Part I: The Attention Network
In the age of information abundance, most value can be traced back to some form of attention-generating event.
The top three largest companies in the world all build consumer products that interact daily with the attention of hundreds of millions of end users:
Three out of the four most valuable sports teams in the U.S. have markets in states with leading network hubs (travel, media, and technology):
Mr. Beast, a 24-year-old who enjoys over 125M+ subscribers on his YouTube account, recently turned down $1B for the rights to his channel and associated properties, later raising a round of financing at a reported $1.5B valuation.
You don’t have to look far to see how aggregated attention, pointed toward the right opportunity, can translate into value, whether for brands, companies, or individuals.
But the idea that these same attention flywheels can drive value to a single unique object is less widely understood.
What does this look like in practice?
One common way an object becomes valuable is on the object’s merits.
Historically, this happens when an object has reached a new threshold of creative, cultural, or technical value.
Take the Honus Wagner T206 baseball card, minted in 1909 and referred to as the Mona Lisa of sports cards. Due to a broken printing plate during production, only 60 copies of the card are known to currently exist. In 2022, one of them sold for $7.25M in a private sale.
A second common way is when a creator, celebrity, or brand associated with an object is able to easily garner attention themselves — which can translate into value for objects associated with them.
Take the Salvator Mundi, the most expensive art piece ever sold ($450M). The work is a restored painting controversially attributed to Leonardo Da Vinci, who many recognize as the most famous artist of all time. The mere (and perhaps misguided) attribution to Da Vinci alone drives attention and value into the painting.
A third common way is when an economy forms around an object with rules that are well understood by its participants.
For example, in the popular online video game Counter-Strike, some of the rarest in-game objects are valued at $1.5M per piece. These objects provide aesthetic utility (identity, prestige, wealth) within the game. Significant attention flows to these items irrespective of their limited utility outside of the Counter-Strike economy.
For most of history, an attention flywheel for objects required decades to take shape, and often involved heavily intermediated physical places or printed publications where communities could gather, such as trade shows, conferences, auction houses, and print magazines.
With the rise of online networking, previous constraints to generating attention for objects have now been removed.
Today, digitally-native communities, celebrities, and influencers can often generate thousands of impressions in seconds on social platforms. This has the net effect of the attention flywheel playing out over minutes and hours, instead of years and decades, in spaces where communities aggregate today.
Over the last 36 months, the attention flywheel has moved on to not only include unique physical objects — but purely digital objects as well.
As a result, an efficient object attention machine has been created:
for unique digital objects.
And it’s starting to fire on all cylinders.
Part of this recent phenomenon can be explained by the unique design space of digitally-native objects rooted in blockchain technology, which have unlocked a number of new features with little to no precedence in purely physical objects:
Near-Frictionless Exchange. Unique digital objects can move frictionlessly across peer-to-peer rails and self-sovereign wallet custody, bypassing expensive and time-consuming costs associated with shipping, settlement, storage, and legal contracting.
Real-Time Provenance. Unique digital objects benefit from a global, public, tamper-proof database that can be publicly queried at any moment — helping prevent forgery and claim infringement, and providing a path to quickly identify fraudulent behavior by contracting parties. Transparency of information makes it simple to audit and track specific objects, issuers, market participants, and trends.
Global Trade. Both an identifier and the content/media of a unique digital object can be permanently contained on a 24/7 globally-connected database, enabling deeper markets and more efficient price discovery compared to physical analogs.
Networked Awareness. The vast majority of high-end physical objects remain in storage, with some observers estimating that museums only display 5% of their collection at any one time — often the result of the amount of physical space required for display. Unique digital objects can be viewed, heard, or enjoyed by the public at any moment, though ownership can only exist in one wallet.
As a result of this unlocked feature set, these objects have the potential to become more networked with attention than ever before.
Digital Attention, Digital Objects
And similar to physical analogs, there are a few common ways by which the attention flywheel can start for unique digital objects.
First, a number of digital collections have already started to become singled out on the merits — having reached a new threshold of creative value, cultural value, or technical value.
For example, CryptoPunks, Autoglyphs, and Chromie Squiggle are three important blockchain-based generative art projects. Each collection employed new standards that inspired how media, art, and on-demand community formation could unlock new territory for creative works.
A second common way is that a creator or brand is able to easily garner attention themselves — which can translate into digital objects associated with them.
Mike Winkelmann, the artist commonly known as Beeple, released free digital art on a daily basis for 13 years on Instagram before selling his first digital object in 2021.
XCOPY, an anonymous digital artist, similarly posted free digital art on Tumblr on a monthly basis for 10 years before selling his first digital object in 2017. Each artist carved out a unique style over years that became beloved by their audiences.
A third common way is when an economy forms around an object with rules that are well understood by its participants, and there is demand to own a digital object because it provides a unique experience within that economy.
Otherdeeds are digital objects for virtual land that will be used in Yuga Labs’ upcoming immersive environment Otherside. Each parcel has a unique blend of environments, resources, artifacts, and creatures which provide unique advantages within the game’s economy.
Similarly, the PROOF membership card is a digital object from the PROOF team that provides unique access to new art, community gatherings, live media productions, and other benefits within the digital economy.
In addition, over the past 24 months, I’ve identified a number of new attention-generating factors specific to unique digital objects:
Online Networking. Some of the most interesting spaces to generate attention exist in off-chain channels. Creators and projects who build their digital objects in public, engage positively with their communities, and workshop their process transparently, can quickly become attention-generating artists.
In addition, online products that highlight a unique object can also help the object gain attention, without the possibly dilutive effects of more supply around a collection. One example is QQL, a generative art project led by Tyler Hobbs.
Hobbs’ QQL allowed anyone to play with the algorithm’s parameters to create their own generative artwork, regardless of whether they would be able to reach the economic bar to owning a digital object in the collection. This led to over 10M unique versions of the project to be pre-generated in the weeks leading up to the object’s release, which would go on to generate $16M in digital object sales on the first day of the collection’s launch.
More Objects, More Attention. Allowing multiple owners to own unique objects within a single collection opens up the opportunity for generating more attention from a larger pool of incentivized holders.
The continued success of pioneer generative media projects like CryptoPunks and Chromie Squiggle demonstrates that a single, unified collection of iterative works can generate compounding network effects, a benefit that can far outweigh the scarcity benefits of a single object.
As a result, collections with a large set of unique editions can become very networked with attention at sizes of 10,000, 15,000, and 20,000 outputs. This trend, which started with unique generative objects, is now starting to spill over to non-unique digital editions in large quantities, illustrating the network effects that are achievable with a large collection supply.
I predict that the next several years will bring valuable single collections comprising millions of unique digital objects. These projects will challenge our rigid beliefs about scarcity and value accrual within a hyper-networked world where attention is the scarce resource.
“Free” or “Low Priced” Objects. Some of the most well-known digital objects started off as free or low-priced at the time they launched (e.g., XCOPY’s 1/1s, CryptoPunks, Chromie Squiggle). Removing economic friction at a collection’s launch can have the net effect of standing out from the crowd and bringing attention to a project early in its lifecycle. Take the recent meteoric rise of Art Blocks’ Friendship Bracelets, a free project of 38,000 iterative versions. Although these digital bracelets were initially given away for free, today bracelets trade for a minimum of $600 per object across over 13,000 unique holders.
No Copyright Reserved. No Copyright Reserved, or CC0, is a tool to relinquish all copyright that an owner holds in a work and dedicate those rights to the public domain. Because blockchains act as a database of record for every digital object, I propose that for certain projects, tight copyright can constrain the network effects of a collection at a time where value and information are now moving faster than ever before.
By relaxing the inherent friction around copyright enforcement, digital object owners and non-owners alike can commercialize, remix, meme, productize, or build on top of CC0 collections to generate attention for the project or digital object at the speed of the internet, unthrottled by legal layer jurisdictions or copyright enforcement.
This has a second-order effect of opening the floodgates to attention-generating activities for a digital object.
Economy Games. Participants in Damien Hirst’s 10,000-piece Currency digital art project (July 2021) had one year to decide between keeping their unique digital object or destroying it in exchange for a physical object. This dilemma forced participants to determine what object form holds greater personal value — the digital or the physical. Over the course of the twelve-month project, hundreds of online articles, reports, podcasts, and conversations debated how the final numbers would tally. After the one-year deadline, roughly half of the collectors chose to keep the unique digital object, destroying the associated physical artwork from the total supply.
Economy games around a digital project’s supply like Currency or Jack Butcher’s Checks (VV Edition) can help bring enormous attention to a project throughout its life, as participants watch the economic game play out in real time.
Category-Specific Marketplaces. A unique object often stands a better chance of being discovered if it is listed or sold in a primary marketplace where buyers and sellers for that specific category are known to form.
These category-specific marketplaces act as natural Schelling points for buyers and sellers within a specific vertical.
Having a “town square” for an object category offers market participants a space to discuss new and existing work, and the recent sales of category-specific digital objects, giving them increased visibility and allowing a more robust social layer to form around the work.
Curation. Much like we rely on experts — engineers, scientists, political leaders — to point our limited attention in the right direction, so too do the unique digital object markets look to experts for similar signals of curation.
As it relates to digital objects, curators actively find and ascribe economic, symbolic, and cultural value to old and new objects alike. These curatorial leaders can be found publishing thought pieces, speaking on podcasts, or posting on social networks like Twitter.
While many digital object owners continue to look to legacy media channels for these curatorial signals, an increasing amount of curation is happening in Web3-native spaces. Many digital object curators now have their on-chain collecting behavior tracked publicly on Web3 native platforms like Gallery, Deca, Floor, and Soho, among other object signaling tools.
Part II: Products vs. Store of Value Assets
While new models for attention and networking are driving value to certain digital objects, not all digital objects are created equal. Some will accrue value, but many will not, and determining the difference depends on the type of the digital object in question.
My view is that in the future, blockchain-based digital objects will wrap every unique category of information. These categories will include digital representations of real-world assets, financial instruments, employment contracts, property deeds, products, services, commodities, and every other category of unique value in the physical world we live in today.
One framing I’ve found useful for explaining this concept is positioning blockchains as a simple recording format upgrade for all the world’s assets.
This idea seems overly ambitious on its face, but it articulates the inevitable intersection of two growing trends — (a) the digitization of all information; and (b) blockchains as a device for recording digital information onto a public, neutral, tamper-resistant database.
For me, this end state is not a question of whether it will happen — but rather on what timeline.
However, given the early nature of this technology, there are only two valuable categories of unique digital objects on blockchain-based databases today:
(1) Products/Services; and
(2) Stores of Value
I’ll provide a short background on both of these categories, and their application to digital objects in the future.
In the physical world, a product or service is something that is created with the intention of satisfying a particular market need or want.
This can include consumer objects such as clothing, video game skins, or sporting equipment. It can include industrial objects like heavy machinery or manufacturing equipment. It can include services like gaming or streaming subscriptions, live music events, or ride-share services.
In the aggregate, the monetary value of global products and services represent tens of trillions of dollars in GDP each year — a meaningful amount of the world’s traded value.
While products and services are tremendously valuable in the aggregate, their individual value is often capped relative to the market outcome that the product/service solves.
For many of these products/services, outcomes can be quite low impact or invaluable, or naturally depreciate in value over time as the product/service is consumed by the market.
Store of Value
Alternatively, a store of value object is something that is stored or saved as means to retain purchasing power. These objects often enjoy a large attention network, are provably scarce, highly durable, and have few external dependencies to maintain value over long periods.
Store of value objects represent some of the largest markets in the world, unbounded from revenue targets and project deliverables. Value accretes to the object simply by the demand to own these objects outpacing supply over time.
Three of the most common store of value objects are gold, real estate, and art.
Gold has been used to store wealth for millennia, relied upon by its inherent scarcity, durability, divisibility, and networked markets across geographic boundaries.
Real estate is another traditional store of value asset. It is verifiably scarce, durable, and can be passed down or parceled out in divisible bundles generation after generation, relying on a jurisdiction’s legal layer.
Art is one of the oldest forms of store of value objects, today representing $65B in annual sales. Influential artists like Mark Rothko, Jackson Pollock, and Willem de Kooning command tens of millions of dollars for their work in secondary markets.
Digital Object Applications
For the first time in human history, blockchains empower any digital object to enjoy the properties of verifiable scarcity, durability, divisibility, and globally networked markets.
As a result, these internet-optimized objects now have the same or greater potential to become globally networked as a (1) product/service; or (2) demonstrate the properties of a store of value asset — all over a public, tamper-proof, trust-minimized database.
The implications across both these categories are massive.
However, given their digitally-native wrappers, it can be difficult for market participants to determine how best to distinguish between these radically different categories.
In my view, determining whether a unique digital object takes on the features of a product/service or a store of value requires one look to the object’s external dependencies.
In software, an external dependency refers to an external software component or library that is required by a project to function, but is not included in the project itself.
Digital objects that have *many* external dependencies rely on external factors to sustain value. This can include ongoing product expansion, continued messaging/positioning, and development that brings continued value to the object.
As a result of this reliance on creators or third-party actors, these digital objects should be valued more like products and services.
Alternatively, objects that only have a *few* external dependencies are often non-intermediated, durable, and require little to no support in order to sustain or accrete value over time.
These objects, without requiring direct creator or third-party reliance, have a stronger path to be evaluated as a store of value object.
In my view, the three most important ‘external dependency’ indicators to evaluate whether a unique digital object fits the category of a product/service or potential store of value are (a) asset sovereignty, (b) content durability, and (c) contained value.
(a) Asset Sovereignty. Today, when a purchaser buys a Fortnite gaming skin, what they are really buying is a single entry on a privately-owned database. Ownership over the skin or digital object can be intermediated at any time by the database owner (Epic Games). Alternatively, projects like Chromie Squiggle and Otherdeed are two collections, in art and gaming respectively, that issue ownership tokens that can be held in self-custodied wallets on the Ethereum blockchain. A huge network of participants verifies and secures every transaction on Ethereum, making it impossible for an unwanted party to interfere with this ownership.
(b) Content Durability. For the strongest guarantee in object persistence, an owner of an object would ideally want both the ownership token and the content associated with the object to be recorded directly on a blockchain. However, pairing both ownership token and content on a blockchain can be prohibitively expensive. As a result, many ownership tokens are simply a pointer, directing holders to off-blockchain storage of the media.
In our example, the art file associated with a Fortnite skin and Otherdeed land is non-durable. The art files for both objects live on a private database, and can be modified by Epic Games and Yuga Labs respectively.
Oppositely, the content of each Chromie Squiggle is mostly stored on the Ethereum blockchain. Each token’s on-chain transaction hash acts as the permanent seed to populate unique variables against the project’s on-chain algorithm. If for whatever reason the Art Blocks platform doesn’t exist to serve Chromie Squiggle art in the future, an owner can still recreate their Chromie Squiggle in any resolution with a browser, a simple HTML template, their on-chain token, and the on-chain code.
(c) Contained Value. This indicates whether wealth stored in the object can be preserved without requiring new value creation by the object’s creator. For ongoing value creation, both Fortnite skins and Otherdeed land require project creators to build and deliver utility that ties together the game, the assets, and the economy over time. These objects are likely not valuable without continued value creation by the object’s creators.
Oppositely, Chromie Squiggle was created with the intent to stand alone as a creative project — one that illustrated the infinite variability of on-demand, algorithmically generated, on-chain artwork. There is no ongoing creator support required.
Many External Dependencies: A Feature
Evaluating the three indicators above, Fortnite skins and Otherdeed land have a number of external dependencies, making these objects look more like digital products/services.
Alternatively, Chromie Squiggle — along with previously mentioned projects CryptoPunks and Autoglyphs — enjoy few external dependencies across all three dimensions. Networked correctly with attention, these objects may be evaluated as digital stores of value in the future.
Not dissimilar to gold, real estate, and other high-value art.
However, it’s important to note that external dependencies can sometimes bring benefits to an object over time. For example, if a creator or team continues to deliver functionality, utility, greater performance over time, the demand to hold that object in order to utilize the product/service will likely increase. This design space is some of the most exciting from a value creation perspective.
Under this framing, external dependency decisions like storing content/media off-chain (instead of on-chain) — which tend to look unfavorable for store of value wealth preservation — may often be the optimal decision for unlocking new product/service value over time.
As a result of this growing use case, a number of decentralized content storage solutions are starting to be used today for product/service digital objects, based on the premise that some mutability should be tolerated for driving new value over time. Further, some of these decentralized content tools can be used in ways to create fewer external dependencies in the aggregate, making it possible that some store of value digital objects in the future have pieces of content that live on dynamic off-chain environments.
In the not-too-distant future, we will see many of the largest communities on the internet aggregate around these blockchain-based products/services.
And it may already be happening.
Just last year, 80% of all blockchain wallets’ first transactions were related to unique digital objects. Amazon, Meta, Starbucks, and many other large publicly traded companies in virtually every vertical have announced initiatives that leverage both digital objects and blockchains.
Over the coming years, you can expect to see natively digital objects power virtually all major consumer product/service use cases. In the short-medium term, I believe they will become natively integrated into business models related to social applications, gaming, music, television, live entertainment and many of the other largest consumer verticals in the world.
Eventually, these use cases will span outside of global media and entertainment, into regulated assets, financial instruments, property deeds, employment contracts, and all other forms of unique value.
Meanwhile, we’ll also begin to see a growing number of unique digital objects play a major role in trust-minimized wealth preservation — acting as digital stores of value.
For this use case, time is instructive.
The Lindy effect (“Lindy’s law”), which theorizes that the future life expectancy of non-perishable objects is directly proportional to its age, is often applied to store of value objects. If an object has proven to be a reliable store of value over a long period of time, it is likely to continue to do so over a similar time in the future.
Throughout history, the objects that humans have used to store value have varied greatly over time. Gold, land, art, and collectibles have all served this role.
As societies develop new technologies and economic systems, the concept of storing value so too will evolve to match new realities.
In this regard, one final area to keep an eye on is the intersection of digital finance x digital store of value objects. Traditionally, a myriad of complex financial instruments will exist around legacy stores of value objects. These financial instruments allow owners to obtain leverage, hedge downside risk, and take on other financial planning strategies using these assets.
Similarly, digital object lending platforms like NFTfi are already starting to break out. On these platforms, CryptoPunks, Autoglyphs, and Chromie Squiggle currently have lending rates which mirror home loan rates (<10%), and an increasing amount of lenders are willing to lend up to longer durations for these three objects, further reinforcing the point that unique digital stores of value are here to stay.
While the digital asset ecosystem is still only a decade old, I believe we’re in the midst of a fundamental, once-in-human-history transition from physical stores of value to digital stores of value.
And a growing number of unique digital objects may start to serve this important role, acting as trust-minimized wealth preservation for a global, 24/7, internet economy.
Disclosure / Disclaimer: At time of publication, Collab+Currency or its members may have exposure to some of the assets described in this piece. The author and Collab+Currency do not endorse or recommend ownership of any project or collection described in this article.
Grateful to the Collab+Currency squad, including my awesome business partner Steve and our giga-brain investors Amanda, Greg, Arad, Karen, and Ronan.
Big thank you to Zack Rosenblatt, our C+C Chief of Staff (and part-time graphic designer).
Special thanks to those who contributed conversation during the construction of this piece, including members of FlamingoDAO, Aaron Wright, Priyanka Desai, JDH, Quickrider, Ben Roy, Gmoney, Zeneca, Kevin Rose, Punk9059, Eli Scheinman, Jess Sloss, Todd Goldberg, Snowfro, Chris Ostoich, Seth Goldstein, Craig Shapiro, EJ, Alex, Quincy.
And always, to MP.