"You know what's really punk? One billion dollars."
That line, from Wave Financial co-founder Les Borsai, a music manager-turned-NFT investor, stuck with me this week throughout NFT.LA, the latest in a series of non-fungible token events that have sprung up around the U.S., this one in the storytelling capital of the world.
The spirit of punk, of rebellion, of anti-establishment expression has always run deep in the crypto community, taking its strongest expression in the blockchain principle of "permissionless innovation."
The "permissionlessness" concept stems from the technology's open-source protocols and decentralized validation networks, which enable direct, peer-to-peer value exchange. Developers are free to build applications without having to ask the permission of say, a Web 2 internet platform, or a bank, or even a government. The degree to which different blockchains are truly "censorship resistant" is a matter of constant debate, but the idea is that decentralized architecture enables innovation.
My conversations this week with numerous L.A.-based digital artists opened up a different perspective. As they eagerly opened their iPhones to show me their latest NFT drop or other creative venture, it occurred to me there's an even more powerful source of permissionlessness being unleashed in this space: money.
NFTs are generating a giant pool of dosh. And, proportionally, more of it is now flowing into the hands of creators than traditionally in L.A., where the arts and entertainment economy's terms have historically been set by music labels, film studios, talent agents and other interlopers.
A great deal of that money is staying inside the ether ecosystem in which it is generated, rather than being returned to dollars. It's now being redeployed into new investments in the space, sometimes leveraged for maximum impact with decentralized finance (DeFi) bets or fed into decentralized autonomous organizations (DAO) that allow creators to pool resources and underwrite ever more new creative projects.
Money matters
For now at least, this virtuous circle of money and creativity seems unstoppable. But, of course, the NFT boom and the energy it seeds at conferences like this one – including the NFT.NYC conference, which stirred similar thoughts last year – could all be just hot air, the output of an unsustainable bubble.
For one, the legal framework for intellectual property in NFTs remains highly uncertain. Also, there's a fear that content-management power is being centralized with giant marketplaces like OpenSea or with creator projects like Yuga Labs' Bored Ape Yacht Club – in other words, that new intermediaries are forming to replace the old ones.
Moreover, the underlying blockchain architecture is not yet able to scale in a sufficiently decentralized manner to accommodate all the NFT projects underway. As a Polygon developer once put it to me, "These guys are launching Formula One race cars before we've built the track."
But perhaps such concerns are moot. Even if the legal and technological framework underpinning NFTs isn't yet fully supportive of a truly decentralized, creator-centric content economy, many artists are creating direct-to-customer products that generate, in many cases, real "FU money." They can tell the Hollywood intermediaries to take a hike.
Read the rest of this column here.
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