Mark Cuban: How Selling Stamps as a Kid Helped Me See Why Digital Assets Are the Future of Business

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Long before Mark Cuban became a self-made billionaire, he was a kid growing up in Pittsburgh selling baseball cards and stamps, trying to make an extra buck.

Now, remembering those days helps him understand the next generation and its interest in digital goods and digital assets like bitcoin, he said in a blog post published Sunday.

"[W]hen I got to be about 15 and started going to stamp shows to add to my collection, I quickly realized that there were inefficiencies in that market," Cuban wrote. "The same stamp was selling for different prices at multiple stamp dealers at the same show. It didn't take me long to realize I could buy from one and sell to another." Cuban would buy a stamp for 50 cents and sell it an hour later for $25.

He compared this experience to what has happened with Reddit WallStreetBets and its traders buying GameStop and other stocks.

"Watching what has happened with Wall Street Bets reminds me of those days," he said of the subreddit that initially spread the word about buying GameStop stock, helping spark a frenzy. "There are inefficiencies and traditions in every marketplace that have become so engrained by the power players that they literally think they are 'rules' that most, if not all participants will follow," Cuban wrote. "Until they don't."

Back in the day, it was "a kid finding discarded items, cleaning them up and selling them on eBay, turning this into a business," Cuban wrote.

But more recently, "finding inefficiencies has followed an interesting path from purely analog when I was a kid, you had to have something, go somewhere and sell face to face or by mail, or use an intermediary like a broker, to using the internet and sites like eBay or other marketplaces to sell their physical goods."

"Now we are seeing the next step in that evolution" with digital assets like bitcoin and stocks being sold via apps or online and smart contracts (the kind of contract used in blockchain), Cuban wrote.

"What happens when literally anything digital can be a store of value?"

Although seasoned investors and experts are concerned by the GameStop trading frenzy and speculative trading, Cuban says it is the beginning of a digital shift by the next generation.

Cuban predicts the next generation will find value in digital assets — from any digital good, including any creation made online, to different cryptocurrencies, like bitcoin and ether (the cryptocurrency powered by Ethereum) — which will be easier to maintain than physical assets, he wrote.

To sell collectibles like stamps or cards, an owner must store them, keep them in pristine condition, protect them and when selling, take on risk when delivering them, Cuban wrote. "Because much of the industry is person to person, there are a variety of other risks and costs introduced... All of these are expensive, time consuming, risk increasing and annoying."

But with digital goods and digital marketplaces, "you have all the fun, none of those risks and the value is still set by the same laws of supply and demand," Cuban wrote. (Of course, there are risks associated with digital goods, as fintech experts point out – cryptocurrency, for example, can be volatile.)

Crypto supporters have felt this way for a while — those who own bitcoin say it is a store of value that can be used to hedge against the U.S. dollar and inflation, for instance. Lately, bitcoin has also gained support from bigger investors, like Paul Tudor Jones and Stanley Druckenmiller; from notable financial companies, like PayPal and Fidelity; and from Square and MicroStrategy, who used their balance sheets to buy bitcoin.

Although Cuban warns people to be cautious with cryptocurrency like bitcoin, he has invested money into crypto himself. He also recently auctioned digital goods online, including a Mavs Suns Game Day Experience video, via crypto tokens called an NFTs, or non‑fungible tokens. (Each such NFT is unique and "holds the image" of the digital creation "with all allocated data associated," according to digital marketplace Mintable, which Cuban used for the auction.)

Cuban even owns a digital "Maxi Kleber dunk Moment" card that he considers a collectible and just as valuable as a physical sport card. Although Cuban said he wouldn't sell his, other digital Maxi Kleber dunk sets have sold for anywhere from $35 to as much as $800 on the NBA Top Shot website.

"This generation knows that a smart contract and the digital good it reflects or a CryptoAsset are a better investment than old school see, touch or feel uses," Cuban wrote. "It took me collecting stamps and baseball cards to truly understand why this is true."

Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."

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