What do deep neural networks, artificial intelligence and Web 3 technologies mean for numismatics - sports cards - art collectibles
by: Mike Johnson | Thursday, December 15, 2022 | 0 Comments
To understand the technologies, it's imperative to consider Web 3 metaverse market scope. There are many reports with a wide range of estimates such as these examples:
Metaverse Market Size, Share, and Trends Forecast, 2022-2030 (psmarketresearch.com) or this one according to Yahoo Finance Metaverse Market Statistics - A $678.80 Billion Industry Size by 2030; The Next Big Thing (yahoo.com) or here Metaverse Market Size to Expand USD 1.3 Trillion by 2030 (precedenceresearch.com)
In any event, it's a huge global marketplace. The closest I can guestimate for the global collectibles metaverse marketplace is $400 billion by 2030 - I guess my guestimate is as good as any! But aside from that, here are some facts.
ERC 721, ERC 1155 and EIP 2981 are all metaverse (Web 3) protocols which are the basis for royalties tied to intellectual property. Now why would I pick these protocols when there is so much else to talk about?
Because as I envision it, they offer a path to rebuild entire industries and where better to start than collectibles?
Here is why. The referenced protocols control royalties and digital fingerprints at nano level uniquely identify a scanned physical asset such as numismatics, sports cards, art and so on. Because of blockchain technologies, digital fingerprints engineered to industry grading standards or ISO measurements with third party asset authentication systems register jointly the physical asset with its digital fingerprint as intellectual property as an immutable chain of title it only requires smart contracts that automate payment of royalties. Got it so far?
So here is my opinion on how you use technologies to change industries - in this case the collectibles industry.
Using the referenced protocols, digital fingerprints IP and scanned physical assets you share royalties using smart contracts. That is, the business, Coin and Card Auctions shares royalties with consumers as a function of marketplace costs. To do this requires minting of the physical asset and creating an asset backed NFT. (Coin and Card Auctions provides this service)
So how does the consumer, collector, dealer make money?
The smart contract triggers automatically on resales and transfer of ownership of the physical asset and the digital fingerprint. Basically, this happens every day in the conventional marketplace. You buy a coin agreeing to pay the seller. You give money to the seller in exchange for their coin and you take physical possession. Now the physical asset and ownership have transferred between the seller and buyer. Most coins sold are graded. The graded coin is generally verifiable on PCGS, NGC, or ANACS (the validation) So the only difference here is royalties are not paid because there is no IP and no mechanisms that enforce royalties. In the metaverse you are guaranteed to receive royalties because when the NFT is created the smart contract identifies you as the beneficiary and Coin and Card Auctions as beneficiary.
But that just the beginning. Let's talk about royalties' aggregation and a secondary marketplace for royalties. Let's also talk about transferability of royalties in an estate and best of all, let's talk about perpetuality.
Royalties' aggregation is just like it sounds - let's say you are a coin dealer, or a young collector. As a coin dealer you take 1,000 coins, we create the digital fingerprints/IP, mint the coins (NFTs) and place them on global marketplaces. You get paid as the coins sell into the marketplace, but you also get paid royalties as they resell into the marketplace. Thats for as long as the coins are in the marketplace and as many times as the coins are resold. And you're earning a percentage of the retail value with each resale. OK, I get it - I can hear the screams from here! You're saying who in their right mind will pay royalties? Right? Here is who. The buyer and here is why. The metaverse marketplace costs are far less than the conventional marketplace.
For example, eBay can be thought of as a conventional marketplace who is probably charging around 12.8%, How much is HA? or any other conventional marketplace? The total metaverse marketplace costs including royalties will average between 6-8%, or just half of eBay. So, the buyer pays roughly 6-8% marketplace costs or about a 50% cost savings and you automatically receive royalty payments.
So, let's look at market traffic. For example, Magic Eden - NFT Marketplace has about 22,000,000 unique visits per month and sells approximately $70,000,000 per month. While most of that is digital art, we are working on making that as one of many available marketplace solutions.
So back to aggregation. Let's say a $1,000 coin earning a 1% royalty turns over 2 times per year. Multiply that by 30 years. You have a two-x turnover equal to 2% per year x 30 years but now let's say you have 5,000 coins turning over in the marketplace 2 times per year. And paying you 1% of retail per each turnover. Now in this example, you have 10,000 turnovers per year each paying you 1% of the retail price X 30 years. Remember - you sold the coin only one time.
So, what's next? With the blockchain registration you will have the exact history of every single coin as it makes its way to different buyers over the years. You will know what coins have the highest turnovers and at what price points. Knowing this you can target the coins you purchase and resell.
This also potentially creates an entire secondary marketplace. If you have a track record showing the number of turnovers and sales prices recorded over a long-time frame it could be logical to bundle royalties and sell them to investors - food for thought here!
But here is my favorite. Transferability. So, what are you transferring and why? Let's say you spend most of your adult life building your collection and its worth a sizable chunk. When you pass on perhaps you don't have any collectors in your family and your prized collectibles are auctioned off. On the other hand, let's say you have a sizable collection you sell off and keep retained royalty's ownership which you want to pass on, gift, donate to a charity, etc. This would only be possible in the metaverse marketplaces. And best of all - its perpetual royalties!
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