bartering Income

 

*Yeah...I know  

 

The point of all of this is the difference between an unrealized gain and a realized gain. It's not me, it's tax law as written by Congress (and other bodies worldwide). Don't like it, take it up with them or play the game and cross your fingers that that ledger doesn't really point directly to you  

[Natty Bumpo]

Just to echo Vodou's point, the one person I know who "really knows" crypto once advised me that the best way to distinguish between someone with genuine expertise in that area and a dabbler/scammer/future mark is that the latter category always thinks they've discovered a new way to avoid paying taxes. That's why the dudes at the top of the crypto pyramid are all sniffing out tax shelters. 

[PhilipB2k17]

On 2/19/2021 at 5:26 PM, dichotomy said:

I turned around and I was being hit by Non-Fungible Tokens. The first instance was a livestream by Jim Lee earlier this month. Then a plethora of announcements this week from Christies, followed closely by Essential Sequential and Felix Comic Art. 

Most of us are fuddy duddies about the digital art aspect and I get it. But look closely at proof of ownership. This is the essence of what blockchain was supposed to be. I remember when BTC/LTC/ETH etc first ‘flared up’ in the public eye. This is like that, with the fervor and vigor behind it, but also backed by ‘the man’ and ‘the machine’ (both of who were left out of the crypto boom), but more significantly, has a very clear and definitive purpose. Think a grading service, but without the self-interest. 

 

1. Copies of artwork are already a problem - there’s a whole Kirby thread about this already - so the proof of authenticity and proof of ownership aspect of an NFT for REAL artwork is very tempting. It’s one of the very reasons why some people watermark the artwork they post. Starting now we should really all be doing that. If you haven’t spend a few moments wondering what is stopping a computer from reading a scan of artwork and recreating it, with a brush and ink, then you should. With a little tinkering any motivated home forger could wreck havoc. We’re lucky that our hobby has been quite isolated, but I believe that it’s time to start tightening up the lines of ownership and authenticity. Public sharers may have a bit easier time establishing authenticity, but what about the unknown black holes? Or imagine when you approach an auction house to sell a piece for you, and they politely ask for the corresponding NFT...

 

1. Digital Art - many of our favorite artists, new AND old are working digitally now. Some finish traditionally but many do not. I know some of these digital artist intentionally produce some pieces traditionally because of the hobby and lucrative money that can be made. As a result, we’ve seen spirited attempts with mono-prints etc. Surely this is better. A clean file, certified forever as the one only true original. Imagine then the other functionality that could be built in. An instant royalty for creator and owner whenever the image is used commercially. Something like that may justify a price that approaches what might be paid for traditional art, because then over time you might make that money back. Or make money on a piece just for owning it. That sounds yummy. 

 

1. NFT enforcement - with the backing of the establishment this will be easy. Imagine an active google crawler and board of arbitration. Every commercial image is checked for it’s NFT. An image without an NFT can be compared to a database and fined/billed/censored if it is found to be in violation. Or, an artist discovers their work is being used by someone on Etsy in some inappropriate manner, now they would have an avenue of recourse. 

 

1. Finally, remember, that just as there are people out there who have more money that you, there are also more people out there who have more Crypto than you. Over the past decade people in hiding have amassed immense crypto wealth, and it’s still hard to spend. The crypto millionaire may have trouble buying groceries (well, not really, but kind of), but they love to find value for a place to park/convert their wealth). 27.5 ETH may be a lot to someone who has to buy it from scratch, but there are many people who picked up ETH when it was between $1-$5 ONLY 5 YEARS AGO! That is HODL. Buy $1000 of coin in 2017. Wait 4 years. Celebrate. 

 

In any case I think this is here to stay. So dust off your digital wallets and put on your thinking caps. How will they get you? Dude, they will start giving you a token for free when you buy artwork. We have to figure out how to token the work that already exists, but soon ALL the new artwork will have one. 

 

Discuss, be happy! I look forward to seeing what Felix and Jason talk about on Tuesday. 

NFT guarantees chain of custody and ownership of a specific digital image. But it doesn’t prevent the original artists from issuing another NFT token for the same digital image at a later date. You’d have to still get an exclusivity guarantee of some kind, which would be in the form of a contract and subject to litigation. 
 

An NFT would be better if it could be paired with physical OA. 

Edited February 25, 2021 by PhilipB2k17

[PhilipB2k17]

17 hours ago, LastRaven said:

I have a reason for saying that.  Removing money from the crypto system may cause capital gains or other taxes to kick in for US folks.  Leaving the money in crypto has value.   A lot of people don't have crypto and most (until recently) comic art vendors don't take crypto either. 

If I want to buy something with crypto gains, it gets sticky.  It's like selling stock to buy a car.  You end up losing money to taxes because of the way it's currently taxed.  

Literally every time you turn crypto into USD to buy something, it's a taxable event.  In fact, up to 20%. Even buying on a website (for example) that takes crypto would be the same thing.  You get taxed on top of whatever state's sales tax. 

https://news.yahoo.com/irs-taxes-cryptocurrency-avoid-paying-113330009.html

https://blog.blockonomics.co/do-tax-rules-apply-to-bitcoin-purchased-items-d95f212d2145

So... Let's say you want to buy that sweet vintage OA with your crypto, you have to take an up to 20% hit on your crypto profits, which could be a sizable amount of the sale.  Do taxes, etc.  That kind of sucks. Depending on how long you held the crypto it affects the tax rate. 

 

 

That’s why crypto is not a currency. It’s like gold or platinum. It’s an asset that gets taxed for capital gains. And I know a lot of OA collectors like to hide their OA Capital gains from the tax man through trades or private cash deals. 

[PhilipB2k17]

On 2/24/2021 at 1:16 PM, Unstoppablejayd said:

Physical art is being included per Jason S from essential sequential... the Kuberts.. Tim Sale, Frank Miller and others he reps are already tying the two together. And they are looking into adding NFTs to older art that is already in the possession of collectors. 

I’m not even sure how that’s supposed to work. Classic OA is already unique. And the same risk of forgery applies to a piece of art “tied” to an NFT as a stand alone piece of OA. Someone could just fake it later, if they wanted. And if it’s hard to fake OA, the point of an NFT tied to it makes no sense except for “royalties.” 

Edited February 25, 2021 by PhilipB2k17

[PhilipB2k17]

Here’s a great explainer of NFT’s and cryptoart for dummies like me. 
 

https://justincone.com/posts/nft-skeptics-guide/

 

[Varanis]

I do taxes professionally, including some work in the crypto space. If you purchase anything with crypto, you have to recognize gain or loss on the crypto as if you had sold it and used USD to make the purchase. It's a really bad tax answer for a lot of folks and very administratively burdensome. I imagine many people buying NFTs or trading crypto pairs either don't know how the taxes work or willfully ignore how it works

[Aahz]

Showing my complete ignorance, I would be curious how NFT's are stored.  It might be interesting if they could be incorporated into the physical art (like an RFID tag or a UPC code).  This way you could not separate them and it would act like a certificate of authenticity.

[vodou]

49 minutes ago, PhilipB2k17 said:

Here’s a great explainer of NFT’s and cryptoart for dummies like me. 
 

https://justincone.com/posts/nft-skeptics-guide/

 

You're mostly "not my pal" but that's a good link; thank you.

[Varanis]

17 minutes ago, Heidjer Staecker said:

Showing my complete ignorance, I would be curious how NFT's are stored.  It might be interesting if they could be incorporated into the physical art (like an RFID tag or a UPC code).  This way you could not separate them and it would act like a certificate of authenticity.

NFTs are held in "wallets." Wallets have private keys which grant you access. If you can access the wallet, you can transfer the contents to the public address of any other wallet. You can put the private key for the wallet holding the NFT somewhere not publicly visible on the physical art, thus giving a future owner access to the wallet holding the NFT. I find this somewhat problematic, however, as it substantially increases the odds of theft of the art's NFT. It will be curious to see if better, similar solutions are derived.

[vodou]

24 minutes ago, Varanis said:

It will be curious to see if better, similar solutions are derived.

[Will_K]

@vodou's first NFT !!!

[vodou]

1 hour ago, Will_K said:

@vodou's first NFT !!!

In case I get Texas-ed  

[PhilipB2k17]

As I understand NFT’s, there’s nothing inherent to the blockchain that guarantees royalties. That’s specific to the forum where the tokens are created and sold. So, there’s no guarantee that an artist will continue to get a single penny in royalties if the NFT is sold on a different market forum than where its first sold. 

[hmendryk]

13 hours ago, PhilipB2k17 said:

As I understand NFT’s, there’s nothing inherent to the blockchain that guarantees royalties. That’s specific to the forum where the tokens are created and sold. So, there’s no guarantee that an artist will continue to get a single penny in royalties if the NFT is sold on a different market forum than where its first sold. 

With my limited research I believe that is correct. Even more worrisome for me is that the art is represented in the blockchain token as a link to the digital image file. This seems to present two problems. The first is that everyone has access to the image file (a jpeg) so the owner has no control on its distribution they just have bragging rights as the real owner of the piece. I am sure there will be digital art collectors who will collect copies of the digital art they like and forego paying for the bragging rights. The second problem is, if I understand it correctly, for the blockchain link to the digital art file to work the file must remain online at that web address. If the file is removed or the host for that address is no longer in business, as far as the NFT art is concerned the owner would now own nothing.

My understanding is that there are ongoing discussions to address the problems of royalties and blockchain image links and I suspect these problems will be solved. What is uncertain is whether the solutions will be retroactive. If they are not retroactive then those spending thousands of dollars for NFT art may find them worthless sometime in the not too distant future.

[vodou]

30 minutes ago, hmendryk said:

This seems to present two problems. The first is that everyone has access to the image file (a jpeg) so the owner has no control on its distribution they just have bragging rights as the real owner of the piece. I am sure there will be digital art collectors who will collect copies of the digital art they like and forego paying for the bragging rights.

I've put a little more time into this since my initial comments that Felix replied to. First - the people that are really active in this space (active = BUYING/TRADING, not buy-curious  ) do not care at all about physical assets. Not at all. Bragging rights of 1/1 (or even 1/50 for small 'editions' or multiples) is 100% of the appeal (well that and the usual flipping, etc motivations). What YOU (or I) think about this is not the point. Further...we're hypocrites if we put much effort into defending a position against this because...we're all about 1/1 here too (or 1/50 when it comes to CGC 9.8 population reports  ). Limited and/or 1/1 is exactly that no matter "what" the asset in question is. There's supply (not much) and there's demand (it's great, plain and simple)...that describes BOTH comic art (1/1) and digital assets (1/1) and let's not forget CGC 9.8 of some comic (1/12 etc). If you can't move past this, as Felix states in that YouTube with Bill and Jason...just go home and polish your Itoyas...you've never get it.

40 minutes ago, hmendryk said:

The second problem is, if I understand it correctly, for the blockchain link to the digital art file to work the file must remain online at that web address. If the file is removed or the host for that address is no longer in business, as far as the NFT art is concerned the owner would now own nothing.

This is 'a something' but I think the argument has been made, and it's a good one that IF you separate the asset from the NFT...neither are worth as much. The sum is of the parts is never greater than the whole. At least to The Market (um, still not us!) that's ACTIVE in the space. This is why these guys are not especially interested in physical assets with NFT to begin with (though maybe things will change over time or the tent of ACTIVE will expand to include other POVs???)...the physical will NEVER be where they want it...in the digital/virtual space!

I'm sure this stuff will get worked out, the "free" market tends to do that if left alone...good ideas get adopted and bad ideas get worked out or go away.

Questions?