Add Venture #8

Sat April 10th, 2021

What Blockchain and NFTs Can Mean for
Budding Artists and Explorers

Getting a handle on how those new technologies work could change how artists, adventurers and explorers get paid for doing what they love and do best. Here are pointers.

Bitcoin is dumb. It does nothing, serves almost no societal purpose, creates immense pollution, defeats the very point of creating trust through numerous scams and fueling an illegal underground economy (almost half the Bitcoin transactions), and mainly stills exists today (as a durable bubble) because of the speculation that goes on around it. 

It's still a brilliant idea.

At least, Blockchain, the technological layer beneath Bitcoin is. For one thing, it enables secure algorithmic validation of transactions without a centralized ledger (though extremely inefficiently, by design, for now). In a world where legal and legitimate seem less and less acquainted every day, and corruption and wrongdoing are rewarded, not punished, Blockchain is seen as one potential beacon of hope on the technological horizon. 

To me, Bitcoin is the Model T of crypto. The first of a kind, ridiculously bad compared to things to come and interesting only for historical (and, to some, speculative) reasons. But I'd wager blockchain will fuel a revolution. And, over the past few years, it has taken the art world by storm. So, how, and what's that got to do with adventure ?

Crypto is here to stay. Understand it. Use it to your advantage.

The art industry is usually not an early adopter of technology. It is only because the art market is closely linked to the financial world (hey, I'm just the messenger ;) that blockchain has been invited into its sphere of consciousness. Big Finance now (reluctanctly) acknowledges crypto as part of its world. Crypto is here to stay.

How does it work? Why is it interesting? Let me explain in a minute or two.

A bank holds a central ledger (a book, in ancient times, databases today) that contains all the transactions made by its clients. To make a transaction, a client must ask the bank for permission. The bank plays a central role and we have no choice but trust its word that its ledger reflects reality. A blockchain is also a ledger on which transactions of assets - called tokens - are recorded. Those tokens can be shares of a company, crypto currencies, a gif, videos, music ...

Unlike bank ledgers, a blockchain isn't hosted in any hidden and centralised location or edited only by the bank, but exists as software present on many private computers (yours, if you wish to) each of which has access to the entire database and its complete history and can verify the records of any transaction without intermediaries. Transactions are peer to peer and do not transit via a central organisation. And a blockchain is an append-only ledger: one can only add new data, or view data. It's impossible by design to change past records, making it theoretically impossible to retrospectively "cook the books".

Blockchains come in many flavours. They support various types of tokens and purposes and their rules differ from platform to platform. Bitcoin is intricately linked to the concept of blockchain because it was the first actual implementation and use of that technology. Bitcoin is the only token that can be exchanged on its blockchain. You can buy Bitcoin, sell Bitcoin, marginally buy/sell stuff with Bitcoin, and that's more or less it.  Other blockchains, such as Ethereum, support a wider range of tokens ranging from Ether (ETH) the financial token of that platform (its equivalent to Bitcoin) to NTFs (Non Fungible Tokens) and Smart Contracts (small pieces of software that automate a transaction when a certain condition has been met; for instance: if you send me x ETH, then I will send you my file).

Non Fungible Tokens are digital certificates of authenticity attached to a digital file. Non Fungible means unique. You can swap $1 coins or bitcoins, they're all identical. But you can't swap paintings. Or Greek vases. Or lithographs for that matter: even though a series my have 100 seeminly identical copies, each is slightly different, is numbered and signed differently. A run of, say, 10 NFTs for a photograph will make each of the 10 identical files unique. There's n°1, n°2 ... n°10, and a buyer owns one of those, not the other.  

You can download the photograph above, but only the person owning the official NFT for it would own the original and would be able to sell it later (hence speculate on its value). For 10 000 €, I can order a legal copy of any painting that's going to be pretty indistinguishable from the original to 99.9% of the population. In spite of this, the Mona Lisa is worth around a billion euros, while my copy of it would be worthless, it's cost reflecting hourly pay for craftsmanship, with very little residual value. An NFT of the photo above can rise in value if I become famous, whereas the copy you have downloaded from this page won't ever be worth a cent. 

Bitcoin's blockchain is considered by some to be the "purest". It's transaction validation is the most complex and its decentralisation is the most extreme. But, to insure this, it is extraordinarily inefficient (by design). All the computers on the blockchain can compete to solve the crypto (maths) problem associated to the validation of a transaction. One wins, and cashes in for its services, all the others just burned electricity for nothing. This makes the Bitcoin blockchain incredibly costly environmentally and incredibly slow. It uses up as much energy as a country like the Netherlands, and can only process up to 7 transactions per second (compared to the 65 000 per second that Visa alone can deal with). Let's repeat this: Bitcoin is useless, it is a purely speculative asset that's burning a hole through our planet's resources. Do you want to by that gal or guy?

Various degradations of either security or decentralisation are being used by other platforms to bring a viable solution to this absolute impass. There's no free lunch. And my money is on Ethereum which not only enables its users to build entire companies on its platform, not just speculate on a virtual currency, but is also investigating far more environmentally-friendly approaches to validating transactions (see below).

Understanding all this is an adventure in itself and an essential one. As mentioned before, Crypto isn't going anywhere. Better be ahead of the curve. But how does this help you go on an outdoors adventure?

Here's where storytelling comes into play.

I'll get into why adventure and story are inseparable in an other issue. But, in a nutshell: stories often tell the adventures of others. And good stories make good money. Why not tell yours? This issue isn't about investing in crypto to live the 4-hour-week lifestyle, but about using the various mechanisms offered by crypto to raise funding for, and monetize, your adventures. What NFTs and blockchain can do is help you build a small business around those adventures.

Let's keep hopes in check first. Yes, the media will always focus on the big auctions and large numbers, but chances are you won't make much money. But, that's not the goal, is it? Your adventure travel is already currently costing you money, so it has that adversary relationship with your day job, right. NTFs, on the other hand, may provide a way of changing that dynamic in the favour of more frequent adventures and a more varied income stream, even if they don't make you rich. May, is the important consideration, here.

If you already have a strong following, chances are you'll do well at selling photos, videos, soundbytes, or any other form of digital memento from those trips your fans love. The beauty of NFTs is that you do not relinquish copyright rights. Buyers only get ownership of the work. So you're not selling your future. And, if sales of your work do pick up and develop into a secondary market, you will receive royalties on every new sale. Again, the important consideration here is if.

Still, all of this means you can focus on building a community, possibly a tokenised community (a community whose membership is paid for in tokens). Considering that most adventurers / artists need to work multiple side gigs to make ends meet, as it is, the possibility of making one of these gigs community-building progressively takes you off the hamster wheel by providing cumulative benefits.

True Fans will want to support you. They are probably not interested in investment or speculation as much as in patronage (though, if you do become famous, those early NFTS could become valuable and create a different type of interest). 

How is that different from selling merch or starting a Patreon page? Conceptually, not very different. But merch is usually made of physical objects and Patreon focuses on this as well, or on relational benefits, such as meetups. Neither really do well for what you actually produce the most of: digital files. So I could see NFTs becoming a good complement to Patreon and an online shop. Not just because because of the focus on digital, but also because of the chance of engaging with a slightly different type of fan profile: the collector.

And interaction between the two universes (digital and physical) has been exploited to great success in the past: you can sell tokens that are redeemable for limited-edition merchandise and hope for speculation before the tokens are redeemed. This is how very ordinary pair of socks are almost worth 6 figures today.

The way of the NFT seems interesting for three additional considerations : first of all, self-reliance (as opposed to side gigs) forces you to up your game. Create the best content out there, the most personal. The world needs this desperately after the cesspool tsunami of social media. Secondly: feedback. Cheap NFTs should sell, if you have built a loyal supporter base. Seeing what sells, and what doesn't, provides you with great feedback on fan interests. You can follow that info or not, but at least, it's up to you. Finally: a customer is worth a lot more than a fan. Someone who purchases that $5 NFT is very likely to buy again from you ... Cheap NFTs could be the top of a funnel leading to your independance.

This is just me, thinking aloud about what I'm likely to try for myself. All of this is riddled with uncertainty about success and environmental ethics, of course. That's part of the fun. Crypto will lift many boats. Riding that wave is important because the world is changing faster and faster. You can change with it or be controled by it. Whether you make money on blockchain or not isn't that important. Training your brain to adapt and experiment is far more.

If you do go that route, Ethereum isn't the only platform out there, but it's the one I'm considering. WAX, for instance, has been one of the best performing cryptocurrencies in the past months, and its platform is dedicated entirely to collectibles. But Ethereum offers a lot more potential to build a personal company on, and it is changing the way security is handled, moving away from the icecap killing Proof of Work favoured by bitcoin (and most others), to a much more energy-efficient proof of stake.

Your choice matters! As Beeple explains, don't count on the speculators or the broader blockchain community to care about the environment, but the art world will.  As an artist and explorer, so should you!