Thu, 11/04/2021
In listening to a recent interview with Katie Haun on Ezra Klein’s excellent podcast The Ezra Klein Show, I was made alive to the potential for non-fungible tokens (NFTs) to serve as a means of funding up-and-coming artists; a use case that previously hadn’t occurred to me. Haun is a General Partner specializing in crypto at Andreessen Horowitz, a leading Silicon Valley venture capital firm, and someone who certainly could be characterized as a “true believer” in the transformative potential of blockchain technology. What made her interview unusual, as expositions of blockchain go, was her ability to provide use cases that bridge the divide between our current world and a not-so-distant future (already being realized within some spaces, like gaming) where NFTs move from a curiosity to a major vehicle for conferring identity and value.
While their conversation covered blockchain’s potential in a number of different contexts, one of the most thought provoking was the potential for non-fungible tokens to be used as a way of providing capital to an emerging artist while in turn providing the individual funding the artistic endeavor with value in the form of a status object that could in accrue value over over time. This could be the case even in situations where the NFT does not confer any restrictions on the artist’s ability to commercialize the underlying creative product.
Let me give you a prospective example:
An investor comes across the work of a struggling digital visual artist whose work she admires; an artist she believes has a real future. The artist is doing her work as a side gig, but would like to devote herself to her art full time, and is therefore offering 100 NFT “shares” of her most recent piece, “Landscape 1,” at $500 a share. The artist has decided to make her work publicly available for download - what then will the investor receive out of the arrangement?
Similar to an individual who makes a donation to a museum and has her name embossed on a gold plaque in the lobby, purchase of a stake in the artwork confers on the investor the social status of an individual with the artistic sensibility (and financial resources) to have supported the underlying creative endeavor at the time of its release, and in so doing facilitate the creation of subsequent pieces of art by the artist in question.
One can also imagine more tangible ways that this could be of value, especially to a select class of very wealthy individuals. Imagine a wealthy venture capitalist and art patron hosting a dinner party at her home. On the wall is a screen displaying digital artwork in a slow rotation, and unspoken morays amongst the social class from which the attendees are drawn (or perhaps characteristics of the display screen, if that too is necessary) provide them with the implicit understanding that the screen is only showing pieces of art in which the homeowner has an NFT stake. As piece after piece is slowly displayed, the homeowner is able to convey to the attendees the scope and characteristics of the work that she financed - suggesting to the attendees that she a) has the artistic sensibility to see the value of the work on display, and b) possesses sufficient resources such as to enable her to patronize the work of the individual in question.
To those of you who might imagine such a financing scheme as combining publicly-minded expenditure (the sponsorship of art with no direct financial upside) with an act of conspicuous self-promotion (the displaying of said gesture on the wall of one’s home) in such a way as to be fundamentally incompatible, I would offer the following counterexample: the NPR tote; a status object which has become near-ubiquitous in certain enclaves within some large American cities. Like the art patron purchasing the NFT share, the donor to NPR is ostensibly making a publicly minded gesture, enriching the world with content over which the donor/purchaser has no direct editorial control or unique access. And like the art patron who is displaying the art in which they own a sponsorship interest as a signaling mechanism to dinner party attendees, an individual carrying groceries in their NPR tote is making a conspicuous statement about their own identity as a person who appreciates publicly-funded journalism (full disclosure: I am such a person) and is in a financial position to support it.
The example of NFTs as a mechanism for funding creative output is only one of a-thousand-and-one potential use cases for blockchain technology, many of which doubtlessly are, at present, but a glimmer in their future developer’s eye. While I remain skeptical that blockchain will fundamentally change our way of life, enough very intelligent people have invested substantial time and money into the technology to give me pause. Regardless, it will be interesting to see over the course of the ensuing years which applications of blockchain take root and which whither on the vine.
Tags: Guest and Fellow Post
