As the crypto winter continues into the summer for most people, those of us who love the art of the NFT are wondering what the hell is wrong with everyone.
Winter Was Coming
The year is 2021, everyone is losing their shit over Bored Apes to the point where people start referencing Bored Apes when describing literally anything to do with NFTs. Your friendly neighbourhood editor/NFT wrangler/metaverse architect and opinionist (that’s me) even wrote the book on NFTs for luxury and art (well, the whitepaper). 2022 came, and the first half was fairly ok, one might say buoyant, then came the crypto winter. The constant and then continued decline of investment froze the value of NFTs harder than a concept ice cream over at the Fat Duck. Crypto winter refers to a prolonged period of falling share prices in the cryptocurrency market. It is characterised by a significant drop in the value of cryptocurrencies and a general slowdown in market activity. During a crypto winter, many investors lose confidence in the market, leading to reduced trading volumes and a lack of new investments. The market experiences a downturn, and the overall mood becomes pessimistic. It should be said that the time was rife with regulatory uncertainties, security concerns, and market manipulation allegations, further contributing to the decline in prices. SBF? Terra Luna? Anyone? Bueller? This crypto winter so far has been a period of reflection and consolidation within the industry, allowing for the emergence of more robust projects and a healthier market ecosystem—that’s what I’m seeing anyway. Feel free to fight me though. What the crypto winter ISN’T is the end of days for the marketplace. Moreover, it’s a time to adjust, create and actually innovate. Eventually, a crypto winter should give way to a new bull market, leading to renewed optimism and increased market activity.
Shooting Your Shot
Try to think back to a time before you were performing mastabatory set pieces for your productive day-to-day using ChatGPT. NFTs were the bomb. Beeple’s forgettable arts, CrypToadz, Cool Cats, and Robotos. Some of these so-called "digital art" pieces were pedestrian as hell, but that didn't stop big-name brands from joining the NFT bandwagon in hopes of making a splash. Then came the dicks, the scammers and their stupid crypto crash sinks which took a toll on what the real NFT lovers, again, that’s mostly me and probably 12 other people before the daily trading of NFTs plummeted. The hype faded away, and many short-term NFT campaigns fell flatter than American lager.
The short termism of NFTs forced the hands of actual creators, with solid non-fungible token ethos and experience, back to the drawing board or into their creative hole—whilst the dichotomy of shillers selling empty products took a punt on a possible payout. Luxury brands, however, put out the same construction of emptiness with nice aesthetics causing enough FOMO for every magazine, online journo and fashionista to call it “innovative” or as I call it: crap.
During this time only a handful of big brands really grasp the nettle of the NFT and do something good worth investing in. These are mostly sports brands such as Nike, NBA, Adidas; but some smaller brands do beautiful collectible things too (because they get it). In 2021 HYBE (the powerhouse behind K-Pop phenomenon BTS) invested in Dunamu, the operator of Upbit, the leading cryptocurrency exchange in Korea: eyebrows raised, we were ready. But it’s 2023 and we're still arguing the toss about who is gonna win the NFT trophy? The answer is really easy, and in your hearts you know it’s true. No, the answer is not “no one”. The answer is “all the utility makers”.
NFTs, Apropos of Absolutely Everything
In that NFT standard I wrote back in 2021, the tl;dr is really simple: offer something to your buyers and it will protect your IP in the long term. The whitepaper discussed the importance of metadata in the luxury and art industries, particularly in the context of digital assets like NFTs. At the time I emphasised the need for a common framework that defines and populates metadata to ensure the value, authenticity, and control of digital assets—I’m pleased to report, two years later, that this actually happens now. In my argument I highlighted various aspects of metadata, including geometric data, export formats, digital rights management (DRM), value considerations, and descriptors. These things simply did not exist in NFTs at the time. NFTs by all accounts were empty vessels of absolute bilge. My primary goal was to establish a standardised approach to metadata creation that can be applied across the luxury and art sectors, providing protection for intellectual property and enabling future-proofing of digital assets. So I chose my favourite Louis Vuitton handbag, something which had never been done at the time, and still hasn’t been done with any level of complexity since. By illustrating the practical application of the metadata framework, I was able to underline the importance of considering dimensions, geometric data, export formats, and DRM to maintain the quality, integrity, and security of digital assets. The article also touches on arbitrage and future-proofing as aspects of value, as well as the significance of descriptors and tags in enhancing the utility and discoverability of digital assets.
Here’s the thing that has happened since though—sensible operatives in this space are still vomiting into a void asking for someone to create a standard (guys, seriously, I already did it, it literally doesn’t need a rewrite, it just needs practical use cases) and then everyone else who knew it existed and chose not to use it because showing that you have empty assets is morally criminal and everyone knows that criminals rarely show their hand.
So NFTs + Bad PR + Crypto Winter = Let’s rename NFTs to something else. It’s definitely plausible. In my work at least, the projects were being renamed as “digital collectibles” which is the same thing but not nearly as exotic as non-fungible. And, er, that’s not a bad thing.
Digital Collectibles Need Love Too
I was at Art Basel (in actual Basel rather than the crap one in Miami) this year. My startup did a mini-NFT collection with renowned Swiss fashion designer Claudia Guedel. One of the things that I noticed about the output of stuff at Art Basel as NFTs compared to me working within my own standard for Claudia Guedel was that art = collectibles. And that’s it. What would make more sense would be to double down on collectibles and use it for everything from fractional ownership, which, let’s face it, is a utility and an asset class. We could also double down on art by making it functional. I saw some wonderful installations, but only one which stood out to me as being something that was not collection dross; it was a sound installation. You all know the story of my NFT orgasm. Please ask me about it when we next meet, but suffice it to say, 2022 was one helluva year for interesting NFT experiments—back to the story! This sound installation was using spatial sound as an artform. What’s not to love? Well it was very limited, but really awesome. When I spoke directly to the artist, I asked him how many NFTs he’d sold, since this was an NFT exhibition as part of Art Basel. A long death knell chimed, followed by a ball of tumbleweed. “I sold the wall canvas”, he replied pointing to the image accompanying the soundwork. My brain started to hurt. “No one wanted to buy something they could hear.” Now I’m not being douchey but I’m pretty sure this has always been any record stores’—online or other’s—business model. If you make sounds, commercially-speaking, you get paid. This guy, whose talent was not in question, had failed to recognise the power of his own NFT pitch. As I looked around the exhibition space there were NFT works where the canvases were just to look at and were not for sale, and then there were postcards which served as the wall canvas for the NFT—again, all empty vessels. They invited the buyer to nothing. Zilch. Nada. Null.
The moral of the story is simple. Everything is the NFT. That’s the model. Collection 1 the wall canvas, and the soundworks replete with spatial technology for 4 ETH. Collection 2 a partwork of the wall canvas as fractional ownership, each valued at 0.0015 ETH. Collection 3, 30-second stabs of the soundworks which when collected form a contiguous experience and the spatial add-on your’s for the bonus price of 0.0020 ETH. Because everything is the model, like with regular artworks, you are collecting the artist not the art. Capice?
Here’s how the NBA does it: fans can collect rare NFTs by watching games, and these digital collectibles can unlock real-world rewards, like VIP access to meet NBA players at the All-Star Game. The game is the NFT, so is the team! So I’m kind of in the dark as to why people are still buying crap. But they are.
Fans and customers will gladly purchase art or collectibles on the blockchain if they can easily access limited editions of their favourite band's new single, meet the Team Principal of their beloved Formula One team, or receive a substantial discount on their next haircut.
Utility is very much alive, and NFTs must offer real value to customers.
Bois of Summer
NFTs are good. They offer us possibilities that we haven’t had in this generation/industrial age/technology epoch. But we’re simply scratching around for use cases because we are ill-equipped to create something this big. It affects quite a few frameworks that we’ve been really comfortable working in, such as economies of scale or loyalty systems.
More importantly for the creator economy and I’ve said it before and I’ll say it again, users need use cases and use cases are the vision of the user not the creator. So what if we do start to create with this mantra in mind? What if our users trust in us to give them what they actually want rather than what we think they want? What might that look like?
Well, we can hypothesise easily with digital, more than physical because physical is really limiting for utility. Digital collectibles can be created with built-in utility, offering additional benefits or experiences to collectors, a leather football from your local sportshop can’t. For example, a digital collectible could grant exclusive access to virtual events, special in-game bonuses, or unique interactions within a digital ecosystem. By providing utility beyond mere ownership, these collectibles become more engaging and desirable to collectors. Let’s go back, let’s go back. Ecosystem, you say? Well these things don’t exist in a physical framework. We can’t give the physical customer what they want from an ecosystem, why? Because it would disrupt the economy of scale for that campaign/item/product.
When digital collectibles are released as limited editions, creating a sense of exclusivity and scarcity kicks in. Look at Bored Ape and Mutant Ape? These collectibles shifted big volumes and made so much money for their creators. Alas, Justin Bieber did not fare so well. Collectors are motivated to acquire these limited items due to their rarity, which can drive up their value over time, sometimes. Limited edition digital artworks, fashion items, or virtual real estate are some examples where scarcity and exclusivity can greatly enhance their appeal.
I haven’t mentioned interoperability yet, not least because even the biggest tech giants and the largest egos in this space still aren’t getting it (though they think they are). Digital collectibles can be designed to work across multiple platforms, games, or applications. This interoperability allows collectors to showcase their items in various virtual environments and creates a sense of continuity and value across different experiences. A digital pet collectible could be integrated into multiple virtual games or worlds (rather than just one), allowing collectors to interact with their pet regardless of the platform they are using.
Digital collectibles might serve as personalisation tools, I’ll admit that I am certainly working on such a project currently—so I know this one works. Anyway, this concept allows users to customise their digital avatars, profiles, or virtual spaces. From collectible skins and accessories to furniture items which can be acquired and used to personalise characters, virtual homes, or even virtual reality experiences. This adds a layer of self-expression and individuality to digital interactions—and that’s ultimately what we want.
NFTs (non-fungible tokens), provide a secure and verifiable method of proving ownership and authenticity. Add a splash of blockchain technology, and voilà, collectors can have proof of ownership and a transparent transaction history for their digital items. This is especially valuable in the world of digital art, where provenance and authenticity are crucial.
Because digital collectibles can foster community engagement and social interaction among collectors. Connecting, trading, or even collaborating with other enthusiasts can create vibrant communities around specific collections or themes. This social aspect enhances the enjoyment and shared experience of collecting digital items. And where that happens, so too does the integration of social items into digital experiences. Gamification and progression are rewarded via engagement or achievements. Collecting rare or valuable digital items can unlock special rewards, badges, or in-game advantages. This incentivises participation and encourages users to engage with the underlying platform or game.
The Long Game
The nature of brand NFT activations is shifting. Maybe a move from short-term, opportunistic campaigns to fewer but larger and more long-term projects that form an integral part of a brand's core business strategy. Is this the way we should be moving? NFTs that can be used as access tokens, loyalty tokens, and identity tokens, providing users with exclusive rights, rewards for engagement, and opportunities for self-expression.
However, as NFT adoption expands, ease of use becomes crucial—from wallet to resale we have to go bro-less. No more folded-armed messiahs guiding us blindly into the abyss because we don’t know how to use a wallet, please! I actually designed my Solo Wallet for this very purpose. I want mass-adoption, because if that happens, then we can really change the way we do everything and that will align us closer to a fully immersive digital future. Which, er, is what we want right? Simplifying the process of accessing and utilising NFTs will be key to their widespread adoption.
The world of NFTs is evolving, and brands that are willing to embrace the opportunities and incorporate them into their long-term strategies will reap the rewards. With the right approach and an understanding of their target markets, brands can harness the power of NFTs to engage with customers in innovative and exciting ways. So far we’ve confused not just our peer group, but more importantly our users—the very people who rely upon us to innovate and develop new technologies for them. Digital collectibles are a great way to get us all on the same page, call them NFTs, hell, call them baseball cards, I don’t care, let’s just get back to the good stuff!