Our Co-Founder Kristina fell into an intellectual rabbit hoIe of sorts and delved into understand NFTs early this year. I have today learned about NFTs, and so I’m writing this to think through their implications on value-driven economics.
Humanity invented ice cream BEFORE inventing freezers.
And that is the whole story of value-driven economics.
People try to come up with grand overarching theories to either drive the future or analyze the past. We only have this moment to live in, really. In this moment, everything is just the mess of human nature.
Human nature does two things:
It follows its appetites.
And then it attempts to make capital gains on that.
We invented ice cream before the freezer. We did it this way not because we lack foresight. People could tell within a few minutes of inventing ice cream that they’d need something to preserve the integrity of their invention. Technology tends to trail its needs, though. Invention reacts to appetite.
The Wild West
We are good at finding quirks. If things haven’t been explored to the edges, then people with the time find the quirks. Some of us like to know because we just like quirky things.
Some people create Napster.
I have mixed feelings about Napster. I’m a writer. What I make could be reproduced indefinitely, cheaply, and then given away (or, as the case may be, sold) to anyone who asks. Someone could invent a Napster of written works (already done, many times over) and cut me out of the distribution circle. For as long as they don’t get caught, or they can protect their actions by some veneer of legality, it could go on forever.
I feel like in this era, I don’t need to go deeply into Napster. I think we’re all familiar with it.
What’s interesting to me is living in a post-Napster world. The phenomenon of Napster put in stark relief a whole host of questions about creative works, and in especially creative works that exist mainly as digital information.
There are a handful of ways to come at the question, but the one I find keeps me busy is this one:
Is it wrong to share digital copies of intellectual property?
It’s a fearfully dull question, and it has a lot of heart-breaking implications. Most of them I won’t get into here. I’ll talk about one, but only for a few sentences, because I know how to speak to it.
I’m a novelist. I have one novel and a collection of short stories out. In practical terms, that means there are two files full of what I made using my skills and my time, and they are in the world and ready to be consumed by people like you.
The other thing they are is easy to steal. The most crude and straightforward way to do it would be to purchase a copy of the ebook from Amazon for two dollars, and then spend a couple of days typing out a copy yourself. Now you have a full copy of your own in a distributable format, and it’s possible for you to do whatever you wish with that. I give no permission to do it, but that is a way you might steal my books. Then you could give them away for free. You could say you wrote them and you could sell them. You did, after all, do the work necessary to copy and distribute those books. You have done some demonstrable work. Work deserves reward.
And I’m just a writer: I could always write more stuff. As a creator, I’m always creating. That might be your justification. I’m always creating. And how hard could it be to actually write a book, anyway?
So why is that wrong?
IS it wrong?
And if it is wrong, then how come it has a less visceral impact (and I predict that it does) than this story:
You are a builder. You’ve just finished building a house. It’s your dream house. You spent twelve years learning how to build that house, learning and dreaming, and you made a lot of smaller things along the way, to practice your skill. Then, after those twelve years when you spent all your time and half your money on your education and all that practice, you started building that house. It came together well! It only took you three years. Not so bad, considering it’s your first serious try at building a house. This house, that you spent twelve years learning how to build and three more years building, stands now finished in front of you. The product of fifteen years of labor and education and many, many resources has come together. Now you are ready to step over the threshold for the first time and live in your house.
When you get inside, someone else is already living there. They know you built it, but they decided to live there. They’re already planning a house warming party, and you’re not invited. Not only are you not invited, but you get to move into the tent set up in the yard.
Feels weird, doesn’t it?
That’s basically what happens with Napster, though. Napster had a goal to democratize music, I think. It’s a noble enough goal. Music should unite us. Everyone should have it as an option.
I chose those lengths of time for that house because that’s what I spent on my collection of short stories and my novel. Yes, I was doing other things at the same time—eating, breathing, etc. But nobody does only one thing.
Some of us spend everything we have on making “intangibles.”
It’s a strange thing when the value we imbue into them turns out so easy to dismiss.
Intangibles is a weird word, from where I sit, after all the work I’ve done.
Looking over the history of intellectual property in the digital age of information makes me put on my science fiction writer’s hat. I think the most useful definition of a science fiction story is “a story that needs some idea or result of science in order to be told.” So, like, Singing in the Rain or Hunt for Red October.
Our relationship with intellectual property has been the story of our relationship with this conundrum: is stuff on the internet “Real”?
It’s easy to say no. Or it has been easy to say no for most of our experience so far, while the impact on us of “stuff on the internet” writ large has been a small one. Smallish. The psychological effects of “stuff on the internet” has, as usual, been of small use convincing us that the internet is part of “Reality.”
The question gets its due attention when we humans have to deal with that most ancient of human motivations: property damage. Threaten our stuff, man, and we’ll come at you. We should put that on a plaque and stick it on Pluto, because the aliens should know it before they get here.
I found this article on NPR. The article talks about Snapchat users. There is a feature in Snapchat called the Speed Filter. Apparently, you can get pretty dank Snaps with your Speed Filter on. But—and this is the key—you need to be driving while doing it.
Which has led to several accidents that have put people in the hospital.
In response, Snapchat has removed the Speed Filter tool.
Which is not a story about intellectual property in the digital age.
But it is a story about an evolving relationship with the technologies on the information age.
What has happened in the past is that an emerging technology changes what we do. Maybe we can do more—maybe we do the same things in different ways. At first, that emerging technology is a novelty. Then its usefulness gets explored. Then clever people figure out how to find its quirks. And then a subset of those clever people exploit those quirks to push an agenda. Then, after usually a generation or so, when the ramifications of that agenda have grown clear, we create the parameters that make it so the technology is something useful to us all, rather than a superpower controlled by only the few who understand it.
That’s what happens during a Renaissance. The Italian Renaissance is famous for developing techniques of art and engineering. It’s much less famous for developing the maturity to cope. Maturity happened too. It always does.
Kristina interviewed a few artists who embraced NFTs before it has exploded as a keyword and new artists are calling themselves "NFT_(insert whatever they can get away with here)" to ride the coattails of the ever-growing keyword.
@romanticappeal is one she is absolutely enamoured with. If you knew Kristina you would totally understand the adoration (She is one of our co-Founders who actually does projection mapping with the likes of Jason Nuroptics, present and dangerously talented in world tours like that of Coldplay and Metallica. Back to Romantic Appeal: Griffin is actually a lawyer. He put himself through law school and revealed that with NFTs-- he "...earned more in the last 3 months than I ever did in the last three years." I wanna say it was like 6000% more, but you may assume I'm exaggerating and not finish up this piece. So I will let Kristina tell that story next. Stay tuned to Think Tank Tactics. Check out @romanticappeal later also!
At the time of this writing, gold costs $1779.83 for an ounce. Not through any fault of its own. Vast tomes of speculation have been written trying to psychoanalyze why gold is so bloody valuable. The simple answer is that we have spent a lot of time and paper convincing each other that gold is valuable, and so it is. We’ve made a game full of rules to support this mythology, and it’s so deeply entrenched that gold still costs a lot, even now when fewer people care than ever. Gold is a thoroughly dopey thing to get worked up over, but we’ve spent a few thousand years creating complex reasons to get worked up, and so we do, and we rarely make fun of each other for it.
The trouble we’ve been facing over the last fifty years, during the age of digital information, is agreeing on where, if anywhere, to find the value in intellectual property.
I have a theory. Our relationship with the intricacies involved has matured to a point where we can begin to accept the fact.
Because the most reasonable perspective is also the simplest: intellectual property has value in itself and just because. It’s like gold that way, only without the few thousand years of litigation and bloodshed to justify that simple and reasonable explanation.
You’re in a science fiction story
In 1969, at UCLA, your fraught relationship with junk you read on the internet began with the message: LOGIN. Some inventors and grad students invented something called ARPANET. The military wanted to use it to send and receive information faster and better than ever before.
Fifty-three years later, and everyone in the world is a few flicks of their fingers away from thousands of gigabytes of videos of cats in 4K HD, whatever that means.
Kitten videos—all of Netflix—every book on the Gutenberg Project. I read a book recently with a feature where one of the characters had to gather as much of the intellectual output of the human race as possible. It took them a team of a dozen and several months, and many cartloads of tape. The book was written in 1983. It would be a much different scene written this year.
The science fiction story you’re in is a story about developing an understanding of digitally stored information. It’s been a new frontier. The virtual world has been the wild west so far, full of desperados in the form of hackers and barons in the form of tech billionaires who have carved a world in their image, and we get to live in it whether without so much as a by your leave.
We’re approaching a climax of the story. People are figuring out the rules.
This might not be the answer, but it is an answer: NFT stands for non-fungible token. “Fungible” is a word most often used in accounting. Something non-fungible is something that can’t be replaced, for some reason or another. Maybe there’s only one of it in the world—fine art, for example. Maybe it has the kind of quality that you can’t put into a thing except through personal relationship—family heirlooms. A non-fungible good is important in accountancy, because if a thing is non-fungible then it’s impossible to set the thing’s value based on equivalence. If THIS Camaro is the one that my grandmother bought brand new in 1966 and my mother refurbished to like-new in 1989, and I just finished fixing and repainting, then it would be impossible to just replace it with some other Camaro. Its non-fungible. The value in it is more complicated than its Blue Book price because of its personal history. It’s become one of a kind. That Camaro is unique and has all the value thereby imparted..
From the perspective of a creator, on the inside, knowing the work that goes in, I feel like it’s clear how my book is like a 1966 Camaro that has been passed down from my grandma.
The world seems to find it less clear.
Which doesn’t mean nobody’s trying.
In the early 2010s, some forward thinking adventurers came up with NFTs. Per usual, technology develops at a slight lag on our need for it. These NFTs, non-fungible tokens, are an attempt to imbue intellectual property with a similar uniqueness to that Camaro.
An interesting proposition, since it’s the answer to an argument. The argument is between the creator and the consumer. I—the creator—say the book has value already. You—the reader—might need to be argued into it, because it might not be evident in itself. The idea behind a non-fungible token is this: it’s a unique piece of code attached to only one copy of the piece of intellectual property. Theoretically, that piece of code can’t be copied, which means that even if someone copies and pastes the image, story, video, then the “original” remains intact somewhere.
Now, theoretically, this representative piece of art, all of a sudden, has, in theory, uniqueness, with the extra value that comes with being one-of-a-kind.
It’s a great idea if it works. “If” being the operative word here. This isn’t the end of the story. It’s a climactic moment, though. People have paid thousands and millions of dollars to obtain the NFTs for various pieces of art. Why they’ve paid and what precisely they’ve bought with it has been a subject of debate, because usually the people who own the NFTs don’t own any of the distribution or any other part of the business of the art. That’s good news for me. All I need now is a rich benefactor who enjoys the rush of being the guy who owns the thing, for the rush of having the only one of its kind.
There are those people out there, people who just want the satisfaction of owning something nobody else does.
Secretly, most of us have that personality trait. It’s just that we all have different artifacts that turn us on. I really like collecting small stones, for instance. I like having little rocks that I find on special days and in special places, I keep them in a stack on my mantel. They all have stories, and I like them because they’re each of them, so far as I am concerned, unique.
If I understand them correctly, NFTs are a little like my rocks. It may not be clear to you what value they have, but that’s just because they’re not for you. I find gold boring and useless, but since there’s vast mythology surrounding it that says it’s worth its weight in gold, even though I find no value in gold I can still sell it for (checking the price again) $1774.95 an ounce.
Which is how economics work. When enough of the appropriately influential people get together and say, “That, right there, is valuable,” then the system rearranges around their opinion. That’s my thoroughly amateur view of how economics works.
An Art Based Economy Perhaps?
The dream of these NFTs is to end the argument around whether creative output has value in itself, and make the answer forever “yes.” The people who invented it have mercenary motivations—I have no doubt about that. Mercenary motivations aren’t evil motivations. Evil’s just what you do with it.
I like knowing people feel an investment in what they’re doing, especially if it’s a difficult thing, and especially if it may benefit me and mine someday. And isn’t that a variety of mercenary motivation?
So I don’t mind if the NFT idea came from people interested in making a buck. If that means they’re invested in making it work, then good for them.
I don’t think that NFTs are the end of the conversation. I think they’re a promising symptom, though. They’re a symptom of developing maturity. There is a segment of the population trying to convince another segment of the population that art that exists as nothing more tangible than code has economic worth, not because of anything it does or any effect that it has but simply because it EXISTS. Some of us view that as intuitive, but apparently it needs to be explained to some people.
As we ever have, we pursued our pleasure and made pretty things, and the technological and societal infrastructure came at a little lag from the pleasure. Given enough time and enough attempts like NFTs, we may develop the maturity to admit that a piece of digital art is as real and intrinsically valuable as a gold-plated Camaro that’s been in the family for half a century.
That is a science fiction novel I would read.
This is the first of a three-part series on NFTs. Stay tuned. Subscribe to read about cutting-edge news that affect your business and art-loving minds!