In my March 2022 Biometric Update column, I explained that NFTs are a big deal because they are a unique digital identity layer native to the Ethereum blockchain. This is exciting because it can be used to track the ownership of digital items. While NFTs are not without their problems, there is a growing appetite to explore the possibilities thanks to a culture that views the world in a fresh way.
To understand the importance of NFTs, we need to understand the context of the world when NFTs were originally designed. In 2018, there was a lot of energy around exploring alternate currencies as a funding mechanism. The term ICO — or initial coin offering — was a method to raise funds for a new venture. But the vision of ICOs weren’t only to raise money, but to create a community with shared values. It’s similar to an IPO or Kickstarter, but with one key difference, the community had its own currency that could be used for transactions. Many of the ICO projects used a cryptocurrency as part of the product design — a financial mechanism to enable cooperation in a complementary financial system (see Bernard Lietaer’s work on complementary currency systems). But an ICO was equally a signaling of belief in the project and a desire to innovate existing economic models.
ICOs were problematic for many reasons, but one thing legit ICO creators wanted was the ability to issue a receipt or stock token to something to show that you are part of this community. This functionality was not possible with the existing transactional tokens. Different business models became available with a token that had a unique identity and ran on the same infrastructure as transactional tokens.
ICOs combined crowd-funding and cryptocurrency, and challenged economics as we knew it at the time. Not all ICOs succeeded, and there were scams. But ICOs are a successful innovation, making a funding mechanism that was previously only available to an elitist few, available more broadly. And it paved the way for NFTs which extend the transactional nature of tokens to enable unique identity while using the same ETH rails. These innovations enable new business models.
Artists and Ownership of Ideas
Artists are explorers pushing the boundaries of what we think technology can be used for and how it can be used. There are many challenges of being an artist. Not only do you have to successfully mine the well of creativity to create your art; you have to have some business acumen and be lucky to find success. Often the financial success of artists comes late in their career, and many die before they see the impact they’ve had on human society.
I was just commenting about this in the Mac Cosmetics store last week, when seeing Mac’s new Keith Haring Viva Glam series. Keith Haring was a revolutionary artist that died of AIDS before he could even see the influence of his work. And one of my first future scenarios explored this idea, through an alternate currency created specifically so creators could pay for longevity treatments to live longer to see the impact of their lives.
But Artists can be jerks. There are countless stories of lesser talented but more well known artists, stealing ideas from unknown geniuses. Yayoi Kusama’s earliest ideas were stolen and utilized by Andy Warhol, Claes Oldenburg and Lucas Samaras, the results of which made them famous, while Kusama still struggled. Seeing the success of her stolen ideas under a different name almost destroyed her. There was no way for her to prove creative provenance, especially when credit was not given.
Jodorosky’s Dune influenced the entire Sci-Fi industry, including the Star Wars, Alien and Blade Runner franchises. But none of this was known until relatively recently.
Then there are artists like Banksy, who create art in public spaces, on brick walls and billboards. I remember driving down La Brea in Los Angeles one morning in 2011 seeing the latest Banksy graffiti on a recent billboard, only to hear that the billboard owner took it down a few hours later– in order to capitalize on it! In another case a concrete wall was removed because of the Banksy piece on it.
This illustrates the problems of creative provenance and ownership. Creative commons licenses were created to provide a mechanism to license one’s work and allow others to use and remix it with attribution. But there aren’t good options for creators to protect against more powerful and better resourced people who can execute on their (borrowed or stolen) idea?
For artists who do sell their work, there is another conundrum. Artists only get paid on the first sale of their work, but their art can be sold at auctions later at an increased value. This makes art collectors in many ways investors, but the actual creator doesn’t get to benefit in the increased value after the art has left their hands. In some cases, the holder of the piece of art can make many millions more, than the actual creator of the piece. This use case inspired the creation of the ERC-2981 Royalty token, where artists can specify a royalty amount paid back to them, when the digital item is transferred.
Artists on one hand don’t always care about the ownership of ideas. On the other hand, you have to have money to live and keep making art. For anyone who has experienced someone take their ideas and execute on it, perhaps not even realizing it was not their own, is extremely painful. But the problem with ideas, if you want them to catch on, they have to become someone else’s. Unfortunately those with additional resources benefit when “borrowing” someone’s idea simply because they have the resources to execute on it.
Do NFTs give control?
NFTs sell the dream that artists can have control over what others can do with their creations. If you put an NFT on something to show provenance, that could help, but only if the laws around IP and ownership change too. Culture needs to change too. We’re all standing on the shoulders of the past, whether we acknowledge it or not.
We shouldn’t be surprised at the explosion of NFTs art — artists always use technology in novel ways that can be quite different from the use cases of the original creators. Traditional economic models haven’t supported creative efforts. And isn’t the point of artists to challenge the traditional ways we see the world? NFTs are an economic innovation that promises to give a tiny bit of power back to the artist.
I want to believe NFTs will help solve this problem, and I think they can partially address it. NFTs are a mechanism to give an artist more control and enable others to directly support them. But there is still the larger problem of living in a world that doesn’t often value creative expression in economic terms. And of those who have more power and resources utilizing the ideas of others for their own gain.