Fractional Ownership is Ownership (Part 1) — My intro to NFTs
Wait…People are Buying JPEGs?!
On July 14th, I was in a group chat with some friends shooting the shit as usual. Our conversations range from sports to investing to what we’re currently learning about. For the past 11 months, I have been really trying to understand what this whole NFT (non-fungible token) thing was all about. I knew it had to do with blockchain technology and since I have been building a company using that tech since 2017, that part of the concept wasn’t unfamiliar to me. The newness was in the intersection between art, provenance, community, and utility. I’ll be honest and say that like many people, my first true entrance into the space was with the Dapper Labs’ product, NBA Top Shot. Like many people, after seeing the Anthony Edwards dunk, pictures of the highlight just didn’t seem to do it justice — you had to see the clip. Roughly two weeks later I made my way over to NBA Top Shot and bought my first NFT — an Obi Toppin 3-pointer from a game that my Knicks would go on to lose. But that didn’t matter. What mattered was the idea of what this new (to me) technology could mean finally took hold and I was willing to put my money up to learn about the opportunities. The next day, I was telling my friend that if I magically had $30k, I’d spend it on art and NFTs. Like many people, I did NOT have $30k to spend on NFTs so I made it a priority to find out about projects early, buy at a price that was comfortable for me, and never allow FOMO (fear of missing out) to drive my spending. At this point, I decided that the best way to learn was by spending money that I was willing to lose. I figured, if everyone else was buying JPEGs, why not me??
Learning in Public
After several months of buying NFTs, joining Discord communities, and managing Google Alerts, I found out about an NFT project that would blend the worlds of my now-that-I-look-back-on-it nonsensical tweet about getting an “NFT to back” my art. At the time, I had been looking at NFTs from an enterprise blockchain approach where using it with a physical or digital asset would allow for a chain of custody (provenance) and proof of ownership. But as I learned about PFP (profile picture) projects like Bored Ape Yacht Club, CryptoPunks, and many others, I learned that there was much more to this new Web3 concept that met the eye. As I educated myself, I found that NFTs themselves could also be art. This was another important realization as I had always struggled with the idea of owning art. Part of it was that I never thought I could afford it (hello, post-traumatic broke disorder). The other part was that even if I could afford it, the access to wealth-creating pieces certainly wasn’t something that I had access to. Many of my friends felt this way too so as I started to see more digital art being created — and the price of Ethereum plummeting — I decided to pick some pieces that I liked to start my collection. The objective was simple — only buy things that I would still like even if I could never sell it. Easy enough, right? I got to find some really dope Black visual artists, I leaned into some of the new sports collectibles of my favorite players, and I began to learn in public, an intentionally vulnerable practice that I have embraced over the years. I’m a strong believer of treating knowledge more like a library and less like a vault so sharing what I learn — as I learn — is the fastest way to help other folks who are interested in learning but may not know where to get started.
As I was checking my emails the morning of July 14th, I saw the news of a new NFT project called The Currency. The 10,000 piece collection would be released on July 29th after an application period where folks could enter to win the opportunity to pay $2,000 for this NFT.
So let me get this straight… Damien Hirst, a notable British contemporary artist is making TEN-THOUSAND pieces and is raffling off entries for folks to have the privilege of paying TWO-THOUSAND DOLLARS USD?! I thought to myself, “There has to be a catch…” and there was! When Hirst released this project with Heni (in collaboration with Palm), he did it with three things in mind — Art, NFTs, annnnnddddddd GAME THEORY! Everyone that bought the $2k NFT would have the opportunity to exchange the NFT for the physical Damien Hirst piece if they chose to. If you want to keep the NFT, no problem, Damien and his team will destroy the physical piece of art. If you want to exchange the NFT for the physical piece, your NFT will be burned and you can even go pick up your piece in London as a part of a cool experience. My interest was now piqued. Could this be my opportunity where access and affordability meet?! Before making the $2,000 commitment, I shared the crazy idea opportunity with my group chat and as you’d imagine, it didn’t go well.
Access meets Affordability
Despite the feedback from the homies, I entered the raffle and won! On July 29th, I became the proud owner of tender 6591 “It’s cold here”. From that point on, I studied and followed the project seeing how owners of the NFT were using it from Twitter backgrounds to printing it for their homes and offices but what really blew my mind was what happened on the secondary market. As I write this, there have been 2,447 totaling more than $64M in sales with one piece, tender 2604 “Revocation” going for $172k! At that point, I realized that I finally owned one of those pieces that I always wanted to own which was really exciting…but when I thought about it more, I was really disappointed. Many of my friends didn’t even know about the drop and the few that did weren’t selected in the raffle. Now, given the rise of the secondary market prices, anyone that I knew was interested in owning one of these pieces was priced out of the market. In the spirit of creating community access, I started looking for ways to bring more people into the NFT space at a price point/investment amount that they felt comfortable. Enter Party Bid. I learned about a swanky tool called Party Bid, built by PartyDAO, which lets folks come together as a group to buy NFTs. The NFT must be listed on a platform like Zora then a party can be created for anyone to participate. My first experience with it was as a part of #cryptocookout party where Sirsu led 229 of us were able to pool 73.5 ETH to buy a Cryptopunk named $HALLE as part of a mission to raise the value of the Black and Brown Cryptopunks. Thanks to allies like Tony Herrera, I was finally able to add a Cryptopunk my collection so I set out to get a Bored Ape. A few weeks later, Bored Elon helped 198 of us came together to buy this Ape for 78.75 ETH. Having seen the process for party bids in action and how they allow the community to gain access to NFTs that are financially out of reach fo rmost, I knew that we could do the same thing for a Damien Hirst piece. Meanwhile, in another Discord, Julia Lipton had the same idea in mind.
She posted this in the Discord chat on September 20th and 5 days later created a new server to execute our plan — buy a Damien Hirst piece to create an opportunity for the larger community to get involved. On this NFT journey that I have been on, I started telling myself that fractional ownership is ownership and now we’re testing this experiment. To get to this point, a bunch of internet strangers sent ETH to a multi-sig wallet but due to the setup on OpenSea, we couldn’t buy the NFT from our Gnosis safe. After hundreds and hundreds of discords messages, half a dozen spreadsheets, and hundreds of dollars in gas fees, we were finally able to complete the process and the 16 of us now own tender 2128 “That doesn’t sound too good”! From the initial convos on 9/20 to buying the piece as a group on 10/2 to preparing for this experiment, the flaws of Web3 have become more obvious. There are still A LOT of challenges in fractional ownership, wallet management, and overall project management but we got through it and are excited for what’s next. I have been incredibly fortunate to even be at this stage of the game when it comes to NFTs. From learning more about the space from folks like Black Dave, Sian, Kat Cole, and Sterling, to debating a billionaire like Mark Cuban about the utility of NFTs in the ticketing and live event space, this whole thing has been a bit of a whirlwind. The fact that I’m even in some of these rooms and convos is still surprising given how much of a novice I am but the truth is, we all are. This entire thing is so early that whenever you feel comfortable getting into it, it will still be a perfect time — unless you’re Jamie Dimon. I’m writing about this experience to share what I have learned in communities like Crypto Packaged Goods (thanks to Chris Cantino and Jaime Schmidt) and everywhere else because I want this stuff to be accessible. But knowledge is just one part of this… the next step is creating access to the assets.
On Thursday, October 14th, we will do just that. We will be listing the piece above (tender 2128) that we bought to create an opportunity for community ownership. I’ll share more about that in Part 2 of Fractional Ownership is Ownership! In the meantime, if you have any questions, feel free to drop them as comments on this post and I’ll be back to answer all of them!
