Digital objects, economies, and the challenge of meaning: a beginning
“Experiencing sacredness together — mutually acknowledging invisible but tacitly understood objects — enables human coordination at a high level of complexity.” — Sarah Perry, Every Cradle is a Grave
Preamble & Acknowledgements
I wrote this back in March 2023 to spark internal discussion at Art Blocks (where I work), a contemporary algorithmic art publisher and platform on the Ethereum blockchain. My colleagues, bless them, found enough value in it that they pestered me to make it public and extend the conversation. What lies herein is, however, my own viewpoint and does not represent the views of Art Blocks. Thank you to Rahul Iyer in particular for the push and the belief.
The New New Thing
The genesis for these thoughts is Derek Edwards’s article ‘Storing Value in Digital Objects’, wherein he argues that purely digital objects (currently figured as NFTs) are a legitimate store of value over time, and accrue value as they attract more and more human attention (with ‘attention’ denoting both awareness and engagement). He posits there are currently two classes of digital objects stored on blockchains: products/services, and stores of value. These correspond directly to the classical economic definitions of goods and assets, terms I will use going forward.
Good: Something with immediate utility (like a Twinkie) that satisfies a short-term need (I’m hungry). All the value of a good is consumed in satisfying the need (I ate it all). There is nothing left over to be used in the future, thus goods do not accrue value and are not engineered to do so (if I sock away the Twinkie in the back of my pantry for 10 years its value likely won’t change much, if at all).
Asset: Something held over a period of time (like Apple stock) that has an expected future benefit (monetary gain I can use for my retirement funds). The value of an asset is only fully realized at some point down the road, with the expectation that carrying it around for a long time will result in it accruing a lot more value than the price at which it was initially acquired.
Goods and assets aren’t a binary, however — they exist on a spectrum, and the position of any one object on that spectrum can change when you tweak certain variables (like time, or as I’ll later argue, meaning). This is also why there are things called durable goods, which are basically goods that live for a little longer before all their value is expended, like a refrigerator or a car. Some things are created to be goods (like the aforementioned Twinkie or a handle of Smirnoff) and rarely travel toward the other end. Likewise, some things are created to be assets (like collateralized debt obligations) and it’s hard to imagine them ever slouching toward Twinkiedom.
The further wrinkle in the goods/assets spectrum is the concept of a market. Something can neither be a good nor an asset unless there is a basis of exchange for that thing and/or things like it — unless people are willing to buy and sell (or exchange) that item. A liquid market is a market in which there is a consistent ‘flow’ of buying and selling, where there is a lot of money consistently changing hands for that kind of item. An illiquid market is one in which it’s hard to find buyers or sellers for a kind of item. This can be because the item is one that very few people can afford (like a mansion in Beverly Hills) or that very few people want (like ten vats of puce colored paint). Both goods and asset markets depend on what I’ll call consensus of value, meaning that there needs to be consensus among a large enough group of people that a thing satisfies an immediate need and/or represents enough of a future benefit before a market for that thing can emerge. In turn, something cannot be considered a ‘good’ or an ‘asset’ unless there is an adequate consensus of value around that thing — unless a market for buying and selling that thing exists.
To go back to the spectrum:
Goods market: Primarily concerned with objects and services that cluster around basic persistent human needs (food, shelter, medical treatment, etc). Goods markets tend to be more stable, but more competitive and less profitable than asset markets.
Asset market: Concerned with objects that, while they may have a practical use (like a house), represent an expectation about the future. Asset markets trade, literally and weirdly, on group hope or group anxiety. As such, they are much more volatile than goods markets, though they are also potentially much more profitable.
So now we have a basic concept of how groups of humans value and exchange objects at the extreme edges of the spectrum, but what happens in the gray area in the middle? How does a good become an asset? And how does this translate to purely digital objects?
Enter the collectible
If you zoom in to the center of the consensus of value spectrum, you get objects that are, to some extent, always in flux — somewhere between good and asset but usually tracking in one direction or the other. There are two dominant variables in the good/asset spectrum: time and meaning.
Time: The longer a good sits around existing without its value being fully extracted, the greater the likelihood it can transform into something called a collectible (or antique, but let’s just use the former). A collectible is a good that is shedding its ability to satisfy a basic need as efficiently as a more recent good, and so meaning comes into play, otherwise these objects would just get binned and would fall off the spectrum entirely (as many do).
Meaning: Meaning is the trickier of the two variables, in part because its experience is subjective, and in part because it encompasses and links so many factors that, like water for the proverbial fish, it can seem to disappear. For the sake of brevity and sanity, let’s go with a definition of meaning that proceeds from the work of Dan McAdams, Roy Baumeister, Thomas Joiner, and Sarah Perry.
The experience of meaning is a byproduct of the process of creating a life story. It is, in its most reductive form, a kind of pattern recognition. The human experience of consciousness is accompanied by a narrative identity: when asked ‘who are you?’, most people will respond with a story. This story will be linear (it will speak of events that happened in a certain order) and will likely proceed according to several themes: purpose, values, efficacy, social belonging, and status.¹ Objects that align along one of these vectors (like a wedding ring, a diploma, an ‘It’ bag, or a vintage ’73 Chevelle Laguna) are likely to be experienced as meaningful objects to the degree that they reflect that person’s (or group’s²) narrative identity. This is the trajectory of goods that transform into collectibles, and in some cases to assets.
A good that acquires time and meaning for many people can even move past asset status to something that is nigh sacred — often expressed as ‘pricelessness’. These objects have acquired such time and meaning as to make them stores of cultural value to entire civilizations. Disney’s “National Treasure” movie franchise is a neat example of the tension inherent in such objects: while owning the Declaration of Independence would certainly be a decent hedge against future risk, it would be seen as a sacredness violation to pretty much everyone in America to even put a price on such a document, let alone have ownership be attributable to a single individual.
But why are these things interdependent? Why is it important that an asset be meaningful?
A meaningless asset (like a penny stock or credit default swaps) will crater in value as anxiety about its future increases, whereas a meaningful asset is less likely to be dumped even in times of high strain and pessimism about the future (I’m not going to pawn my wedding ring even if I have to go hungry tonight). In turn, a robust asset market is needed to maintain the consensus of value that a class of object is in fact still an asset (I have to know that I can pawn my ring for food for me to consider it more than a sentimental trinket).
In short, meaning is a hedge against asset volatility, and a liquid asset market is a hedge against meaning’s inherent relativity and fragility.
And now for digital objects
Where purely digital objects end up in this matrix, or whether they end up falling off of it entirely, remains to be seen. But if they are to stay with us there are a few challenges they’ll need to surmount.
The first is brute youth: these objects are new. They have not yet accrued enough general familiarity and consistent usage to approach a heuristic (the vast majority of people still have to consciously think about digital objects rather than recognize them as something intrinsically ‘understood’). The longer digital objects exist and the more broadly they are adopted the more baked-in consensus of value will become, whether that value is as a good, durable good, collectible, asset, or all of the above.
Second, there’s an inherent tension in the non-tactile — humans are embodied beings and relate to the world by means of sensory information: things we can touch, smell, taste, hear, and yes, see. Purely digital objects, because they are mediated — only experienced through another object (a device with a screen) — can frustrate the senses: they are taken into the body as information divorced from direct exposure —concrete only in the way an idea is concrete. This is why it can be difficult to form meaningful relationships with digital objects and why a default reaction can be to physicalize them in some way: to print them, sculpt them, or simply to give them a dedicated purpose-built screen. Concretizing them, giving them a ‘body’, brings them into relationship with our own bodies. It makes them real. Without physicality, digital objects are experienced as a landscape through a picture window: scenic perhaps, but flattened, glassy, distant, surreal, literally ‘out of touch’ relative to our embodied reality.
Third, digital objects would need to play by the same ‘rules’ other kinds of goods and assets do: if goods, they need to satisfy persistent human needs and do so better than existing ways of solving for those needs, and if assets, they would require a reasonably liquid market underpinned by some concept of fundamentals. Exploring fundamentals when it comes to markets and how that relates to meaning is a post on its own, but in the interim we can define fundamentals as underlying value that is drawn from a widely understood reality. In short, digital assets of great value, if that value is to endure over time, would need to refer to and represent things many people consider ‘real’, and whose meaning is mostly agreed-upon. Lacking fundamentals, digital assets will fall into the definition of what philosopher Jean Baudrillard calls ‘simulacra’ — symbols that don’t refer to any underlying meaningful reality. In the context of markets, this means digital assets would begin and end as little more than vehicles for speculation — a critique already levied in their direction.
Conclusion-ish
The future of digital objects is far from clear, and will be written as much by those who believe in their promise as those who are skeptical of or even resistant to them. Though I have been working with new media for quite some time, I’ve only been deeply involved in blockchain-associated digital objects for a few years. In that time, however, I’ve gained appreciation both for how revolutionary the concepts and applications are, and also how deep the psychological resistance can be when thinking about a world filled by intangible and disembodied ‘things’ — things that, though they have no essential sensory existence, are sometimes bought and sold for sums far eclipsing most people’s annual salaries.
For those of us embedded in groups bringing these objects into being, or who enjoy them and already find them meaningful, it’s worth engaging with their relation to basic economic principles and how those principles are imbedded in an embodied form of logic. Meaning is a trickster figure, always changing and morphing. Some argue it does not exist. I’m with David Chapman here — meaning, like the digital, is “always nebulous — ambiguous and fluid — but also always patterned”. Engaging with these qualities directly will, I hope, help us create better digital objects, which is to say better means of communication, storage, and transmission of human value — and to have these objects designed for and in dialogue with meaning.
The world is finite, the world is full of numerable and contiguous objects. The artist can have no other task than to make catalogues, inventories, and to watch out for small unfilled corners in order to conjure up there, in close ranks, the creations and the instruments of man.
— Roland Barthes, Mythologies
- The dimensions of meaning in narrative identity:
Purpose: the desire to interpret life events and actions as leading toward desirable outcomes, which could be experienced as goals (graduating from college) and/or feeling states (feeling proud and content).
Values: the desire to see oneself as fundamentally a good person, usually accompanied by some system of morals or ethics by which one makes decisions.
Efficacy: the perception that one possesses sufficient autonomy and control to direct the course of one’s narrative (‘I am a player more than I am a pawn’).
Social belonging: the need to find acceptance and affiliation with others, specifically those others one perceives as aligning with one’s own narrative identity.
Status: the desire to see oneself as exceptional, admired, and powerful, whether by affiliation with a particular group or through individual accomplishments. - Most of the current rhetoric on meaning in NFT-centered groups centers around aspects of social belonging and status with a sprinkling of values (like supporting artists or the community itself) and purpose (the joy of collecting and/or competing). The term ‘cultural value’, as currently applied to individual NFT collections, seems to be an amalgam of these dimensions of meaning. Interestingly, humans have a tough time keeping meaning alive without social groups to reinforce it. More on that another time.
