The art world needs a revolution! A revolution fueled by randomness. Forget predictable brush strokes and perfect technique. Let’s just throw some words into the grinder, add the element of danger and see what happens. Why not? It’s Friday, it’s been a long week, and I needed a laugh, so I give you this gem.
Since the olden days, I’ve got a chuckle from doing something like catting /etc/shadow and piping it to your sound driver. It’s not like it makes beautiful music. It’s, well, kinda stupid. I wanted my own stupid thing. Well, it only took a couple of decades, the invention of cryptocurrency, and advancements in generative AI, but I finally have it. Welcome to the world of Crypto Wallet Pneumonic Generated Art. It’s cultured, refined, and, don’t forget, incredibly stupid. Yes, now you can risk it all to generate art from your wallet seed phrase. Behold! The beauty!
The image was generated with the following seed phrase.
This is all fun and games, but what if you did it with a real wallet? Hmm, let’s do that.
Here are 5 images generated from the 12-word seed phrase of a real Phantom wallet. How much SOL is in there??? Hmmm. You’ll have to recover the seed phrase and find out. At the time of this writing, the crypto market is crashing, so far less value then you’d hope.
Two of the Twelve words should be painfully obvious. Interestingly enough, from a few of the experiments I did, it seems to latch on to just one or two of the words that it’s most familiar with and discards most of the others on every subsequent run. It also seems to make some relations between words that explain how the model is constructing the image. I may run some further experiments using DALL-E as well and compare them to Stable Diffusion, but I’ll leave that for another day.
Time To Make Millions $$$
Now, for the business plan. What if NFTs were created based on pneumonic phrases from cryptocurrency wallets with balances in them? I mean, because why not? Since NFTs aren’t actually about art, this could be a way of superficially pumping their value. Will this be the next art revolution? Will people walk around galleries sipping wine and marveling at these masterpieces? Just asking questions 🤣
Try it yourself! Throw caution to the wind and join the artistic revolution.
Disclaimer: Not responsible for loss of funds due to complete stupidity!
What if I told you there was an investment opportunity where you were almost guaranteed to lose money? What if I told you that this technology allows for someone to airdrop you unsolicited d**k picks, and instead of burning them or being upset, you end up hanging on to them in the hopes that someday they are worth money? (Yes, this actually happens) Welcome to the wonderful world of Non-Fungible Tokens (NFTs).
Amara’s Law: We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.
Even though I have a bit of fun in this post, it would be foolish to underestimate the effect of NFTs in the long run. Misconceptions, hype, and complete denial of reality are stifling something which could be a cool technology experiment. That’s what gets lost; NFTs are just a technology experiment. Whenever money is involved, people tend to forget that things are an experiment.
Start
By now, you’ve probably heard of NFTs but aren’t quite sure what you get when you buy one. Don’t worry, you aren’t alone. Many people buying them don’t know what they’ve bought either. There’s plenty of information out there on what they are, so I won’t go into that here, but I would like to talk about is their value because that is a hotly debated topic.
NFTs have become the slow news day punchline for many, some for a good reason. Not a day goes by where there isn’t some NFT scam. Fakes, frauds, and scammers are all cashing in on the craze. The victims aren’t gullible rubes either; some are large corporations like Kia.
Even though I take a few of my own jabs for entertainment purposes, this isn’t a post beating up on NFTs. Just a look at where the technology is today, from the perspective of novelty and individual ownership.
What You Get
For many, it seems silly to spend money for a receipt because that’s essentially what you get when you buy an NFT today. You don’t get the copyright. You can’t reproduce the image and create new NFTs from it. The receipt is verifiable to someone curious enough to check the specific blockchain on which the NFT is minted. This is summed up in the following cartoon from the New Yorker.
Non-Fungible Tolkien
Side note: Props to whoever came up with the “Non-Fungible Tolkien” joke.
If the copyright holder wants to mint another identical NFT on a different chain, they can do that. If they want to print posters of the image you bought and sell them, they can do that too; you can’t. As a matter of fact, if you wanted a poster to hang on your wall, you’d have to pay for the image again.
In non-technical terms, from the buyer’s perspective, what You’ve bought is bragging rights. Bragging rights are what people find valuable about them.
The Value of an NFT
NFTs aren’t about the artwork or artists, no matter how much someone tries to tell you otherwise. The current value of NFTs is about signaling to others that you are part of a group. There’s a hierarchy, so the “cooler” the NFT project, the “cooler” group you belong to. NFT ownership is like being in a fraternity, only in this case, the hazing comes from outsiders.
NFT ownership is like being in a fraternity, only in this case, the hazing comes from outsiders.
Determining which projects will be popular can be tricky since NFTs have a closer relationship to memes than art. You aren’t always sure why one takes off, and the other fails.
The market is fueled by two things, FOMO and sunken cost fallacy. This is accelerated through artificially built-up hype created through traditional social media platforms.
Pumping and Artificial Hype
Let’s look at a simple example NFT launch. An “artist” creates an NFT collection. Now they have 10,000 images that nobody will buy because nobody knows about them or cares. They need to create a buzz, so they make an announcement on a platform like Reddit or Discord offering to airdrop free NFTs to users, but there’s a catch.
To get free NFTs, you have to take a series of steps that involve amplifying the announcement and spreading the word on various social media channels. To others, it looks like “everyone” is talking about this NFT collection, and they buy an NFT when the project launches because they don’t want to miss out. FOMO hits both the person getting the free NFT and the buyer. Neither care about the artwork but don’t want to miss out on an investment.
Of course, the previous scenario is only if everything goes as planned. If it’s a scam, you just helped a thief steal people’s money, and of course, these scams happen all the time.
There are also PR stunts to try and draw more attention to NFTs, like the guy who took out a loan for half a billion dollars to buy an NFT from himself.
Look at the example below of a fake sale from Twitter.
These stunts are a daily occurrence and actually hurt the community instead of help.
Almost all NFTs and NFT projects lose value after the initial hype dies down. Anyone who paid an astronomically high price for an NFT will feel pretty stupid or just has so much money they won’t miss it anyway. Of course, there’s always the scenario where you may just love collecting NFT farts.
Now, that said, some people have made money on NFTs, but they typically sell them shortly after buying or receiving them. To take this a step further, a recent study published in Nature found that the top 10% of traders account for 85% of the transactions and trade at least once 97% of all assets. This is a shell game, not a vibrant community of collectors.
Scams and Illegal Activities
Criminals find the NFT craze lucrative, and not a day goes by where someone isn’t ripped off. The current market is full of scams and illegal activities. Wash trading, rug pulls, money laundering and many scams are a daily occurrence and will continue into the foreseeable future.
Not About Artists
Everyone likes to say NFTs are about art and artists, but this evidence doesn’t line up. You create a couple of templates and then let some code create 10,000 permutations. People then buy them with the hopes of flipping them. I’m not saying that an 8bit image or even a computer-generated image can’t be art, but what I am saying is there isn’t any appreciation for art or the artist in the current ecosystem. Refer back to the previous Nature article about the ecosystem.
People buying NFTs think of themselves as investors, not collectors or people who appreciate art. Investors are showing off that they bought something, not showing off the artwork.
Not About Art
On the flip side, most people consuming art, buy it for a purpose. They want to show it on their wall and don’t want to be their own art dealer.
New Promises, Same Problems
In the old days, artists hated the gatekeepers. The gatekeepers were the obstacle holding them back from the masses and success. Today, the gatekeepers have mostly disappeared, and musicians can freely publish their music on platforms such as Apple Music, Spotify, YouTube, and a whole host of others alongside famous artists. The same platforms exist for other types of artists as well. The barriers between artists and consumers have all but disappeared. Success still hasn’t come, now comes the promise of NFTs. New platform, same problems.
The unspoken reality is the vast majority of user-generated content, both creative and non-creative falls in the range from not good to pure garbage. This is an astronomical uphill battle if you are a diamond in the rough. The fact that the content is poor won’t stop people from giving you a platform and making money from it. Dreams rarely turn a profit, but selling people on their dreams has always been profitable. The chain and marketplace always make money, the artist, not so much. Artists still have a lot of heavy lifting to do.
Dreams rarely turn a profit, but selling people on their dreams has always been profitable.
NFTs don’t solve the most significant challenge for most artists. If you are a well-known artist with a following, getting a larger share of proceeds from streams and sales is attractive, but you’ve already passed the most significant hurdle. Most artists would rather have exposure than money. In the case of musicians, they freely give away their music in the hopes that people will listen. These artists are in the “trying to build a following” stage, not the “maximize profits” stage.
Reality Denial
As an outside observer, one of the biggest things irking people about NFTs is the complete denial of reality in the ecosystem. Fanatical collectors are willing to lose family members or even wish another pandemic upon the world, all so that their NFTs will rise in value.
Reality Denial
Reality Denial
It would be foolish to dismiss NFTs completely
It would be foolish to dismiss NFTs completely. NFTs are a technology experiment, and like most technology experiments, the initial iteration often doesn’t resemble the end result. I think this is what frustrates me about the current state of NFTs. It’s all hype, but the technology actually has some pretty cool use cases.
If you look at what NFTs are, it’s not hard to see how they could be a utility with additional value. So, NFTs will morph into a value add vs. a thing of value.
Companies are already experimenting with these concepts. A couple of unique examples are Nike with their CryptoKicks or something like TechStyles for the resell market. We’ll see more of this experimentation from companies in the future.
New Revenue Streams
Even though NFTs aren’t about art, NFTs do create new potential revenue streams. Companies who want to launch NFTs may commission people to create NFTs for product launches and other promotional activities. This type of work will increase, and today you can even find people on Fiver who’ll create these NFT collections for you.
If Kia wants to launch an NFT to go along with a new vehicle, they’ll need someone to help them with that, either on staff or as a contractor. Just don’t rip them off this time 🙂
Conclusion
Whether you are all in on NFTs or all against, it’s good to keep Amara’s Law in mind. The next couple of years will be interesting to see where NFTs head. We’ll see a transformation of the original concept into more value-added technology, so please, don’t talk your parents into converting their retirement savings into a pixelated image.
Shout out to the @CoinersTakingLs Twitter account for some of the example tweets used in this post.
While out for a jog the other day, I noticed an older man on a large motorcycle blasting Dubstep obnoxiously loud to the entire neighborhood. The transmission ended when he turned off the bike, but he sat there for a moment with a Sad Keanu look on his face before dismounting and disappearing into his house. Besides making me feel as though I was in a cheesy sitcom, this surreal scenario got me thinking deeper about the ways technology kills novelty.
Dubstep
Ever wonder what happened to Skrillix? Of course, you don’t. You didn’t even notice I spelled his name wrong. There was a year where he won like 5 Grammys, and then nobody talked about him again. If I told you he died years ago, you’d probably believe me. Didn’t you hear? He did something cool, like hiding an album inside a video game or something, and… nobody cared. Skrillex certainly didn’t create Dubstep, but he defined it for a mainstream audience. In the end, technology killed Skrillex. In an ironic twist, the same technology enabled him.
The Death Of Novelty
So, what happened to Dubstep and Skrillex? Massive numbers of people pointed to this as the future of music and how things would never be the same. The disappearance of Dubstep and Skrillex from the mainstream is pretty simple when you reflect on it. The tools used to create music that sounded like Skrillex were easily accessible to anyone, and they took no talent to use. This lead to a deluge of everyone doing the same thing. The same year he won all of those Grammys everything from Kleenex to Clorox used music that sounded exactly like a Skrillex in their commercials. You couldn’t escape those sounds. They were everywhere.
I’m not claiming Skrillex isn’t talented. What I am saying is it doesn’t take any particular talent to sound like Skrillex. The basic tools are a laptop, headphones, and some music software.
Technology removed the barrier to entry, removing the novelty allowing anyone to replicate the sounds of his success. This decrease in friction also accelerated the timeline for replication to a matter of hours. What resulted was an inevitable crash and a quick tiring by the mainstream, but apparently still popular with one particular biker.
Friction Reduction
Overall, reducing friction is a good thing. We certainly wouldn’t want to make it harder for people to get essential services when in need or take long to implement security requirements meant to protect people. But there are cases in which friction does serve a beneficial function.
What we don’t like to realize is that the gatekeepers that everyone liked to hate on so much, although flawed, did serve a purpose in some ways by adding friction. If you don’t believe me, think back to the reaction you had when someone told you that their brother’s friend has a band you should check out.
In the current world, novelty directly relates to value.
It’s important to keep these concepts in mind, because in the current world, novelty directly relates to value.
Talent
Not all friction is bad. Talent, for instance, is friction. When we look at a piece of artwork or a sculpture, we are amazed by the person’s talent. That a human equipped with the same tools as us created such a masterpiece that we couldn’t. I remember standing in front of Michelangelo’s statue of Moses in awe that any human could create such a masterpiece, by hand, out of marble.
Imagine I show you a detailed statue like that of Michelangelo and tell you I sculpted it. You’d probably be amazed, or you are terribly hard to impress. Now, imagine I tell you that I 3D printed it. You may still think it was kind of cool, especially if it’s the first one you’ve seen, but not even in the universe of what you thought when I sculpted it. Imagine I told you I downloaded the Michelangelo template set, the same template set that anyone can download. The novelty falls off a sheer cliff. Everyone’s printing Michelangelo’s, and they aren’t worth anything.
Being First
There may be a high value in being first, but there is a steep and unsustainable drop-off afterward. For example, a piece of AI artwork sold at Christie’s for $432k. Don’t expect this to be some sort of trend. It was the first. The article starts with this question, “Is artificial intelligence set to become art’s next medium?” Let me answer that, ah… no. At least not in the way the article is framing it.
Some people think so, and those people are what we call wrong 🙂
Someone also created an NFT of their farts and sold it. Is the person who bought it going to show that NFT to anyone in a year? Am I to believe there will be fart markets in the future for fine purveyors of artisanal gas? Some people think so, and those people are what we call wrong 🙂 When the thing people want to collect is readily available anywhere and everywhere, it loses any value. My mom collected figurines and baby dolls that creeped me out as a kid. Although the items in her collection weren’t highly valuable either, thankfully, they also weren’t easy to get.
What amazes me is that people look at these new concepts, be they creative or technological, and always fall for them, claiming they are the new thing and that’s just how the world is going to be. It boils down to FOMO and a whole lot of wishful thinking. By applying a little thought and analysis, it doesn’t align with the real world. Whether they be creative arts or technology, things that are easy to recreate or duplicate die a pretty quick death.
Lessons
In summary, any technology or trend based solely on novelty has an incredibly short shelf life if the friction to recreate it is low. This trend is because if everyone is doing something, it’s not novel. Since novelty relates to value, don’t invest your life savings into things that are easily repeatable and have no staying power. Strive to be unique, push yourself beyond the bounds of easy replication and into new areas. That’s where you’ll find success.
