NFTs are changing cultural value creation
Hello and welcome back to Equity, TechCrunch's venture capital-focused podcast, where we unpack the numbers behind the headlines.
This is our Wednesday show, where we niche down and focus on a single topic, or theme. This is our sweet spot: going beyond definitions and into the dirty and deep impact of how a phenomenon could impact startups and tech. We are hoping to explore more than answer, and debate more than agree.
NFTs, or non-fungible tokens, is this week's topic! This is something that you have nearly certainly heard of in the past few weeks but probably don't understand with perfect clarity. While we've all seen the Twitter threads of basic definitions, consider this episode the appetizer to your aperitif understanding.
The Equity team put on our research caps, dug in, and found quite a lot to like. But we did not tread alone: our EIC Matthew Panzarino joined Chris and Alex and Danny and Natasha to help us out. Panzer was early to the NFT world and has contributed some of TechCrunch's reporting on the matter.
So, what did we get into? More than a little:
We spent a few minutes on the NFT basics, including historical examples and how NFTs are minted, as well as some examples of how they have been used recently.
From there we riffed on use-cases more broadly, and where we might find NFTs in the wild. Sure, we talked about visual art, but also music, tickets and sports moments. The NFT world has the possibility of a large remit if it plays its, ahem, tokens correctly.
Then we talked culture. What could it mean that NFTs are in the market? Could residual incomes from the reselling of NFTs constitute a material revenue base for future artists, and how broad can the value-experiment go? Depending on which side of the NFT hype-cynicism divide you land, there's plenty of room for discussion. A point made by Panzer:
NFT's and the architecture of smart contracts and the way that social tokens work, these are all opportunities for the creators and originators of culture, to finally take part and participate in their rewards of the platforms of that culture - you know, that hosts that culture. Because we've seen it over and over again: Artist blows up on TikTok, and you know, somebody does a dance to them, and then that video blows up. What does the artist get out of it? Sometimes they get a recording deal. Many times they get nothing. Right? In Vine, famously built on Black creators and brown creators and Latino creators and Latino creators. You know, TikTok, very much the same. Black Twitter one of the early driving forces of engagement on Twitter and culture on Twitter - how many of them were actually able to participate in the economic rewards of Twitter as a platform selling advertising and making millions of dollars and their stock going bonkers? Besides, of course, you know, maybe they were able to purchase stock, right? So the, the remapping of how creators can participate in that economy directly by saying, Hey, I've created something of value, and I'd love to connect directly with the people that enjoy that and they can provide me value back" - that's what's so exciting about this.
And we chatted just a minute about the weight, or carbon footprint, of different blockchains. There's real nuance to this point of argument, but it was also something we couldn't avoid. Panzer again:
And this is probably the biggest negative blowback on Ethereum and NFTs is that Ethereum is by nature a very heavy chain, which means that it takes a lot of work to prove that a block has been written to the chain. Not quite as heavy as Bitcoin, but it's up there. And that energy usage that was used to mine that Ethereum that's being spent on the chain to confirm a new transaction is being sort of credited forwards in- for lack of a better term to the artists minting on it. I don't think that's absolutely fair. But it's absolutely fair to acknowledge that it does have an ecological impact.
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