Financial And Tax Implications Of NFTs With Joe David, Crypto Accountant

Podcast: Download (Duration: 48:14 — 38.8MB)

If you want to create, sell, buy, or trade NFTs, you need to understand the financial and tax implications. In this interview, Joe David explains the important aspects of blockchain assets and cryptocurrency.

[Disclaimer: This is not financial or legal advice. This is just a conversation based on our interest and experience. Please consult a professional about your situation.]

In the intro, I mention the bear market and recommend Unshakeable. Your Financial Freedom Playbook. Creating Peace of Mind in a World of Volatility by Tony Robbins, as well as my list of other money books, plus my NFTs on OpenSea; Future Freedom community; and podcasts I listen to at the moment: Crypto Business; Azeem Azar’s Exponential View; Exponential Wisdom .

If you’re just getting started, listen or read episode 610 on NFTs for Authors, which covers the basics and different types of NFTs. You can also watch the presentation as a video here.

This podcast is sponsored by Written Word Media, which makes book marketing a breeze by offering quick, easy and effective ways for authors to promote their books. You can also subscribe to the Written Word Media email newsletter for book marketing tips.

Joe David is the founder and managing director of UK-based Nephos Group, which helps businesses with tax, technology, and business planning. Nephos includes Myna Accountants, which is the UK’s leading dedicated cryptocurrency accountancy.

You can listen above or on your favorite podcast app or read the notes and links below. Here are the highlights and the full transcript is below.

Show Notes

What is an accountant interested in crypto?
Is cryptocurrency ‘real’ money?
Why blockchain transactions are transparent and trackable and how exchanges require KYC (know your customer) setup
Global vs local rules for cryptocurrency
Are NFT books assets or products and how do we account for them?
The types of tax you need to think about: income tax, and capital gains (and loss)
Taxable events include ‘disposal’ of assets, which can be transferring one currency into another (e.g. ETH to BTC) or from crypto to fiat (e.g. ETH to USD)
Where are we in the crypto adoption cycle?
What is the future of NFTs?

You can find Joe David at MynaAccountants.co and on Twitter @crypjo091

Transcript of Interview with The Crypto Accountant

Joanna: Joe David is the founder and managing director of UK-based Nephos Group, which helps businesses with tax, technology, and business planning. Nephos includes Myna Accountants, which is the UK’s leading dedicated cryptocurrency accountancy. Welcome to the show, Joe.

Joe: Hey, Jo. Thanks for having me.

Joanna: I’m really excited to talk to you about this topic.

Before we get started, I guess you’d better give a bit of a disclaimer.

Joe: Indeed. Basically, everything we discuss in this podcast will be based on either factual information that’s been provided to me via the resources available, or my opinion on certain things.

None of it is financial advice. None of it is tax advice.

If you do want specific tax advice, then please contact me separately. But this is a generic overview for your education only.

Joanna: Yes. Brilliant. Absolutely. So, let’s get into it.

I want to start with a more personal question, because you’re an accountant, and yet you are super interested in cryptocurrency.

Why are you so interested, especially when the media, and probably a lot of accountants, can be super negative about crypto?

Joe: It is a good place to start, because I do get asked that question quite a lot. I think, for me, it comes down to two things.

First of all, looking into cryptocurrency over the years, working in the area with a few clients here and there, I just really liked the concept. As soon as I started reading more about it and watching more videos about it, and really understanding the underlying fundamental principles of crypto and blockchain, it really resonates with me how we can have a financial system that isn’t reliant on any one person or any third party.

There’s no single source of failure. You control your own money. All of those bits and pieces fit really nicely, I think, with where we should go with the digital technology we’ve got these days.

The other point is, and it kind of touches on your point of where the media say certain things and other accountants might say certain things is, I’ve always been very opinionated and very…I call it anti-establishment, but that doesn’t mean I hate everything that is said. It means that I like to do things differently, and I like to mix things up, and I like to change things for the better.

I think that crypto will create a better financial system for our future generations, and therefore that’s my opinion, and that’s why I’m so passionate about it.

Joanna: I do want to circle back. You said you liked the concept, so you started reading more until you could understand the fundamentals. This is what I feel right now. I feel like I have now spent maybe 60 to 80 hours on reading about cryptocurrencies and blockchain. And that’s just sort of the real deep stuff.

It’s been a year or so for me of learning in discussions like this. But I do feel like there is quite a knowledge gap between people who have opinions on this stuff and people who’ve actually spent time learning about it.

Is it that you have to spend 40 hours on this stuff before you get it? Is that where we are?

Joe: I think it depends on what you class as ‘getting it’. You can get a fundamental, basic understanding of it through watching a few videos, reading a book or two here and there.

You’ll be able to get a basic understanding of some of the common principles within blockchain technology and the cryptocurrencies that are laid on top of that. So, I totally think you can get an understanding fairly quickly.

The reason I said it takes ages and what, loads of videos, to read loads of articles and books and things like that is, for me, I wanted to go really deep, and I’m still going deeply. There’s still much more that I keep finding.

I’m on a group, and just this morning, someone said, ‘It’s amazing how you learn something every day in crypto.‘ And it is definitely that feeling of every day, you learn something new or you see something different, so I think it depends on the level that you want to go to.

And because I wanted to go so deep and really specialize in it, for me, I spent hours and hours and hours and days and weeks, and months and whatnot researching it.

Joanna: I’ve definitely caught the bug as such, and I’m going down these rabbit holes too. And again, it’s following your curiosity and figuring stuff out, and I’m still learning a lot as well, so I’m really glad to talk to you about this.

Let’s tackle a common misconception, which is that cryptocurrencies are not real money, so we don’t have to account for them, we don’t have to pay tax on them, and equally, it must be anonymous.

Tell us why that’s wrong and how we should think of it.

Joe: If we start on the first point around it, whether it’s kind of, in inverted commas, ‘real money’ or not, obviously, the definition, I guess, of money is an exchange of value.

I give you money for something and you give me something back in return. So, if somebody is willing to give you a cryptocurrency and you’re willing to give them something back in return for that cryptocurrency, then ultimately, you’ve got a transaction there that you could class as money.

I was reading once that there’s some island somewhere out in Australasia, or something like that, they trade rocks or something because that’s the only kind of commodity they’ve got there that. So that’s not real money. But it is able to trade value between themselves and between other people. So that is, I guess, the concept of whether it is or isn’t real money, but it’s money if it’s perceived to be exchangeable for value.

Obviously, at the moment, there are limited ways of spending cryptocurrency in the world, but what I would say is that’s only going to get bigger and stronger. I wouldn’t say it’s not real money, but at the same time, I wouldn’t say that it is a currency and therefore should be treated as so, if that makes sense. That’s the first part I would say about whether it is or isn’t real money.

The second point, then, is, if it’s not real, or you can’t physically see it or hold it, I can understand people then saying, ‘Well, why do I need to tell anybody about it? I’m just going online and effectively I’m gambling with buying some Bitcoin and hoping it goes up, therefore, I shouldn’t pay tax on it.’

But actually, that couldn’t be further from the truth. The tax rules are very complicated, and have a lot of potential issues for some people if not done properly. It is definitely something that you need to be aware of. It’s not as simple as just saying, ‘It’s not real money, therefore I don’t have to report it.’

Joanna: And what about the anonymity side of it?

Joe: So, it’s one of those situations. It’s totally anonymous in a sense of, it’s done all via a wallet address, not by name or anything like that. But at the same time, it’s the most open system that anyone can possibly see ever. That might sound a bit strange, but the reason I say that is for two reasons.

Like I say, it’s anonymous in the sense of you’ve got a wallet address, and that wallet address is the identifier to who you are, but, in a lot of circumstances, you don’t need to run any kind of KYC [Konw Your Customer] checks on that wallet. And therefore, there is no clear distinction between whose wallet is whose.

The other argument to that is, but actually, some exchanges, so, Binance, Coinbase, places like that, they will expect you to KYC. So that the moment that you trade with one of those, you’ve already linked that to your name.

I can understand why people consider it to be anonymous, but actually, 9 times out of 10, it probably isn’t. The reason then that I say it’s the most open system ever is that, even if you could argue that it’s anonymous, let’s just say, actually, you can follow the flow of every single transaction.

Every single movement of crypto across a blockchain can be tracked and viewed on what’s called block explorers on the internet.

So, if I knew your wallet address, I could look at your wallet, I could see your transactions, I could see what you were doing, which also actually makes it much easier for us than you might think to do the tax side of it.

Joanna: In fact, I’ve read that people are more worried about transparency than anonymity, and that for very high net worth individuals everything can be seen, and then the tax authorities can see everything. Plus, I’ve heard of AI-related tools that can essentially track you through other forms of online behavior to your wallet address.

I guess why I wanted to start with that is, I still hear comments that relate to what perhaps Bitcoin was back a decade ago, and things have changed a lot. And so, importantly, we are saying that we’re going to account for this as we do, let’s say I go to a fair and I transact in cash, I will account for that with my accountant in the same way that I will also account for my cryptocurrency.

So, you could ‘somehow try and avoid accounting for it’, but we’re business people, we want to do the right thing. That’s essentially what it comes down to.

Joe: Totally. And look, I speak to people who have this dilemma ‘all the time’, their dilemma of whether they should declare it or not. And my point is always, this is an open system, that anybody can look at, at any point, whenever they want.

HMRC (UK tax authority) may not have the capability at the moment in order to be able to find this information, but this is going to stay on the blockchain forever.

It’s not going to be taken away and no longer viewable or anything like that. So, even if it takes a couple of years for HMRC to be able to get the ability to be able to do it, they are going to have the ability. So, why would you risk, if you like, that, when you know full well that they’re going to be able to access publicly available information?

And actually, you talk about cash, and actually, it’s an interesting point because people suggest that cryptos are used for a lot of illicit activities and things like that. But actually, all of that, in principle, can be tracked, whereas cash can’t be tracked.

If I drive to where you are now and I hand you a bag of cash, and then I drive away again, who’s to ever say what happened to that? And if you then go and use that for illicit activities, for example, even if I didn’t, there’s no way of tracking that.

Whereas with crypto, if I send you crypto, and then you send that to an illicit activity, I can find that out. So, actually, when people talk about that, you’ve got to think about actually, well, how much illicit activity is used in the current financial system that can’t be followed or tracked?

Joanna: Absolutely. So, just a couple of acronyms there, KYC, which is Know Your Customer, for people listening.

Joe: Know Your Customer.

Joanna: That’s when you upload your driver’s license and your name and address and what country you’re in. And then also, you mentioned HMRC, which is the tax authority here in the UK.

When you’re talking about things, is this UK-specific or, given that this is all kind of global, how is it global and how is it not?

Joe: It’s a really interesting point, again, because we do now get a lot of inquiries internationally, and we do work internationally, more so on the business side of things than the personal tax side of things. But we do work internationally on personal tax as well, because there are accountants around the world that don’t know how to deal with crypto.

We’re talking to a guy in the U.S. at the moment where we’re going to reconcile all his crypto stuff, and then send that over to his U.S. accountant, who will file it.

Ultimately, the rules are different, in a sense, in every country. There are more tax-friendly jurisdictions for crypto, and there are less friendly jurisdictions for crypto. The rules are different in each country, but a lot of the principles are very similar.

[From Joanna: For country-specific accounting and tax info, check out Koinly tax guides per country]

Joanna: Absolutely. Right, let’s get into some specifics.

The listeners are authors, and we sell books, mainly, and there are companies emerging that will help us sell eBooks as NFTs.

So, let’s call them NFT books, which are essentially an EPUB file on a specific blockchain, with a smart contract attached in some way, and a buyer can read, collect, and/or sell those NFT books.

Is an NFT book a product? Is it an asset? Is it a collectible? Because I believe these are treated differently for tax purposes.

Joe: I should say this, we’re going kinda specific, but also, I just want to reiterate the point around, whilst this is a specific subject, we’re not actually talking about specific scenarios, so please do get in touch if this relates to you.

Ultimately an NFT can be multiple different things these days, and people look at NFTs and say, ‘Oh, it’s just digital art or what have you.’ But actually, the use cases for NFTs are going to be mind-blowing, I think, in the future.

For the first thing to establish is what NFT you are actually creating, or using, or selling, or buying, or what have you. Ultimately, what I do is to try and tie it back to what the kind of traditional underlying asset might be, and what the intention is of what you’re doing.

If, for example, you’re a creator, so you’re a book author, and you create your book as an NFT and you sell that, then, to be honest, you’re likely to be taxed under the same kind of rules, if you like, as if your book was another copy. So, if you sell that book for 0.1 Ethereum or whatever it might be, then you will be taxed on the value of that at the point of sale. That’s the first, fairly kind of, again, broad brush, but fairly simple approach.

If you’re a buyer, obviously you’re not going to pay tax on purchasing, but if you then resell that, then there is a tax on reselling of that NFT. So, where that might be different is if you were buying a book, you’re in the kind of normal kind of world, you went to a book store, you bought the book, and then you saw your friend the next day, because you read it really quickly, and you said, ‘Here you go. Here’s this book. Gimme a pound back for it,’ and they gave you a pound, that probably wouldn’t ever be declared.

Whereas, with the blockchain, NFTs, at the moment, are not split between a book, a piece of art, a ticket. They’re all put under one banner, if you like, as NFTs. So, I think at the moment, there’ll be a real challenge between saying that NFT purchase and sale shouldn’t be taxed, because ultimately, HMRC would say an NFT’s an NFT, therefore there should be tax on that.

The last example is, you will have collectors. So, you will have people who purchase NFTs, or traditional books, to collect. Now, obviously there’s a slightly different regime for that under the current tax guidance as well.

Unfortunately, we’re in a position where we’ve got a whole new world, which is opening up to a kind of really large audience, which is fantastic. But unfortunately, the guidance doesn’t necessarily follow every single kind of avenue that’s been opened. So, in this case, with books and publishers and authors, there is no specific guidance.

That is definitely something that needs to be considered when you’re doing this, and to get specific advice on the exact scenario. Like I say, intention’s really important, why you’re doing it? What would be the implications if you were doing it in the traditional way, and kind of taking it from there. But like I say, it does need to be specific to your scenario.

Joanna: Absolutely. And as you say, intention, and also best endeavors, like, I really tried, and I came to you with these questions, because I want to do the right thing, and I’m going to make decisions about my business based on trying to abide by what the rules are. Maybe I’ll write a company minute about what I’m doing, and I will just really, really try hard to do this the right way.

But, as you say, there are no rules yet, so we have to just make it up as we go along, but in the best way, the most appropriate way, that will enable us to run a business, but also, will stay within what the tax authorities want.

Joe: Absolutely. And like I say, that’s the trickiest part now, is the fact that there is no specific guidance, and you’ve got to guess in some sense as what the tax authorities may or may not want you to do.

As we discussed, when we’ve spoken, it’s all around intention. It’s all around the kind of backing paperwork that you’ve got covering your back. If you’ve made a decision, why have you made it? And here’s the reasoning why I did it.

Because if they do change the rules in the future, at least you can say, ‘Look, at the time, these were the rules that were in place, and this is why I made that decision.’ You’re much more likely to be looked upon positively than if you just said, ‘Oh, I didn’t know, so I didn’t do anything.’ They do say that naivety is not the answer, if that makes sense.

Joanna: Ignorance doesn’t count.

Joe: Exactly.

Joanna: You have to try. You have to at least try and find out these things.

Let’s go back to, I’m a creator and I sell my book for the 0.1 ETH, as we discussed. And obviously, I’m going to pay income tax on that, completely fine, but also what happens when I sell an eBook right now is, depending on where the customer is, so, some EU countries, for example, Australia, Japan, have a digital sales tax, or a digital VAT, which, at the moment, is covered by the services like Amazon and Apple and Kobo, and they pay those taxes, and then I just get the profit afterwards, which I would pay income tax on.

If we’re looking at selling NFT books, and again, we don’t know the answer, but what we might think will happen:

Do we have to do this kind of digital VAT, or digital sales tax, on NFT books?

Joe: This is a really hot topic at the moment, not just for VAT on cryptocurrency and NFTs, because it’s a similar sort of situation with digital art and tickets, and many kinds of NFTs is, where is your customer? And especially in crypto world, a lot of people like to try and stay as anonymous as they can.

You very rarely get someone tell you their first name straightaway, because it’s a space where people are very cautious about their details, security, and things like that. So, you’ll quite often find that people aren’t being honest, and people will also use VPNs, which, again, earlier I said, acronyms that didn’t necessarily mean anything.

A VPN effectively changes the location of your computer. So, if your computer is based in the UK, you can get a VPN which you can route to, I don’t know, France. And then, as far as the computer is concerned, you’re in France.

People like Netflix and people like that will block, for example, if you’ve got a subscription in the UK, you can’t use it if you’re on a computer outside of the UK. So a lot of people will use VPNs to trick the computer to think that it’s in the UK, so they can use Netflix and things like that.

Same concept here in crypto, where people will quite often say, ‘I might be sat in the UK, but actually, I want this security and this anonymity etc., so therefore, I’m going to put my IP address to be somewhere else.’

So, it’s a really difficult question, because ultimately, who’s responsible for that, and HMRC would say you as the seller, you’re responsible for finding out where your customer is. But practically, and in reality, that’s significantly harder than it might seem.

Ultimately, like I said, the rules at the moment are very, very, very general. And it’s the same as the VAT as it is for income tax and capitals gain tax around NFT. So, there is no specific answer to say, ‘If you’re an author, and you sell books to the EU, and that country has a digital sales tax, and therefore you’d have to pay that tax.’

The answer at the moment is, again, going back to that point I made earlier, you’ve got to relate it back to the real-world asset, if you were to sell that. So, at the moment, what we’re advising clients is, if you are selling into a country, and you would normally have reported that sales tax under the VAT MOSS regime, then you should continue to do that.

Again, best endeavors with your NFTs. HMRC have said to us that you should track an IP address, the IP address being the computer’s location. As I just said, that can be different, but if you’ve tracked it, and you’ve got an idea of where people are, whether that’s right or not is not your fault, you’re not expected to then investigate whether someone’s IP address is in the right place.

So, there are certain things you can do. You and I spoke about, could you take an assumption? Let’s say currently you sell 50% of your books in the UK and 50% in the U.S. Again, reasonably say, ‘Look, I took a reasonable assumption that 50% of my books were in the UK, therefore 50% of them I charge VAT on, and, or pay VAT on, and 50% I don’t.’

There are a lot of assumptions, as you’ve probably gathered, but what I’m trying to get at is as long as you’ve got reasoning and justifiable basis for what you’re doing, you can’t be penalized for doing your best with what’s in front of you, is what I’m trying to say.

It is a bit of a game, and you’ve got to try and work out the best way to play it. But that’s what people like me are here for, to talk through your specific scenario, and really give you a bit more comfort on it.

Joanna: I have been trying to encourage the NFT book platforms, which are just emerging, to give us some kind of report on their best endeavors on which countries people are buying from.

So, to put the onus on them, to give us a report that says, ‘Here’s your country breakdown as best as we can do it.’

If they at least provide that, then at least that gives me something to go on. So, they’re definitely listening, but as you say, this is still all emerging, so it’s actually quite, I want to say fun. This is fun for us. We love all this stuff.

Joe: If you’re sad like me, then it’s fun, but…

Joanna: Oh, no, it’s sad like me too. If anyone’s still listening, it’s fun for them as well!

Joe: Yeah. True.

Joanna: You mentioned capital gains tax, and I feel like capital gains is something that, as authors, we really have not had to think about before. It literally, it has not come up any time in my business of over a decade as an author, is capital gains tax, as it relates to books specifically.

Explain why we need to think about capital gains as authors selling NFTs.

Joe: Really good point. And again, sometimes I forget that actually, you’re right, this would probably never really come up in your business or whatnot before.

Quickly on what capital gains tax is. Capital gains tax is a tax on any capital gains. So, the simplistic way to explain it is, if you buy a property, which is an investment property, and you buy it for £100,000, and then two years later you sell it for £200,000, you would pay capital gains tax on the increase in value of that property. In that example, there’d be capital gains tax on the £100,000.

I’m not going to go into the rates, because it depends and all those sorts of things. So, the second concept here, so, let’s just say you accept, and I’m going to call it 1 ETH, it would be great to sell a book for an ETH, I’m sure, which is about $3500 at the moment, but, or $3000 maybe, but, depending when this goes out.

But yeah, so, let’s just say it’s for 1 ETH, and let’s just say that when you receive that 1 ETH, you keep that in Ethereum, you don’t sell it, and therefore, you’re holding that Ethereum.

If, in a week’s time, again, what a scenario this would be, that 1 ETH was worth double, so now it’s worth, well, let’s just call it it’s $3000 for one, it’s now $6,000 for one, you’ve now made a $3,000 gain, of which you will pay capital gains tax on.

When I talk about capital gains tax, I’m talking about the increase in the value of an asset that you’re holding, that you then subsequently sell.

So, like I said, Ethereum is received at a value. If that goes up when you sell it, and you sell it for a higher value, you will pay tax on the difference between what you sold it for and what you paid for it when you received it. Hopefully that explains it in a fairly non-complex way.

Joanna: Yes. And I think, again, people might have to think about this again and again, or listen several times. I had to think about this quite a lot, and I made a mistake. When we call things taxable events, that’s the time at which things become taxable. So, like you said, if someone bought my book, and let’s say it’s a first edition, why wouldn’t it be 1 ETH?

Joe: There you go. Yeah.

Joanna: Sort of, like, the first edition, Charles Dicken’s first edition print book is way more than that. The 1 ETH I got when they bought the book, and so that is income taxable, because that was a purchase that they bought, and I received that at that point, so that’s a taxable event. But then, as you said, if I wait a week and then I turn that ETH into pounds or dollars, that makes it a taxable event.

If I keep it in ETH, then it just stays there. I don’t have to turn it into fiat currency, or pounds, or dollars, or currency in my bank account. I can just leave it there in ETH, and then I don’t pay capital gains or loss, because, let’s remember, there can be loss as well. I don’t have to think about that unless I do something, like I turn that into money in my bank account, or, if I exchange that ETH for, let’s say, Bitcoin, if I exchange it, that’s a taxable event, or if I download the money, essentially, that’s also a taxable event.

Joe: Correct. You’ve hit the nail on the head there, so maybe you want a job?!

It’s a case of a disposal. A taxable event is a disposal of some kind.

Now, in some circumstances, a disposal, like you say, is selling of the asset. It might also be using that to purchase something. For example, you might receive an ETH for your NFT book, and you might use that 1 ETH to then buy an NFT piece of art, or an NFT ticket, or something like that. Any kind of disposal, if you like, of any kind.

You’re right to point out, because some people do sometimes get a bit concerned and anxious about this. ETH was to increase tenfold overnight, you would only pay tax if you sold it or disposed of it, and realized that gain. If you don’t realize it by disposing it, then there is no tax to pay.

Joanna: I think that’s really important. And so, what I did was, I was like, ‘Oh, well. I’ll turn this into something else.’ I didn’t realize that that would trigger a capital gains event in that case. If I had known that, I would’ve maybe done it at a different point, or just held it there, instead of going, ‘Oh, I should put that in my GBP bank account, because that’s a good idea.’

I think it just gives us more to consider. This is a big mindset shift, and so I hope people listening are still with us.

When we do an NFT book, there are different blockchains that we could transact on — and we have to choose carefully.

So, you’ve mentioned Ethereum, which has the currency ETH, and that is, at the moment, it’s expensive to mint. But equally, it’s quite stable as a coin.

By holding ETH, I think, probably it’ll go up and down, but it will be quite stable.

But there are other services being built on blockchains that are newer, that might have a coin that few have heard of before. I guess what I’m saying is, what do you think about how we can assess risk in terms of which blockchains and which services to use when we’re thinking about a longer-term thing?

You said earlier that you think it’s mind-blowing as to what the future might hold for NFTs, but many of these blockchains and coins are going to disappear.

They’re going to go to zero, in the same way that many of the .com boom companies disappeared. So, what do you think about that? I know it’s totally your opinion, by the way.

What do you think about how we can assess risk in terms of which blockchains and which services to use when we’re thinking about the long-term?

Joe: You’re right. And it’s so hard, because you read the white paper which is the pitch deck, if you like, the reason why their product is better than everybody else’s, why you should buy it, and whatnot. And it’s very easy to get sold on them and think this is the next big thing.

But actually, like you say, a lot of these will very quickly go to zero, and it’s really hard to know which ones will and which ones won’t, and in fact, probably nigh impossible.

So, what we’ve got to do is look at blockchain and look at cryptocurrency for what the underlying principles and technologies are that we’re looking at, and the blockchains that you’re building on, and how many other projects are on there, how much money is on that.

You can look at what’s called a ‘total value locked,’ which is basically the money that’s locked on the platform in one way, shape, or form, which shows you the use. You can also look at the volume that’s gone through, the trade volume that’s gone through the platform, to see how high or maybe low that is.

There is research that you can do, and it’s impossible for me to say which ones are going to be good and which ones are going to be bad. But naturally, if something like Bitcoin and Ethereum has been able, Bitcoin more so, but has been able to be around for as long as it has, and yes, the value’s gone up, and yes, the value’s gone down, but actually now, there’s a fairly good range, say, for Bitcoin to 35K to 45K dollars is pretty much the range, I think, for now.

Ethereum’s pretty much $2,700, $2,800 to, like, $3,500, something like that. So, there is that range now, and if you look today, the market’s down today, Ethereum’s down a couple of percent, different lower-cap coins are down 9%, 10%, 15%, 20%. So, it shows in that, that you can see which ones are the more secure.

You’ve got to do research, and as we said at the start this is not financial advice and all that sort of stuff.

You’ve got to do your own research and you’ve got to look into each project, and really just not be sold on what it says on the tin, and really look at the underlying assets.

Because the biggest thing in crypto is effective because it’s peer-to-peer, effectively. I sell my crypto, you will have to buy my crypto. Do you know what I mean?

It’s not like a bookie, where you say, ‘Look, I’m going to put a bet on,’ and the bookie backs that bet. This is a situation where I’ve got to want to sell and you’ve got to want to buy, effectively. So, what that means is there isn’t a lot of liquidity, so if it’s a small-cap token, where there’s not a lot of liquidity, you might actually find that if you receive money in that, you can’t actually sell it.

And not because it’s a scam, but because there just isn’t enough liquidity to sell that at that moment. You’ve just got to be conscious and careful around what you’re receiving, why you’re receiving it, and really do some research before you accept anything that is outside of the kind of top two.

Joanna: Absolutely. And right at the beginning, you said this is a financial system. And that’s, I think, the big difference between the whole Web 2.0, we were still using normal ‘money.’ We didn’t have to think about a financial system, really, on the internet, and I feel like this is another step, that I didn’t actually realize until I minted my first NFT. And then I was like, ‘Oh my goodness, I’ve just earned this thing, some ETH. What does that mean?‘

When I started questioning, ‘What does it mean? What does it mean?’ that’s how I ended up thinking about this.

But, to come to the risk again, how early do you think we are? Obviously Bitcoin’s been around what is, 14 years or something? Could crypto fail completely? Is the NFT bubble bursting? Or are we looking at, we’re just moving into a new phase, where we’re going to have the regulators coming in, we’re going to have the central banks coming in, and things are changing?

Where do you think we are in the blockchain and cryptocurrency adoption cycle?

Joe: I still think we’re very early. If you look at, and I haven’t got the numbers to hand, but if you look at the amount of people adopting cryptocurrency today compared to the amount of people there are in the world, that gives you a slight indication as to where it could go.

There’s also a chart out there, it actually shows the adoption curve of the internet, and then the adoption curve of crypto, and crypto is actually ahead of that adoption curve at the same period of time as the internet was.

So, it doesn’t mean that it will be in the future, but I think it is more accessible to more people, because you can deal with crypto on a mobile phone, you don’t need a hard-wired internet connection, you can access crypto on your phone.

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