“A piece of cake is a can of worms” — Mercer West
Like so many others, I am high on non-fungible tokens or NFTs (“nifties”) in recent weeks. I am hopeful this technology can make the world a better place.
I write here for myself (to organize these many loose thoughts) and for other artists, musicians and creators curious about the NFT fad. I will focus almost exclusively on the perspective of NFT creators as artists and musicians, but this is misleadingly only a very small piece of the greater blockchain phenomenon. I encourage the reader to dig deeper from here, think critically (everybody’s got an angle), and please also educate me where I am wrong or ignorant in the comments 🙂
Gauche Optimism about NFTs
The NFT world I speculate about has not yet quite arrived yet, and it may never. The following may only be a fantasy, a wish-fulfillment story. But this act of imagination — the glorious benefits to artists, musicians, and society — can make a step to actualizing those benefits in the real world. It is worth dreaming about.
Being optimistic about technology in our debauched timeline is in poor taste. The technocracy has earned the public’s cynicism about its intentions — we have seen the bad side effects and have learned we should not trust Big Tech. We see AirBnb drive up the cost of urban rent; we see Uber and Lyft as schemes to transfer money from labor to capital (the value of a driverless future added to ownership, subtracted from drivers); we see employees transformed into “contractors”, with no benefits and few labor rights. Old moneybags Google continues to be a total creep, peeping into our windows, following us everywhere and scribbling it all down to sell to another skeev. (Hey Goog, maybe you should engineer yourself some class and get a business model where you don’t have to be a peeper!) We have seen the Facebook algorithm radicalize the American terrorists and then collect money advertising body armor to them. This is not even to mention Amazon and many other rogues.
Before the ’90s tech bubble burst, it was easier to swallow an optimistic (if not end-of-history messianic) narrative about technology where the decentralization of the Internet could liberate the people from historic forces of oppression. In 2121, where four giant corporate monopolies (“FANG”) rule the Internet, the possibilities of the digital frontier appear greatly constricted. Any “advance” in technology seems only to benefit the monopolists and their financiers. NFTs and blockchain, however, take me back emotionally to those early days of the web, where something truly new and positive seemed possible.
What About the Environmental Cost of NFTs
How could I blow a big cloud of happy words about NFTs before considering the environmental impact of crypto? You cannot ignore it. This is the end of the conversation for many people — they hear cryptocurrency is a disaster for the environment and oppose it and hate it. No dumb digital dingus is worth destroying the planet, even for a tidy profit.
Ethereum is the primary blockchain for NFTs right now and it uses a whopping amount of electricity. It is not intuitive that what seems like “saving a file on a crypto-server” could consume a day’s worth of energy use, and most ethereum NFT marketplaces are not especially forthcoming about the true cost of creating or spending money on their chain. Many artists would not be using Ethereum, or at least using it so flippantly (i.e. minting extremely large editions of NFTs), if they realized its energy cost.
Some can justify the energy cost, but I will not. It is ugly decadence to use such energy on a NFT. That this potentially revolutionary tech was engineered with this fatal flaw and already has achieved such wide adoption is sickening. I recognize that this continuous electricity has created and also stores a lot of value, but obviously it’s inefficient and not sustainable or scalable. Couldn’t you spend a day’s worth of energy and create something of more value — like a bunch of bricks, or at least like 10,000 NFTs for the energy instead of just one?
The environmental footprint of Ethereum (and other old blockchains like Bitcoin) is real and should not be minimized. But it is not at all necessary to use energy irresponsibly to mint, own or use cryptocurrency. To mint a NFT on Tezos blockchain takes as much electricity as a Tweet, less than 1/1000th as much electricity as Ethereum and at a small fraction of the cost. (These numbers are coming from here.) There is no energy-intensive “mining” on Tezos or similar blockchains (Ethereum is also supposedly moving in this direction). It uses energy but not in an insane, unconscionable way. The old blockchains are like leaded gas: harmful, unnecessary, obsolete and begging to be kicked out of the market.
Even if NFTs of the near-present are eco-friendly (Tezos!), the continual downplaying of the energy use involved in these early blockchains feels like we got off on the wrong foot. From the fogs of the mind steps a dodgy character — it’s our libertarian tech bro slum lord. This personification has violated our trust again. We have learned the whole ghastly league of these devils will be willing to mislead people about the sustainability of their tech, to sell magic elixir vaporware, and to unreasonably exploit the planet for short term profit. So maybe that’s a solid reason to be against NFTs.
But it is already possible today to enjoy the benefits of NFTs and cryptocurrency without being a huge asshole to the planet. The future of crypto and its mass acceptance will happen in an eco-friendly format.
The Glorious Benefits to Artists, Musicians & Society
So granted: cryptocurrency is new and scary. It could all be a giant scam, or a bubble will burst splattering everywhere, or a scheme for oligarchs to steal even more control, or maybe the government will somehow crush it, or maybe the next gen blockchains gush nuclear waste they’re not telling us about, or maybe its unbelievably unethical because of twenty other things. But I think it could revolutionize income for artists and musicians. That sounds too good to be true. I realize people were once convinced that Communism was going to be a great humanitarian venture, too. This time it might end well?
For almost all artists and musicians, NFTs could mean getting paid well, or at least way more than they ever have. This is in part a commentary on how little income many artists and musicians generate with their art. Many talented artists could hardly be paid worse (Spotify pays musicians, on average, $.0038 per stream), and they assume the costs of their art out of pocket. They must depend on other “real” jobs for income and have learned to not expect to ever be able to earn much money with their art. Most bands are delighted to break even, most artists are not trying to hustle rich collectors. Artists know that compensation for their art is usually mostly non-monetary. In some senses to value art in money at all is absurd — it is just not the point.
It’s not about the money but, harsh though it may be, in this world artists must pay the piper. Money is useful to them. If artists can generate income with NFTs, so much the better. Even a relatively small amount of new annual revenue of, say, $1,000 would meaningfully defray costs of studios, practice spaces, coffees, and materials.
If the income from NFTs is substantial, it could liberate some people from a lifetime of folding napkins or re-stocking beer. Countless talents are locked away in hopeless bullshit jobs. What if people could afford to put those hours into their art practice? Income from art would incentivize the creation of more art; artists would be better able to afford the time and costs it takes to make art. With more practice, maybe they would deepen their visionary powers and truth-telling states? And all of society could then share a rich flood of fresh good art, with its powers of humanizing, healing, challenging, creating community, bringing beauty and joy. We could enjoy a renaissance.
Yes that would be lovely. But from what evil fountain does this wonderful money flow?
The Evil Fountain
The digital widget you are selling, this NFT, is not quite the copyright of the art (this is a whole other nuanced conversation) but the thing itself. It is a token with the art (or music or other digital content) colored in on the face. It is a chimera beast: part coin, part contract, part digital content, part artifact. Engraved into the blockchain with an aura of permanence.
A painter mints three copies of an NFT of their painting. The painter gets the money from the initial sale of the NFT paintings, say $50 for each of the three. The new owners of the NFTs may then sell them to other buyers — money and objects transfer directly peer-to-peer easily within the system. Every time the NFT is resold, the issuer of the NFT automatically receives a percentage of the sale (commonly 10%). A NFT can trade hands hundreds of times, and each time it sells the issuer receives 10%. The NFT could increase in value to $10,000, and each time it is sold at this price the issuer would receive $1000.
For the coin’s issuer, a NFT can generate money initially and continue to generate income forever. An NFT issued today could still be paying income to an artist in 30 years when they retire (in this fantasy NFTs will still exist, musicians and artists will be able to afford to retire). In the real world, when an artist’s original art is re-sold by a gallery or investor for fat stacks of dollars (a work that was sold by the artist early in their career for hundreds), the artist is not getting a paycheck. With non-NFT art sales, the artist does not get cut into the big money (if it ever arrives) or receive royalties, despite being the source of the thing that had become so valuable.
The royalties on NFT sales could benefit artists with long, storied careers. Cult favorite musicians or bands are often re-discovered by later generations or hailed late in life as living legends. Such recognition, while surely appreciated, will not pay a musician’s dentist bill. If the band had issued NFTs early in their career, a critical rediscovery of their music could mean increased valuation and trades of their coins (new fans patronizing their hero), turning that fan love into something materially beneficial for the musician.
Why Would You Turn Real Money into Funny Money?
Some people that buy NFT tokens will strictly be investors, expecting the value to rise and to then flip the token for a profit. The NFT collector / speculator is something that shocks people to the point of being offended here in early year 2121. NFT art collectors are dropping mega-millions into the form of NFTs every day, spending as much on an animated gif NFT as a house. Can you imagine the gall to store so much personal wealth in this form? Can’t they see how post-modern and transparently fake it all is? Annoying though it may be, at the moment it seems many NFT speculators are getting rich quick.
(If investing in NFTs makes so little sense to you that you feel personally insulted, please stay away from NFTs. Savor the day when all the dumbbells that bought a magic nothing stored nowhere lose their investment and you were right all along.)
As a safe investment with reliable returns, let’s just call NFTs suspect. Some people predicted the Beenie Baby bull market would never end. (Note: I am not a financial advisor, or particularly successful at business.)
But NFT buyers don’t have to be greedheads lusting for unreasonable profit. They can buy and exchange your cryptocurrency as a collector, or altruistically as a way to support you and give you income (similar to people buying tickets at a church carnival or “Chamber of Commerce” bucks). They can value your coins sentimentally (one person’s “worthless” is another’s “priceless”).
In theory all parties can profit from the arrangement. A young band can issue NFTs to early fans and supporters, and use the money to finance a recording. The increased recognition brought by the recording can increase the value of the NFT, so the early investor can sell it and make a profit. The NFT buyer both gave meaningful patronage to a band they like (the band making money on the initial sale and also the re-sale of the coin) while also storing their own wealth in a form that appreciated in value.
Maybe you buy NFTs from all your favorite bands in your local music scene. Some bands might break up prematurely (potentially decreasing the value of their NFTs), others may achieve great levels of popularity (increasing the value of their NFTs, which are always limited edition). After a few years you sell your band portfolio to recoup your investment costs. At worst, your investment is not profitable but your money has been used to pay all your favorite musicians in your scene, and probably you have enjoyed improved quality of music in the scene. If an entire community of music fans invest like this, the local community of musicians could possibly make living wages and create so much more excellent music with their time.
Storing Real Capital in Social Capital
Music is the soundtrack to moments of deepest human love and soul. It does magical amazing things, and people in turn love artists and musicians for the gifts of their art. Artists are people’s heroes — they show people different worlds, and embody heterodox values, attitudes, and ethics. Artists that are highly valuable to people are not valuable in money terms, they are valuable in “social capital” — in respect, social regard, appreciation, love.
Cryptocoins are not inherently valuable — they do not do anything, and anyone can make them for very little cost. What makes them valuable is a community of buyers and sellers agreeing they are valuable. What they are worth is whatever someone is willing to pay for them. If nobody wants to buy a token, it is worthless (at least for that moment).
The “social capital” of valued artists and musicians can make their currency desirable and thus valuable. Anyone can issue their own cryptocurrency, but not just anyone has the social capital to get people to invest in it. The authenticity and specificity of a favorite artist is not easily reproduced — you can imitate the Ramones, but you cannot forge them.
Distinct from selling merch or swag, selling NFTs in effect means a band or artist becomes a bank, issuing cryptocurrency (with each NFT as its own coin). People can take their savings and “save” them behind the seal of an artist’s brand. The social capital of musicians and artists stores actual literal capital in the form of cryptocurrency.
Is It Punk to Be Your Own Bank?
Finally, your favorite underground band can become a lot more like Chase Bank! This might seem like a complete nightmare. Finance, banking, the stock market are ugly things, and many artists are reluctant to be associated with such dubious enterprise on both aesthetic and political grounds. NFTs could be a Trojan Horse for Finance to commoditize artists and musicians and rob their souls. Rather than being jailed in an unjust economic system, the inmates are hereby paid to become the jailers, earning a commission to extend the front lines of capitalist oppression.
But must money always be the root of evil? Don’t non-capitalist or non-evil economies use money too? Maybe if you take the money out of a bank and put it in an artist’s NFT the money could have less potential for evil?
Crypto may yet create its dystopia (and damn me for dreaming about it positively here), but I imagine that cryptocurrency could bring a revolutionary swing of power from wealthy institutions to common people. NFTs create the freedom to withdraw wealth from banks and Wall Street and invest it (or “save” it) in artists, musicians, and countless other unconventional formats.
The growth of investment in cryptocurrencies comes not in isolation but relative to dollars, stocks, real estate, and other formats where people can keep and grow their wealth. You must “store” your wealth in some form. Owning your wealth as a $100 U.S. note with Benjamin Franklin on the front is to patronize the Federal Reserve, the private coalition of banks with a monopoly to print greenback dollars. This bill (a competitor with NFTs as a format to store wealth) will reliably lose value every day you hold it.
Keeping wealth in a bank account benefits the bank, keeping wealth as a stock benefits the business, keeping wealth as real estate benefits other property owners. These institutions grow fat on the bounty of wealth they store. Whereever you choose to park your wealth (and, again, you must park it somewhere), it benefits other people to leave your money lying there.
Here where we love our property you get to choose what to do with your wealth — you have the freedom to convert it into whatever form you choose. You have the power to choose who benefits from storing it. Rather than buying a stock of Microsoft, people could buy a stock of their local arts community. This movement of wealth from the old savings economy to the new, which could happen on a very large scale, would be a revolutionary transfer of power. So maybe being the bank is a lot more anti-authoritarian, and punk, than it may seem.
People with leftist economics may yet come to love NFTs, in the tradition of people’s banks, infrastructure banks, and buying collectives. Democratizing banking could benefit under-banked people and reduce the control of traditional banks. NFTs could conceivably be used to keep capital within communities where capital flight is common (by issuing a neighborhood coin, with proceeds to benefit the community). NFTs open doors to pool and grow resources around common values, and invest money in non-financial instruments like wildlife preservation. It can be a format for communal money power.
This can also be used by other institutions that are valued by people but do not generate huge profits, including non-profits, charities, and journalism. For example, a magazine with fanatical readership of 50,000 could issue 100 NFT tokens. They can find 100 buyers to buy the coins initially, and another couple hundred buyers who would buy or invest in the tokens second-hand both to make a little money and to be “patriotic” to the magazine (as each sale of the coin sends money to the magazine). If the market is steady and the value of the token is good, outside investors may want to introduce their money into the fund, even if they don’t read the magazine.
Cryptocurrency may come to be owned only by the elite, but NFTs are not an elitist medium. To create NFTs requires only a little knowledge, an internet connection and a few pennies (don’t use Ethereum!) — this is accessible to almost all people. This is a much less elitist path to a career in the arts than traditional avenues like having a successful parent in the industry, a $200K art school education, an unpaid gallery internship in Manhattan, or a trust fund willed to you at birth.
In Conclusion
There are many potential pitfalls for NFTs, as the negative parts of human nature come to bear on it. It will be a medium for creative new frauds and thefts. People will lose all their life savings by investing foolishly. The profit motive could corrupt the art, with artists pandering to their audiences to make money. The emphasis on social capital could lead to a world drowning ever more in influencers and personal branding. “Tokenization” of everything could turn countless more weird things into disturbing commodities, easily bought and sold in a liquid market.
Artists and musicians, though often poorly paid, can afford to have integrity. They don’t have to “sell out” to be part of a system that will exploit people or that does a bunch of stupid horrible things. But if NFTs do not hurt people or the environment, they could prove to be a revolutionary force for good.
Plato cast the poets out of his Republic, because they were liars. But I love the idea of a whole generation of artists and musicians fed well and giving back with art that will make society wiser, more spiritual, more connected with other people, more emotionally in tune with their inner world. I like the idea of the surplus treasures of civilization’s work day resting idly in the pocketbooks of artists. We should never let another Herman Melville spend decades in the customs office instead of writing priceless fiction. If we can use non-fungible tokens to push artists toward the center of our society, history will remember us for it and drink toasts to our memory.
Obscuro Chicago 