10. Wrong (JW)
San Francisco, USA
Dear Owen,
I predict I’m going to be wrong again, and I’m mad. A GIF of Nyan Cat was just sold for $600,000. I’ll get back to that in a minute.
The problem with being a technological cynic is that I’m usually right, but when I’m wrong I’m like, extremely wrong. I’m sure I’m wrong about technological trends on an almost daily basis, but I can remember two specific instances where I’ve been just comically incorrect, and I feel like I’m on the brink of a third.
The first was when I heard about video games shifting from subscription models to free-to-play, with their only revenue stream coming from in-game purchase of purely cosmetic digital skins or clothing, e.g. character skins in League of Legends, or hats in Team Fortress 2. These games emphatically did not want to be “pay to win”, so these items were literally just… pretty things. I thought there’s no way that people would be, on average, more willing to spend money on digital cosmetic stuff than on a subscription which let them play the game in the first place, right? Right? Well, League of Legends has been raking in over a billion dollars in revenue every year in recent years, with the majority of that coming from these cosmetic purchases. As you can see, I was a bit wrong here.
The second was when I heard about Bitcoin for the first time, back in 2013. I was fresh out of ECON 102 learning about the basic nature of money. I learned that interest rates are used as a mechanism to control inflation, and how inflation encourages people to invest their money. If you have deflation, you can accumulate wealth by just sitting on your money, doing absolutely nothing with it. It will have more purchasing power tomorrow than it does today, so stuffing it under your mattress and waiting is a winning strategy. This is fine for some assets, but seems like a terrible property for a currency, because it discourages people from moving it around to generate assets in the world with intrinsic value! Then along comes Bitcoin with a fixed money supply, making it deflationary by design and claims it’s going to revolutionize the world’s financial system. I thought there was no way this was going to be viable as a currency, so I thought it would fail. In early 2013, when I made this argument, the cost of Bitcoin was around $15. Now it’s sitting at $50,000. I was, uh, kinda wrong?
My most recent and ongoing foray into being very wrong has to do with NFTs, or non-fungible tokens. My limited understanding here is that they’re a new blockchain construct, most prominently featured in Ethereum, which allows the tracking and transfer of unique digital assets. Unlike Bitcoin or USD, these tokens aren’t divisible or interchangeable. Each one is a unique, discrete item. People are using NFTs to auction off one-of-a-kind pieces of digital art, where the winner pays to take the token.
I need to explain why this shit makes no sense to me. They aren’t auctioning the art per-se, because both during and after the auction, everyone can see the art. Not like a thumbnail, not a watermarked image, but the exact thing, byte-for-byte that the winner of the auction holds.
When you buy physical art you’re, in part, buying exclusivity of it. You purchase the thing, and you have the thing, and you put it where you want it, and other people have to ask you nicely to see it. But when you buy art via NFTs, there’s no exclusivity. So you’re only purchasing ownership. Which is just a baffling concept to me. The idea that the abstract concept of ownership without exclusivity is valuable to people is even more confusing to me than people spending $20 for an in-game digital hat.
I don’t know what stronger evidence there could be that I’m wrong than someone spending $600,000 to own a GIF of Nyan Cat, which is exactly what happened on Friday. Now, you might be thinking “Hey! The intellectual property of Nyan Cat is probably worth a ton! Maybe this a steal.” Nope.
From foundation.app, the website where the Nyan Cat GIF was sold:
Collectors receive a cryptographic token representing the Creator’s Digital Artwork as a piece of property, but do not own the creative work itself. Collectors may display and share the Digital Artwork, but Collectors do not have any legal ownership, right, or title to any copyrights, trademarks, or other intellectual property rights to the Digital Artwork
[…]
Collectors have the right to sell, trade, transfer, or use their Digital Artwork, but Collectors may not make “commercial use” of the Digital Artwork.
The purchaser is only allowed to use the GIF for non-commercial purposes. You know, just like everyone else who has ever seen the Nyan Cat GIF. Why are people paying for this?!
You might argue “Hey Jamie, are you opposed to artists being paid for their work?” No, but they could just send them money without buying anything from them. And it’s not like they get to experience that artist’s art in any different way from everyone else by buying it. I’ve heard lots of schemes for supporting creators, and appreciate models like Patreon, but there’s no way I ever would’ve predicted the creator community being supported via purchases of the abstract idea of ownership.
Unlike past situations where I’ve been wrong where I’ve only been willing to admit it after it was globally acknowledged it was going to A Thing(TM), the NFT art marketplace still seems like early days. So I’m conflicted. The principles behind it make no sense to me, but obviously people see a lot of value where I don’t. So I’m preparing to be extremely wrong, especially since this one seems like the bastard child of my previous two prediction fuckups.
Anyway. How are you? What’ve you been incredibly wrong about recently?
Your cynical yet bemused friend,
Jamie
