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Yellowheart CEO Josh Katz sits down with Yahoo Finance Live to react to Bill Gates' comments on NFTs, the outlook on NFT smart contracts being utilized in various industries, NFT uses for live event ticketing, and how to de-incentivize ticket scalping with this technology.
DAVE BRIGGS: Well, feels like summer, Seana, but it looks like the crypto winter is here with more than $1 trillion wiped away since early April, and the price of Bitcoin down more than 25% in a week, 50%-plus this year. Bill Gates pouring salt on the wounds of the crypto community at a TechCrunch climate summit on Tuesday. Listen.
BILL GATES: Well, I mean, obviously, expensive digital images of monkeys are going to improve the world immensely.
- We all agree on that.
BILL GATES: And that's so incredible. Anyway, I'm used to asset classes where-- like a farm where they have output or a company where they make products. To have an asset class that's 100% based on greater fool theory that somebody's going to pay more for it than I do--
DAVE BRIGGS: Josh Katz is the CEO of NFT marketplace Yellowheart. He joins us now. Josh, good to see you. I'm sure you're thrilled about the sentiment there from Mr. Gates and his 100% based on greater fool theory. Your reaction?
JOSH KATZ: I agree. I think that this underlying technology is really what it's all about. Profile pictures were a great way to begin the world introduction to NFTs, but it's not what blockchain technology is really all about. The provable scarcity, provable ownership of the blockchain has enabled the profile picture, but it's really just the beginning of the use of blockchain technology and Web3.
RACHELLE AKUFFO: Hey, Josh. Rachelle here. So where are we in terms of NFTs? Obviously, when something first comes in, a lot of hype, see a lot of people get into the space, perhaps not using it, as you mentioned there, for the long-term intentions. Where are we in that cycle? And when do you think we'll really get to see NFTs mature as they were meant to be?
JOSH KATZ: So we're just beginning. We had the birth of NFTs last year with the profile picture. You know, Bill Gates is referring to the Bored Ape Yacht Club, which is the largest profile picture project by revenue. And that project has done extremely well in introducing the world to Web3. Now, we're going to start seeing the adoption of this technology into all types of sectors. And I think that we're going to really see the evolution of this starting now moving into the rest of this year and onward.
DAVE BRIGGS: So I think we do agree, then, that digital images of monkeys would not necessarily improve the world immensely. So what is the best practical usage application of NFTs?
JOSH KATZ: So it's really-- what an NFT is really a programmable contract. So in any instance where there is a contract and you have a middleman population, whether it's a broker, an attorney, any type of situation-- it could be a lease, it could be a deed-- that is an industry that you will have the use of nonfungible tokens or programmable smart contracts.
RACHELLE AKUFFO: So, then, I want to ask you, then, because Yellowheart recently announced its first ever NFT ticketing partnership with global hospitality brand Tau Group Hospitality. Talk about the thinking that went into that and what you hope to achieve there.
JOSH KATZ: So Yellowheart has been doing NFT ticketing for almost a year now. And this partnership is actually with Tau Group, who is, by far, the largest nightlife operator in the world, the most forward-thinking and innovative nightlife and hospitality group in the world. So we are thrilled to be partnering with them.
And what we're going to be doing is really evolving ticketing. Ticketing to date has never evolved. It's been stagnant. It's been a proof of purchase, a bar code for entry. Whereas now what we do is evolve ticketing, where we are embracing building communities around live experiences-- so very excited about this partnership.
DAVE BRIGGS: And so what's next in this evolution? And how key is the future of sports tickets tied to NFTs?
JOSH KATZ: It is the future. So once again, a industry that has never evolved, is going to start evolving. And if you think about the live experience-- you know, let's take a football game, for instance. You go to the football game, you tailgate, you're in the parking lot eating, drinking, hanging out with people having fun.
You go into the game, you're high fiving, hopefully your team wins. You're having a great time and then, poof, the experience is over and everyone scatters. With NFT ticketing, we allow for the building of a community where when you buy that ticket, you now enter the community. You're now part of people that are going to have an experience together and you can interact with them.
So now, the experience begins and when you're scanned into the venue, you now are further enabled into a community that you could be interacting with, that you could be doing commerce with, that you could be really evolving the overall live experience with. And for those companies that are putting on the live experience, whether it's a artist with a concert, a sports team-- it then enables for ongoing reach to those consumers to continue monetizing post-event.
RACHELLE AKUFFO: That's interesting, because with NFTs at first, they really will focus on being collectibles. But this seems to sort of be more of a membership way to get into this. How far do you think that's going to go in terms of growing the NFT space?
JOSH KATZ: You know, I think utility-driven NFTs are what's coming now. Once again, we had the birth of NFTs a year ago with the profile picture. Now, we're seeing incredibly creative companies use this technology in order to push their products further and enable community building through NFTs, in this case.
A lot of other cases, you'll see what's called utility, where these NFTs actually do something for the owners, and open up doors, and open up commerce, and allow for people to then trade them. So I think it's going to really start evolving quickly now.
RACHELLE AKUFFO: And I want to ask you about prices. Obviously, when we buy a lot of tickets to things, the fees and the things that get priced into that, can we expect to see any sort of relief if it's sort of an NFT ticket?
JOSH KATZ: Well, we hope so. That is the goal, and that was actually the goal in Yellowheart was to actually disseminate third party bad actors or scalpers. See, with the blockchain, every single transaction is transparent. So for instance, people hold what's called a wallet. And in that wallet is their non-fungible token.
And that could be a ticket or any other type of asset. So for instance, at Yellowheart, we could see if a wallet might have bought 12 tickets but didn't redeem any of them. So that person is immediately flagged or that wallet is immediately flagged. So we try to disable scalping.
The other thing that will happen is we're able to essentially send a royalty back to the stakeholder. So in the case of scalping a ticket, if a ticket were $100 and it would go for $200, we could program that 50% of that, for example, might go back to the stakeholder. So that will actually really de-incentivize scalping.
DAVE BRIGGS: Josh, the ears of parents across the country just perked up, because they've tried to buy their kids tickets to concerts in recent years. And it is an absolute nightmare out there. Bots are buying up tens of thousands, reselling them at 10x. Can this take Ticketmaster out of the equation?
JOSH KATZ: Well, you know, I think that it's not about taking Ticketmaster out of the equation. It's about enabling Ticketmaster to give the fans a better experience. The hopes are that they will embrace this technology as well and, essentially, offer their fans a transparent experience where right now, the way that Ticketmaster works is Ticketmaster releases, call it, 20% of tickets. They'll then call the event sold out, and then they'll try to maximize revenue on every single ticket leading up to the event through third party marketplaces, through their own, quote unquote, "secondary" marketplaces, preferred fan, platinum, whatever name they might be using. The hope here is that artists and teams will embrace this technology, start working with companies like us, and essentially give a transparent experience to the fan-- maybe charging more for the ticket, but doing everything upfront where the prices don't fluctuate so much and there's less grade, so to speak.
DAVE BRIGGS: Josh Katz, Yellowheart CEO, you have my attention. Appreciate it, sir. Thanks.