I bought my first artwork for LM50 when I was 16 years old. It was a piece by Steve Scicluna, or “Il-Maku” as we used to know him back then. The artwork is signed by the artist on the back making its source identifiable. I bought the artwork to keep for my personal enjoyment and not to sell it again, but I also bought the artwork with the opinion that it will conserve the value spent on it in terms of fiat. My opinion is based on the premise that the artist’s work is valuable to others as well since if there are no other people valuing the artist’s work, I would not be able to exchange the artwork back for the equivalent monetary value I had purchased it with.
I have worked in the culture industry for many years and have also followed the crypto space closely apart from owning crypto-currency since 2019. As someone coming from the book and publishing industry, I can attest that crypto is nowhere to be seen in our industry. The situation is also very similar with regards to other culture industries, but it is probably worse in the book and publishing industries which in the West are mostly run by traditional and very conservative men and families.
Non-fungible tokens have made it to the press this year with headlines of people selling images of rocks for more than one million Euros each. There seems to be a mixture of amazement, shock, awe and perplexity about these stories. In reality, similar things happen in the physical art market on a daily basis where strange and weird artworks are sold for ridiculous amounts of money such as when a banana wrapped with duct tape was sold for $120,000 and Jeff Koons’ Balloon Dog sold for $58.4 million.
But how ridiculous is it that an image of a rock was sold for such an amount? Or, is it, really?
NFTs are basically an innovative technology where the files are uniquely and digitally signed by cryptography on the blockchain providing proof of origin through the uncensorable and unchangeable blockchain ledger. This is an excellent application to the world of art where proof of origin and identity are issues that art historians grapple with on a daily basis. In addition, given that NFTs are transacted on the blockchain through cryptocurrencies such as Ethereum, NFTs can be directly sold by the artist to the buyer in a verified transaction. This basically means that the artist has the means to directly sell his or her artworks without a third party. This is a technology that greatly empowers the artist by giving the artist the means of its own trading and pricing mechanism.
Here’s what’s getting many people confused, however. This technology was created or rather discovered by cryptographers from the blockchain and cryptocurrency world and not people coming from the culture industry. NFT technology wasn’t discovered or created by a group of culture industry executives who were figuring out how to maximise their gains, but instead was applied as a pricing and trading mechanism for artworks by cypherpunks themselves knowing very little about art in general. These cypherpunks applied the technology on their own by creating some of the first NFT artworks which today are going for millions of Dollars.
Once NFTs were introduced and began to increase in popularity thanks to platforms like OpenSea, the first initial massive buying sprees of NFT artworks took place by holders of crypto-currency who previously would not have bought a physical artwork. Coders and developers were creating artworks created by digital artificial-intelligence software from very simple illustrations by artists. Some artists got to collaborate with other coders and developers to transpose their art digitally while a handful of established artists like Anthony Hurd and Beeple (Mike Winkelmann) took the opportunity and sold their own NFTs.
So far, the trading volume on OpenSea, one of the most popular NFT market places, has topped 10 billion Dollars. Most of the buyers don’t seem to be the typical collectors you would see at an art gallery buying or exhibition. Most of the buyers seem to be people loaded with crypto who through NFTs have discovered art. Meanwhile, some auction houses like Christie’s and Sotheby’s have tapped on the opportunity and started auctioning off some of the most popular NFTs such as the Bored Ape Yacht Club series. Yet, so far, NFTs and crypto are still something rare in the culture industry in general. It seems like that NFTs have a life of their own distinct from all traditional culture industries – and it’s growing fast. The total market volume of NFTs is rapidly catching up to the trading volume of the physical art market which globally spans around 50 billion Dollars per year.
What’s happening is clear to me. Crypto has begun a paradigm shift in the world of finance Now, crypto has begun another shift in the culture industries. Given that the traditional culture industries are still very distinct and far away from the crypto and blockchain industries, what is happening right now is that a new culture industry based on the blockchain and NFTs is growing and this new culture industry will permeate all other culture industries and radically disrupt them. Why do I believe so? It is very simple, I think.
NFTs have hugely empowered creators by giving them a mechanism that enables them to directly trade their product and price it at their will without any third party interfering in the process. In addition, platforms like OpenSea have enabled artists a literal marketplace where they can promote and showcase their NFTs. This is a very big deal. Artists have always been at the mercy of middlemen and publishers to publish, distribute and earn money from their work. In addition, the emergence of big tech such as Amazon, Google and Facebook has squeezed the margins of practically everyone in the culture industry. Book publishers became dependent on Amazon while musicians became dependent on Youtube. News publishers became dependent on Google. Indeed, the internet had opened up a multitude of opportunities for artists to expose their work, but the monetisation of art and culture on the internet seemed to be increasingly controlled by a few.
Now, imagine, if book publishers would no longer need Amazon to promote, sell and distribute their work. Imagine if artists wouldn’t need Google and Facebook in order for them to promote and sell their work. Imagine, if content creators didn’t need a middleman to sell, promote and distribute their work and they could do all that by themselves on blockchain networks using crypto-currencies as means of exchange. How would that happen? It’s difficult to imagine how it would happen, but the use-case is there, the potential is there, and the space is growing exponentially. Here we are not just speaking about a dress change but of a total and radical change of the economics and dynamics of the culture and publishing industries. Let me just give you an example of myself.
My personal experience
I’m a book writer and have been involved in the print and publishing industry since 2005. I’ve seen how Amazon has decimated our industry and grew into a behemoth at our expense. The value that Amazon was creating seemed to be mostly to their shareholders as most of the jobs they created seemed to be unfulfilling low-paid jobs and this comes in great contrast to the culture and publishing industries which traditionally created decently paying white-collar jobs which offered very fulfilling experiences. Bringing in some of that money back taken from Amazon into the publishing industry would create more value in the economy. One way which Amazon decimated the book industry was by acting as the main arbiter for prices. Amazon’s pricing model was based on cheap book prices with tight margins with the aim to sell as many books as possible. The same model was applied more vigorously to ebooks and today, ebooks are culturally considered to be inferior products to physical books due to their lower prices. Profits in the ebook space are razor-sharp thin and for most small publishers and authors don’t even exist. Big tech has forced everyone to literally give out their work for free just to be distributed and accessed over the internet. Think about it. You expect to pay a lower price for an ebook as compared to a physical copy, don’t you? You sly little fox. And why would you? The industry has forced you to think that way because of its pricing model. In reality, an ebook has more functions and usability than a physical book, so why would it be cheaper? With my ebook, I can scan and look for words in a second while with a physical book, I’d have to flip pages. I can also copy text and transfer the ebook to a friend more easily than handing out the physical book.
Is there a way to regain control over the ebook pricing model?
I have recently released my book, a work of non-fiction with stories that journalists and its protagonists were interested to read in advance of publishing. The book is my perspective as a historian and previous government executive on Malta’s rent seeking regime. NFT technology gave me the opportunity to sell and price my work in ebook format in advance of publishing in print by simply uploading the book cover as an NFT with a hidden content of the PDF of the ebook uploaded on Pinata which would be accessible once the NFT was bought. The price of the NFT was 0.1 Ether, which I thought was a fair price to those who wanted to use the information in advance of the print publication. The launch was a relative success with 2 institutional clients which were media houses offering to purchase the NFT via cash transfer since they didn’t transact in crypto in their books. This operation enabled me to seed the print publication which then went on to become the top number 1 best-seller in Malta. One of the protagonists of the story, previous Minister of the Interior Emmanuel Mallia, bought the NFT with Ethereum.
Now, to get to my point, my application of NFT technology enabled me to turn my ebook into a collectable, and through its sale seed the print publication of the book. Had I launched the ebook in traditional formats and channels, there would have been no way I would have made the same relative success. In addition, I have also added value to my product through scarcity and this value will be pegged to the value of Ethereum. Therefore, with my work as NFT, I am also betting that Ethereum will either conserve or increase its value. I would not have used NFT technology had I been of the opinion that Ethereum would fall in value. In this way, I have turned the ebook into a historic collectable while the print version is distinguished as the product intended for the retail market and which is widely available as a paperback at the price of €15.
My NFT collection
I have been buying art and historic items since I was 16 years old and it’s one of my only vices and guilty pleasures. I own historic coins, old books, art pieces, posters of events and other stuff. Currently, I’m collecting some NFTs to keep to myself and some others with speculative interest. I’m of the opinion that NFT technology is the emerging principal manner in how digital art and ebooks will be transacted. Given that we are still early in this incoming phase of disruption in the culture industries, I think that many NFTs right now which are being sold for what seem to be large sums of money do actually hold a lot of historic value. However, this premise is also being made on the condition that blockchain itself does not become disrupted. Although there seems to be a lot of research into quantum computing, the prospect that quantum computing will go mainstream and disrupt everything we know of the digital world still seems very improbable in the near term. My speculative opinion is that blockchain technology and cryptocurrencies will disrupt way much many industries and before they become disrupted themselves.
The culture industry is very fragile and is run on old models. Once NFTs take a major role in the culture industries the archaeological and historic-first NFTs will be viewed as collective items of a newfound technological era. Just like when buying the first LPs, the first tapes, the first books, the first ebooks, the first, the first video games, the first CDs, and more…. However, I am also aware that like in any other cultural industry, the artistic products sold in the NFT market may have a 90% chance of losing all their value. Like in any other art market it is only a minority that will thrive and survive the test of time.
So, I’m placing my bets.
One of the main use cases for NFTs is profile pictures and for profile pictures, people often use an avatar: a figure which represents the person. My first NFT was my avatar. I chose my avatar to be a Cunning Fox because at that time I was looking for something cheap yet aesthetically decent. I bought the Cunning Fox because I liked the art and its simple and rebellious nature. I’m still using it today and I intend to keep using it as my main avatar.
The crypto-currency industry has often been called by its critics a bubble similar to the tulip mania: an irrational exuberance over an asset which although useful is exaggeratedly priced due to excessive speculation. Apart from being a historic NFT forming part of the earliest NFT artworks ever released, Ether Tulips hold great cultural significance in the crypto space for representing the greatest allegory to crypto, albeit potentially wrong, making the cultural significance even more valuable due to its irony.
Ether Tulips from part of the third cluster of historic and archaeological NFTs. According to NFT historian WhiteRabbit1111, NFTs issued in 2018 are part of the earliest clusters of NFTs ever released. The first cluster of NFTs amount to less than ten projects and have been released between 2014 and 2016. The second cluster of historic and archaeological NFTs have been minted in 2017 and amount to less than 20 projects. In 2018 more than 100 projects were minted one of which was Ether Tulips. As of 2019, there were thousands of projects available. The amount of NFTs available for sale already exceeds the one million mark.
I’m invested in Unusual Whales because it is one of the most popular cultural icons of the retail trading mania which started during the lockdowns of the Covid Pandemic. The Unusual Whales NFT also provides a small market data service to both stocks and NFTs – it’s like a Bloomberg terminal for retail traders specialising in option trades and NFTs.
The Fame Lady Squad are the first-ever all-female avatar project. The project has an interesting story as well. The founders of the project were men but when they revealed their identities, the women who bought the NFTs of the project organised a rebellion and forced the founders to hand the project to them. Today, the project is fully run by the women who own the NFTs.
I bought an Ether Lambo to celebrate my best-selling status, however, these are also the first luxury cars minted as NFTs and also form part of the third cluster of historic and archaeological NFTs of 2018. In addition, the smart contract was created in 2017. Ether Lambos have a lot of cultural significance in the crypto space given they represent the popular saying “When Lambo?”, which can be considered either as a figurative way of asking when will the price of crypto increase exponentially or when will your crypto holdings eventually became as valuable as to possibly buy a Lamborghini.