Ben Way is a well-known crypto expert and entrepreneur. His most recent startup, TokenMaker, is a platform on which users can create tokens and non-fungible tokens (NFTs) with zero code experience.
In this episode of Power Your Advice, Doug Heikkinen and Ben discuss cryptocurrency, NFTs, and why advisors should learn more about both.
- What an NFT is
- What are some of the challenges with this type of investment
- Why Ben sees a positive future for them in the future
- Why you should be interested in this asset class for your clients
Douglas Heikkinen, Ben Way
Douglas Heikkinen 00:02
Hello and welcome to the power your advice podcast. The power your advice podcast is designed to bring financial advisors new ideas, why those ideas should be considered and how to implement them into your business. This podcast is brought to you by advisorpedia the best place advisors comm to grow their minds and businesses. This is your host, Doug Heikkinen. . .
Ben Way 00:56
It's a pleasure. Thank you.
Douglas Heikkinen 01:00
We've all seen NFT's in the news recently, it seems like this space throws something new at us all the time. Can you explain to me what an NFT is and how it works?
Ben Way 01:13
Absolutely. So it has definitely gone a bit crazy. Um, you know, the the thing about NFT's is they they always mirror the world, the real world crypto space always mirrors the real world in a in a in a certain respect. And so you got kind of things like Bitcoin in the traditional crypto world, which mirror kind of fit and currency. And then you've got NFT's, which technically means something called a non fungible token, which means that one cannot be exchanged for another, it's something unique. And the easiest way to describe an NFT is probably to think about it as a unique asset, a piece of art, a piece of music. But it's inherently unique and has a specific value attached to it, based upon what the market is prepared to pay for.
Douglas Heikkinen 02:07
Does that make any sense to you? It makes a little bit of sense. And it's really interesting. And there's so many skeptics out there. Let's talk about some of the issues and challenges with investing in NFTs, for example, how do you know what you're buying is legitimate? I mean, it's a piece of art, and who gave me the price on that?
Ben Way 02:28
Yeah, unfortunately, it's a bit of a wild wild west right now. You know, the, the most important thing I would say is a bit like life is buyer beware. You know, there is there is no policing to this right now. And there will there will be you know, there will be legislation that comes in and tries to protect people. But the reality is, it's the wild wild west, and at this point in time, and, you know, he really is down to the down to the buyer to kick the tires on whatever they're purchasing, and you will, you know, a number of people will lose out and be scammed because of it. That's just unfortunately reality of life, people take advantage of any new system says whether you know, is, you know, what I always say about investing is a you should never invest. You should never invest more than you can afford to lose. And the way I've always invested in my life, is that why I always hope for for a significant return, I never invest $1 more than I can afford to walk away from.
Douglas Heikkinen 03:36
Yeah. So is this something that advisors should consider for their clients? Or just understanding more about it? So they can explain that to clients or both?
Ben Way 03:50
Yeah, I think I mean, I, I would say it's, it's useful for for financial advisors to understand I suspect, they will have some kind of client interaction in this space at some point in the relatively near near future because it is, it is, you know, point of interest and is an extra is kind of interesting for financial advisors, because it's kind of starting to blur the line between kind of becoming, you know, becoming an art dealer owner and financial advisor, right is really starting to, you know, things thing, you know, starting to get into this kind of interesting gray area. And I think what I would say is that, you know, if you're advising your clients is, you know, you're, you're spreading, you know, what you're doing with their portfolios, effectively spreading their risk, right, they're gonna have some low risk, low risk assets, they're gonna have some medium risk assets and then some very high risk assets. And I would say that NFT's are pretty much the highest risk category, you can get into so depending on depending on their clients appetite for very high risk, very Reward opportunities, you know, that's the way it should be presented in this, you have some kind of much deeper knowledge or deeper access to the NFT network that allows you to kick the tires in a way that most people can't.
Douglas Heikkinen 05:15
Yeah, we know ultra wealthy Millennials are spending big on art. So and I'm really interested in from a music standpoint of all the people who are creating music and, and not getting paid anymore. What other industries do you think will leverage NF T's especially where the wealthy are spending their time?
Ben Way 05:33
Yeah, and this kind of this kind of comes into kind of market development, you know, we are just seeing the very, very peak of an iceberg as it were in the water and kind of art and music in the creative arts to kind of be the the low hanging fruit of what NF T's are capable of, I think, you know, as you just like, you know, crypto is has started to do, well, you're going to see is all these edge cases of, of products and utilizations and markets which in a sense, are going to be far more valuable over the long term than just these, you know, very high peaks and troughs that we're seeing in the NFT space. So the way you know, we're we're seeing, you know, we're looking at, you know, token maker, we you know, we we've always wanted to be the picks and shovels of this industry, why we're not interested really, in being you know, bare building a platform to sell art, what we want to do is be the picks and shovels that allow somebody else to build that platform. And that's kind of our kind of conceptual kind of way we're running the business by you know, we're looking at all these kind of edge cases. I mean, we've added we've had some incredible ones, you know, everything from local government asset management to, to ticket sales, ticketing platforms, to sports, I mean, it's a you know, just like crypto, you know, at the beginning where everyone's nice sayings like, Oh, it's not gonna change anything. And now really, it is changing something has been like mfts, your way of why you know, where we're at kind of day one of the NFT space. I mean, I was very lucky, back in the day 2003 to be involved in trade Hill, which was the first ever Bitcoin exchange and the FBI shut us down, because it was too scary. And but if if trade Hill, it survived, I'd be sitting on a billion dollars. And the the NFT space is exactly the same, it's right in the beginning, there's a lot of masses, no regulation, but over time, over the next five years, it will come into focus, and it will be a more normalized asset class.
Douglas Heikkinen 07:54
How at the beginning, are we? Because it seems to me like I just started to see articles in the last two months, but it's more than just two months old.
Ben Way 08:03
Yeah, I mean, then if he's been around for years, but you know, just like crypto wasn't until it wasn't until it became accessible to the population at large, when it hits, kind of it's kind of it's kind of conscious tipping point where it suddenly enters the mind of the general population as an opportunity. And I think, you know, I think we saw that, you know, the kind of major price points Bitcoin were kind of around $100, and then $1,000, and then $10,000. And now $50,000, it's the same with NF T's and NF T's, well, how is this there's no doubt there's going to be an NFT crash, right? Isn't it, you know, the, you're gonna have people piling on, people are gonna get ripped off. And then people give me like, fuck mission, that's, that's, let's do that, you know, that's that this isn't what's supposed to happen. And then people are going to solve for those problems. And, and build, you know, build solutions. And then people come back and go, Oh, actually, this is a really interesting model. Let's try this again. So nothing is static, and nothing is predictable in a new market or new technology. So, you know, it's it's very much in the beginning, it's a wild wild west right now, which is why, you know, people can can turn $1 into a million dollars, but people can also lose a million dollars. So you know, it works both ways.
Douglas Heikkinen 09:28
There, there wasn't often a sheriff in the wild, wild west, and many of our listeners are wondering if NFT's are regulated? And if they're not, do you see them being regulated in the near future?
Ben Way 09:42
I don't think that will be I mean, you know, one thing we know about governmental agencies is they're very slow to react. And there's a beautiful saying I can't remember exactly what it is, but it's kind of like the, the you know, the law is slow but it always it always comes right it's it's just a very slow mechanism. But ultimately, it will catch up. Whatever you're doing so, you know, I think, you know, over time it will be regulated, in a sense, it needs the freedom to be unregulated to see, you know, weather where the sand settles as it were. But, you know, it is it is, you know, it is a very, you know, we all end up being regulated, but it is right now, a very, you know, like I said, you know, from an advisory point of view, it's incredibly high risk asset. And, you know, if you if you're doing 100, NFT deals, you're gonna get burned on a good percentage of them.
Douglas Heikkinen 10:35
How about safety? We know everything can get hacked these days, it this is no different. Right?
Ben Way 10:40
Yeah, it's, it's one of the problems we're trying to solve in token maker both, there's kind of two aspects to that. And there's, there's the kind of, there's the, the actual security of like, okay, you own this thing. And that's a kind of a somewhat basic thing in the sense of, you know, you know, how do you protect your data? How do you know, if you should, you should protect your NFT passwords and access just like you would, your bank account, right? You know, the difference being is if you lose an NF, T, nobody's gonna refund you, right? If the platform screws up and gives your password away, and, and you lose your NF T, nobody's gonna refund you for that. So, you know, be responsible, the NF T's it's is it's really for you to research how to protect them, maybe even you know, protect the physical asset offline, there's, there's, it's quite a complex area of of security. And then there's, then there's the other side. So you know, that's the kind of owning the asset side of things. But then there's the security you have on is the thing you're purchasing, the real thing that you wanted to purchase. And this is a real challenge in in the marketplace right now is because you can buy something that actually you may not end up having the real products at the end once you access it. So you can it's like a bait and switch type activity. This is one problem, we are trying to solve a token makers how to how to make sure people can't do bait and switch. And we're building some pretty sophisticated technology, which without getting too complex has to do with hashing and, and some artificial intelligence regression technology. So that and normal user can check. Oh, yeah, I paid a million dollars for that, Oh, yes, I've got one of those to get. Right now, that's not the case you are is basically, and I can't quite believe that the market is what it is today. This is basically on trust between the buyer and seller. And as we all know, when there is it when something is based on trust in the marketplace, there are bad actors that will take advantage of that.
Douglas Heikkinen 12:57
So there's tons of challenges. They're not regulated, they can be hacked, you can spend, you have tons of time that you can spend doing anything in this industry or other industries. So why this and why do you see a strong future?
Ben Way 13:12
Yeah, I mean, it may sound it may sound totally counterintuitive, but I'm, I'm that I'm highlighting all these issues as anybody's, like any other new creation, right? It's, you know, it's the start of the market. So great fortunes can be made, if you know what you're doing. Right. And and while it is the wild, wild west, you know, it will rapidly transform it will, it will be regulated, and in five to 10 years, what you have is a platform that can can digitally represent the value of work created. And that on a fundamental level to be able to give value to the creator of anything directly without having to go through these mediating intermediary intermediary. People it makes the whole system more efficient. Imagine imagine being Sotheby's right now or record label or film this year. Imagine, imagine that all gets cut out. And instead of instead of everyone taking the little piece of the pie and leaving, leaving that creator with 100th of what they deserve. The person consuming, the content is paying 100% to the Creator. And that inefficiency is why NF T's interesting, just like anything else in the world, just like Bitcoin, right? Why is Bitcoin interesting? Because it cuts out the intermediate T's. That's the value creation, its efficiency, efficiency drives, reduces the amount of energy required to do the transaction and therefore increases its value inherently. And that's what the internet did. That's what you know, is what every major technological revolution has done is just made something a lot more efficient cut out intermediaries. And and that's that's, that's that's what we're talking about. And that's why it's interesting.
Douglas Heikkinen 15:12
I also see a number of major companies coming after you with pitchforks.
Ben Way 15:17
Well, yeah, I mean, I mean, if you have I mean, it's like Bitcoin I mean, you know, like, it's no econ is like trying to stop the internet. Right? I sat down, I sat down with 15 years ago, I sat down with the board of I think it was Sony records and one of the record labels, because I developed an anti piracy technology to stop music getting shared on the internet, which was a big problem at that point, because they hadn't they hadn't, we were missing down the exact Sony on one of these 11 music labels. And literally them telling me that in a few years, nobody's going to want to have digital music, we're gonna all go back to CDs and records. And you're just like, Are you kidding me? And they lost billions of dollars. So what I would say to any big corporation out there who's like, we need to fight against this? No, you need to be the first ones to adopt this. So you can get that value creation early, and transform your business. You can't you one thing we know about human endeavor and human innovation is you can't stop progress, you can't stop progress. So you can either go with the flow, or you can try and slow it down slowly. And maybe you slow it down by one or 2%. But the ultimate outcome will all be always be the same.
Douglas Heikkinen 16:42
I find this also fascinating because it's non traditional. I just listened to a podcast from the CEO of Netflix in that journey. So how did you read the tea leaves and become an evangelist for this emerging asset class?
Ben Way 16:55
Well, my biggest failure in life has always been that I've always been about 10 years to 10 years too, ahead of the curve. So you know, I have always I've always, you know, I spend my time thinking about the future, constantly predicting trends, trying to see where things moving, what the ultimate, you know, when the ultimate, you know, what the ultimate journey for society for our planet and beyond, is, and, and so I just see these very distinct trends and, and you know, everything, everything is going to be digital, everything is going to be on demand, everything, everything, there's going to be the efficiencies, the inefficiencies, in our society today, there are literally millions of technologies being built today to reduce those inefficiencies down to zero. And we are an incredibly inefficient society right now, we think we're efficient, because we've got nothing to compare ourselves to, just like, we think we're the most intelligent species on this planet, because we have nothing to compare ourselves to. But we are an incredibly fraud species that is inherently inefficient. And the whole point of technology, the whole point of AI and the whole point of all of this is to, to rebalances inefficiencies and and reduce them so we can come the species we deserve to be and we can become this, you know, this, this, you know, we can we can move into our next phase of, of existence on a much, much faster and more efficient level. That's what this is all about. It's just efficiency is energy at the end of day, all energy, it's just that it's just, you know, a, you know, increasingly Finn's efficiency of energy that runs through the system.
Douglas Heikkinen 18:58
I'm really interested in that because if you take away all those inefficiencies, and somebody is doing them for us, what are we going to become? I have no idea, do you? Well,
Ben Way 19:08
they say I mean, that is that is the kind of meta metaphysical question now what I what I would say is my hope I you know, I'm an eternal optimist. there's kind of two ways to look at it. One, technology could free us and bring in a period of Renaissance that we haven't seen in generations, and allow pure creativity of human human humans to to grow and you know, this vision we have for ourselves of being able to live live a life of filled with pure creativity and joy and happiness. That's what we are as one possibility technology could free us that another possibility because I do a lot in a lot in artificial intelligence and robotics You know, I ultimately leave and I've written a book to this to this effect is that at some point we will generate a artificial consciousness on Earth, which is beyond our. And my belief is that inherently the universe is a, a positive force. And so my belief on my, my best hope, as I describe it, is that, you know, at some point this this artificial conscious will probably take over, because we're pretty flawed species, I'm not quite sure we can look after ourselves. And we become like, well looked after pets, and, you know, we, we, we have a beautiful life. And, and we're not we're not allowed to touch anything too complicated. That's kind of that's kind of the kind of joking where I look at it. If that makes any sense at all. We become star people. Yeah, something like that. Someday we we, you know, where there's an inflection point coming. There's new data, we all feel it inherently deep down. There's some this this, this society, the way we're working right now cannot continue there is there is a deeper and deeper inflection point coming. And it feels like it's coming up fast. And there was a beautiful article I read yesterday from one of the Google. I think it was Google engineer. I try and try and send that to you. So you can post it in the comments or something. But it's one of the most interesting articles about the acceleration of innovation and how that basically every 10 years we go forward, the pace of innovation doubles. So it's an exponential doubling. So 40 years, you know, what is what is a month's innovation today will be like a day's innovation. Right? So it becomes this kind of exponential kind of consolidated. growth pattern is going to be insane.
Douglas Heikkinen 22:06
Then this has been absolutely fascinating. We really appreciate you joining us. If people want to learn more about NF Ts and what you're up to, where should they go?
Ben Way 22:16
I just go to token maker.org we're here we're very accessible. If you're interested in any part of it, feel free to contact me directly. You know, I'm not that hard to find and is a great connecting with you and sharing my views.
Douglas Heikkinen 22:32
Thank you very much. For everybody advisorpedia our producer Jakie beard and the power your advice podcast team. This is Doug Heikkinen
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