A Tale of Two Tokens: my experiments and experience with tokenization of art
About six months ago, I met some artists who were tokenizing their art by attaching images, text, and music to tokens on the blockchain, thereby creating digital art assets. Honestly, I didn’t quite get it at the time. Then, a couple of days later at the Ethereal summit, a Crypto Kitty went up for auction. (You may remember Crypto Kitties, the game that bogged down the Ethereum network in late 2017.) I made a bet that it wouldn’t go for more than 10k USD. I lost that bet. This digital image of a cat on the blockchain went for the staggering price of $140,000.00. I was in shock for about 30 seconds, and then it clicked. They had created digital scarcity, an asset whose ownership could not be counterfeited, which had transparent provenance, record of ownership and transfers. I realized if this could be done with a illustration of a cat, why not any digital asset?
I wanted to learn how to tokenize my own art, but at the time there were very few articles and even fewer videos on how to do it. So, I began experimenting and asking around until I was able to do it myself. The following is a summary of my experiments and experiences in tokenizing art thus far.
A Tale of Two tokens
While possible to tokenize art on many platforms, I chose the two with the largest communities, Counterparty (XCP) and Ethereum’s ERC-721. Each protocol uses different blockchains with different architectures also different features communities and what seems like unwritten philosophies.
I now realize that each coin’s unique features could be considered a flaw depending on one’s perspective or philosophy or the particular use case. These coins are built with different philosophies and have different communities around them.
Counterparty, built on top of the Bitcoin blockchain, has been around since 2014. It is battle tested and has worked as it was intended perfectly ever since. It allows for easy creation of assets, tokens, sub assets. It also allows push-button distribution to asset holders with little technical knowledge required. The Counterparty wallet has a built in Decentralized exchange, which allow permissionless sales and exchanges.
You can learn to make your own Assets in minutes, you could be proficient in using XCP for tokenization, asset creation, and distribution in an afternoon. There is no standard for tokenization. There seems to be a philosophy that the standard is in the code, which allows for freedom but comes with a downside that I will go into later. Possibly the greatest thing going for XCP is its community generally intelligent, always helpful, funny, and maybe with a bit of a tendency toward Bitcoin maximalism.
Ethereum’s ERC-721 is the other protocol I used for creating digital assets. Unlike Counterparty, these required a lot of technical skills to create. A lot of learning required for a non-developer like myself. Luckily, I met the guys at Rareart.io and they tokenized images of three paintings on their platform, and taught me a bit about how they worked. ERC-721s are created using an Ethereum smart contract which mints a token that references an image uploaded to (decentralized storage). Token and reference image are linked together, both uneditable and immutable*.
ERC-721 tokens have a standard schema in which they are built that allows them to automatically work and be viewed in a standard gallery or marketplace by design.
Ethereum tokens can also have a feature in their contract such as a pause, which allows the owner of the contract who created the tokens to stop all movement of tokens, regardless of who now holds the tokens.
Now this could be considered unacceptable to many coming from the perspective that “all things blockchain must be immutable”. I myself considered this a flaw, until I came to the conclusion that this flaw is a feature depending on the use case. More about that later
So where has my experimentation led me, Counterparty or Ethereum? The answer is “both.”
I’m creating tokens using both platforms, but with different purposes.
With Counterparty, I’m tokenizing Digital art as well as crypto collectibles for games such as Bitcorns and Mafia wars. And my new asset, the JOHNNYDOLLAR token, an art subscription token.
Holders of this token receive distributions of rare art created digitally by me. it is an experiment that is leveraging XCP’s ability to create and distribute assets easily, and it solves the problems of getting art to my loyal fans and collectors.
I, with the help of developer Chris Lumpkin, created the JohnnyDapp, a smart contract which mints ERC-721 digital assets. I’m using this tool to make digital limited edition prints of my physical paintings and drawings, treating them like digital lithographs. I am selling these tokens peer-to-peer and on some of the new created NFT marketplaces such Opensea.io and Rarebits.io, as well as online galleries.
I have begun experimenting with the ERC-721’s ability to add metadata to the token, text with different information which may allow for all kinds of token contract interaction yet unimagined.
The JohnnyDapp smart contract tool was so useful to me, that we’ve made an Open Source version, The Artist Liberation Front. It’s available to all artists, galleries, or anyone else who would like to mint their own tokens.
What’s next? These are still very early days for digital rare assets, and we are just starting to scratch the surface of the possibilities. I look forward to working more with these tools and trying out some new ones coming online soon, such as Creay and PixEOS
Please note the above is not a complete list, just a small sample of the space many more are out there and more being created all the time.
Special thanks to all that helped me in learning, Gustavo at Artolin.org, Dan Anderson, Theo Goodman, Louis Parker, James Waugh, Matt and Kevin at Rareart.io and Chris Lumpkin.
Some additional links
- Bitcoin And Blockchain simplified -video
- Blockchain for Beginners — video
- Creating your First Truffle Project
- Ethereum Token Standards and Proposals
- The Real Cost of Cryptogoods
- The Non-Fungible Alliance
- Artist Liberation Front
- How to create counterparty assets
- Counterparty Wallets
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