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Sure. But bundle them into CDOs, give them the AAA rating, start selling options on them and suddenly that's a legit business. NFTs are missing this thick layer
by akomtu 5y ago
Sure. But bundle them into CDOs, give them the AAA rating, start selling options on them and suddenly that's a legit business. NFTs are missing this thick layer of complexity that obfuscates the nature of the core financial "product".
- elil17 5y agoCDOs are groups of bonds. Bonds are debts, so they produce real value in the form of interest. If the debtors stop paying, the CDO can recover value in bankruptcy court. CDOs may misrepresent the risk of the underlying assets, but those assets are still there. An NFT is more akin to a baseball card - it’s value might go up, but that would just be because someone wants to buy it. It’s not producing any income on its own and the owner is no right to recoup the money they paid for it.
- throwmeariver1 5y agoIt was a tongue cheek quote from The Big Short… can’t wait for synthetic NFTs.
- Ekaros 5y agoHmm can I buy derivatives of NFTs? Like credit default swaps?
- akomtu 5y agoThen sell payment plans for NFTs, so every NFT would have a debt associated with it, and a payer. There is a risk the payer will default, but all debts have this risk. Now that we have these NFT bonds, we can bundle them into CDOs...
- TigeriusKirk 5y agoNot surprisingly given the nature of crypto markets in general, NFTs have been financialized to various degrees. You can, for example, put a popular NFT into a pool where individual NFTs are traded back and forth and you receive a slice of the trading fees. See https://nftx.io/ https://nftx.io/