In lieu of an image of an NFT to kick this post off, I thought a Bobby Digital album made as much sense.
In 2017, as part of a 24-hour engineering contest, I developed a cryptocurrency token for StockX, an online market and reseller of sneakers among other things (and a company that has some music industry connections, with investment money coming in from Eminem, Scooter Braun, Steve Aoki, and Marky Mark Wahlberg). The coin in this case was tied to a physical good (a pair of verified sneakers), and allowed users to track the chain of ownership from when it was sold, to its verification by StockX, to its receipt by the purchaser. The purpose of this was to help eliminate the market for bogus resellers who were making duplicates of the StockX verification tag and selling fake sneakers to StockX users. This past week, StockX announced they were offering NFTs with a very similar setup that I'd like to think I inspired.
I mention all of that because, hey, maybe you're looking for a guy who can write a blog post once every 3 months at the same time as architecting whatever blockchain project you've been dreaming up in your head. Or, more importantly in the context of this post, maybe you're an artist that is trying to understand whether "the blockchain" is something that can help your career and my resume might be enough to convince you that I have some idea of what I'm talking about.
So the purpose of this post is not to turn you into an expert on all things crypto, my goal is really just to provide a basic description of some of the key pieces of the crypto world and hopefully make a case for why you, the independent artist, should consider looking into it further. And I appreciate that learning a technology that has baffled many people who have a career in I.T. may be a daunting request for a musician, but I'd also point out that the music industry has had to adapt to a major technology change every 5-10 years at least since the 80's, and the artists that are the quickest to adapt to it are often the artists that find the most success. Just going back a couple of decades, think about these milestones:
The music industry already seems to be taking its first steps into adapting cryptocurrency and specifically NFTs. Though it didn't go as smoothly as he would have liked, Nas sold the royalty rights to two of his new songs. And if you spend any time at all on Instagram, you've likely seen numerous musicians pitch the NFT "artwork" that they're either selling or buying (Jay-Z, for example, uses his NFT as his profile pic). As with any new technology, there's a lot of opportunity for scammers and grifters to make some money off of the ignorance of others, but there are also some legitimate use cases for it. To me, the biggest opportunity is tying royalty rights and ownership of a song through the secure contracts that NFTs allow for.
I am in the early stages of a new project trying to leverage NFTs exactly for that reason, and I could write pages more on the topic. For today though, I just want to define a few key terms with the hopes that might give you enough info to go out and start learning on your own:
NFT - Non-Fungible Token, a cryptocurrency-based token whose chain of ownership is tracked through the blockchain. In plain english, it is a unique identifier tied to a digital or physical item that cannot be stolen or copied but can be transferred or sold to others by the owner.
Fungible Token - an item or currency that can be exchanged for similar items without losing value. The primary example is cash (ex. I can give you a one dollar bill in exchange for 4 quarters from you, and we both still walk away with the same amount of money even if the overall value of one u.s. dollar changes)
Blockchain - Digital ledgers that track crypto currency coins and tokens. The blockchain is used to identify the current owner of any given crypto currency token, and when that token is sold or transferred it is recorded on the blockchain. Due to the way that the blockchain is built, you can be fully confident that no one can steal or duplicate the token.
Gas - Gas is what it costs to complete a transaction on a blockchain. This is important because while you may price an item for $X, the buyer will also have to pay the gas cost on top of that like they would a sales tax. Depending on the crypto currency involved - ethereum in most cases for NFTs at this point - this could be tens or hundreds of dollars.
Metaverse - An online world that you can participate in with a digital avatar (a digital representation of yourself). There are a handful of metaverses currently, with Facebook's upcoming meta universe likely to be the largest once it launches. Metaverses are expected to be the primary location to display any art/music/etc NFTs that one owns.
Avatar - A digital representation of yourself in the metaverse. Essentially it's your character that you move around in, the way you might control a character in a video game.
Verchandise - Virtual Merchandise, a branded digital item tied to an NFT, which a musician or artist sells to their fanbase. As an example, the the metaverse platform Decentraland, you might sell a virtual tshirt with your logo on it to one of your fans, who would then have their digital avatar wear the shirt in the metaverse.
Bitcoin - A crypto currency whose primary purpose is to track ownership. Meaning a bitcoin itself does not do anything other than identify its owner.
Ethereum - A crypto currency that not only can track ownership but also can have an action or "contract" tied to it. For any coin you create using Ethereum (or many of the other new forms of crypto currency), you can have it run code that you write any time a certain action happens, like when you transfer it to a new person. So as an example, I could create an Ethereum-based coin that pays out a royalty to the original creator of the coin every time it is transferred to a new owner. A real-world application of this might be to say every time an nft tied to an mp3 is resold, some percentage of that coin is transferred back to the original creator.
As you may have seen, the crypto market is currently in a bit of a crash (along with the stock market). I won't take the time in this post to talk through the financial pros and cons of trying to invest in it right now, but it is worth mentioning some of the potential forces driving the NFT market in particular since I am here pitching the idea that NFTs are worth pursuing. It is something of a joke at the moment that a random picture of a cartoon ape can sell for tens of thousands of dollars. There are a few possible reasons why the prices on NFTs are astronomically high at the moment:
People truly believe the artwork they're buying is worth the money they're paying for. Seems unlikely, but barring evidence otherwise it can't be discounted.
Investors who have a lot of money tied up in cryptocurrency don't have an easy way to use it. Bitcoin, as an example, has made some folks multi millionaires on paper, but it is not easy to convert large chunks of bitcoin into currency that's usable for purchasing real world items. It is not too difficult, however, to move those bitcoins into other crypto coins that can then be used pretty easily to purchase NFTs. For some, diversifying within cryptocurrency is a slightly safer approach than keeping all of your money in bitcoin.
It's a way to launder money. Let's say you've made a million dollars from some sort of criminal activity - it's hard to put that money to use without drawing some attention from the IRS. I'll spare you the full breakdown on how to launder money, but creating an NFT and then selling it to yourself for some absurd amount of money would be one way to do it and due to the nature of cryptocurrency it wouldn't be obvious that you were both the seller and the buyer.
I don't know if any of the above adequately explain the amount of money Quavo has allegedly made off of his NFTs, but the uncertainty around what is driving the NFT market suggests there is a pretty limited amount of time that they'll be worth as much as they are today. So if you want to act quickly you might still be able to use NFTs as an avenue for a quick shot at becoming a millionaire, but I think the longer term play here is to leverage NFTs for a way of ensuring you are able to keep and track the ownership of the digital music you are creating.
That's my sales pitch for today, if anyone is interested in moving forward on a project like this please hit me up!