Understanding the NFT Phenomenon

July 27, 2021 Elizabeth Crittenden

To help unpack the complexities of the NFT marketplace, this episode weaves together interviews conducted by B Crittenden with three people who have expertise with and varying perspectives on NFTs, or non-fungible tokens. B discusses how the arts and culture sector is interacting with NFTs; the environmental impact of NFTs and cryptocurrency in general; and where this technology is headed with AMT Lab contributor Katie Winter, Heinz College professor Ari Lightman, and entrepreneur and investor Josh Bobrowsky.

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[Musical intro]

B: Hello, AMT Lab listeners, and welcome to Tech in the Arts, the podcast from the Arts Management and Technology Lab. My name is B Crittenden, and I'm the Technology and Interactive Content Manager. This month, AMT Lab is taking a deep dive into NFTs, or non-fungible tokens. An NFT is a unique, identifiable digital asset, a digital certificate of authenticity that solidifies ownership of an asset on blockchain. NFTs are publicly verifiable and traceable, and while they're often talked about alongside cryptocurrency since they're both on blockchain, they're not the same. Being non-fungible, NFTs cannot be readily exchanged for one another, so one NFT cannot be exchanged for another NFT. They have unique value. NFTs have been around for several years now, but they really boomed and started making major headlines in the past year.

So, I interviewed three people with expertise and varying perspectives on NFTs and have woven our conversations together in this podcast to help unpack the complexities of the NFT marketplace. You'll hear us talk about how the arts and culture are interacting with NFTs, the impact of NFTs and cryptocurrency in general, and where this technology is headed. To start us off, I spoke with AMT Lab contributor, Katie Winter. Katie wrote an article on NFTs that was recently published by AMT Lab. It's titled "Fueling the Global Flame: A Look at the Long-Term Sustainability of NFTs."

Thank you for doing this. I read your piece when it came out, but I was just rereading it again. And I'm just really curious: what drew you to the topic?

Katie: Yeah, so I have been a fine artist. I actually got my undergrad degree in arts, and I also actually got an undergrad degree in accounting, as well. So I have kind of both of those backgrounds. So when these first blew up, the NFT concept, I thought it was so interesting because it was such a mix of both fine art and obviously finance as well. There were so many investors talking about them but then so many artists talking about them as well. So I thought it was just a really interesting topic, and then as they kind of became more popular, there became a lot more controversy over them as well, so it was hard not to kind of just follow along with all the articles and find an interest in it.

B: Yeah, yeah. As technology tends to be, so much of it is in motion and constantly evolving and, like, I think it's really interesting from the arts perspective because I feel that oftentimes we aren't hurled into this very trendy topic, I guess. There are a lot of things to look forward to in this area and a lot of things to be really cautious of, as well, so I wonder if you might share some of...given your arts background, from the artist's perspective, what are the pros of getting involved in NFTs, creating digital artwork, sharing, and creating an NFT to sell?

Katie: As you mentioned, what's so interesting is that artists are kind of hurled at the front of both technology and finance all of a sudden, and we've never really had that place there. Obviously, fine art pieces and museums are invested in and sold, but for a lot of just artists making everyday artwork or even local artists, it's very hard to kind of find yourself at this forefront of investing and technology, and it's been exciting with more technology advances. We're starting to see more artists kind of become at the front of that. And this is one of those instances where even digital artists are now getting into this investing scene. And at first it seemed like such a great opportunity for digital artists, especially because obviously selling digital art can be very difficult. For people that just make digital artworks, how do you sell prints? And that's what I think a lot of digital artists struggled with is, there was just so much copywriting, so much...people just not buying the artworks, just saving it off of a browser, honestly, and then, you know, printing it and putting it on their wall instead of actually buying it from the artists. And so artists have been grappling with this, trying to put on, you know, low-res files on their websites, trying to only put watermarks on everything that goes out. So this was a great opportunity for digital artists to actually start making money off that. Obviously, there was definitely fraud with the NFTs still, but the pro for it is, for digital artists, they're actually able to put value onto these digital artworks, that even if people save them, spread them, share them, there's still value in that one single NFT that they release. And there's been a ton of artists that have made so much money off of them. I think that's what so much hype was about is that there was artwork selling for just millions. In fact, Beeple's artwork, which was one of the most, like, famous NFTs that sold, sold for...I believe it was $69.3 million, which is just absolutely incredible to have an artwork that's just a digital reproduction, you know, of his other artworks just kind of sell like that. And so for artists, it's a great opportunity to make money. I think we've also seen that there's been groups of artists that have come together. So there was actually a whole entire group called Black NFT Art, which was just a group of Black artists that came together and sold NFTs. And, in early 2021, they made over $700,000, just grouping together, selling their NFTs together. So it was a great opportunity for artists to kind of finally get that worth and kind of, like, finally get that recognition.

B: So, now I want to shift over to a conversation I had with Ari Lightman and Josh Bobrowsky. Ari Lightman is a professor at Heinz College at Carnegie Mellon University with expertise in social media and marketing, with a particular interest in digital trends and how marketing, information technology, and data all blend together. Josh Bobrowsky is an experienced marketer and entrepreneur. He's currently a full-time investor, primarily in the cryptocurrency and NFT space. Here's how we kicked off our conversation, starting with Ari.

Ari: Digital transformation is something that I teach to a variety of different audiences. Understanding digital trends and how to sort of separate signal from noise and looking at how people converge around adoption patterns, social trends, technology, feasibility, and availability is something that, I just, my brain sort of gravitates to constantly. So I love having discussions with people who are curious about what the future holds, which is why I keep going back to Josh. He always has really interesting insights in terms of where we're going as a society from a technical perspective.

B: Wondering what drew you to this space? Especially Josh, like, as an active crypto and NFT investor, what has drawn you to this area?

Josh: One of the things that you look at his kind of secular change, and when I say secular change, I mean a lasting change that is going to have a material impact on the way that we interact with the world. And you can kind of see two or three of these huge secular shifts that were in my lifetime, which would be, like, the invention of the internet, which really created an enormous shift, and you can look at, like, how that impacted e-commerce versus regular commerce and what Amazon has done to the entire commerce market, as probably something no one would have imagined would have come out of the internet but for a few people that really understood the global potential very early on. And then you can look at a subsequent shift, which would almost be the Web 2.0, which is what has happened with digital media and how that has been shifted. And it's my belief that, between cryptocurrency and NFT, we're going to see, like, and they call it Web 3.0, but I believe that we will be seeing a shift that is as large as the previous two shifts, but the cryptocurrency shift—and that's a very broad category—but that shift will be in, like, financial markets, stores of value, ways to interact with wealth, automatic market makers, things of that nature, and that's going to affect a lot of things: everything from the way that we trade stocks or synthetic stocks, all the way down to looking at how we could do sports betting or something like that. The NFT space is actually very different and equally potentially disruptive where, when you look at NFTs, it's a centralized information repository where you can store information that's publicly available. So right now we're looking at art, we're looking at concert tickets, we're looking at collectible sports memorabilia, but, realistically, you could easily hypothesize this could disrupt the entire real estate industry because real estate is historically very opaque and the record-keeping is very bad. You have to get title insurance on a residential home, and if you have a centralized repository that everyone can look at, you could buy a singular piece of property, but you could look at who owns the land rights, who owns the mineral rights, who owns the air rights, what capacity you have to build if you're in an area like New York City, and you could circumvent many, many, many middle people, because there wouldn't be a need for all these jobs to be held in order to functionally provide insurance or source that information. And so, very short version is, there's going to be a big shift and I think it's going to change the way that we interact with the world.

B: Yeah, and sort of the hallmark of NFTs is the transparency, that record keeping aspect of it. At the same time, I know there's a lot of questions, especially when it comes to images, like copyright issues. Obviously, ownership doesn't translate to copyright all the time. Have you delved into that area and do you have any thoughts on how that's going to change how we regulate replication of images, or replication of anything?

Josh: Historically, the law takes a little bit of time to catch up with technology across, like, any platform. You know, the laws that are in place probably aren't designed incredibly well for NFT platforms. But at the same time, it's a very nuanced dynamic because you have fair use clauses where, if something's reasonably transformative, you're allowed to use it and then create, like, almost, like, a new piece of work. So I think that we're going to almost have to wait and see. Ari, what are your thoughts?

Ari: It's a fascinating question around copyright. It's something that a lot of the creative industries have been dealing with for a long period of time, and it's nothing new. You can look at the music industry and who owns copyright on music. And as Josh mentioned very astutely, it takes a while for regulatory bodies and legal authorities to catch up to where the technology is. So right now, we're basing everything on a consensus-driven model. So, ownership is based on this idea of, “Does a community concede that this person actually owns it based on this technology paradigm around the blockchain associated with establishment of ownership?” Now, in doing that, you determine provenance associated with who has owned title to it? At what point in time was it created? At what point in time was it transferred? To what extent do they own what part of that digital asset, or in some cases, even a physical asset that's tied to a digital token, if you will?

One of the things that is fascinating is innovation and technology sort of catches up to needs that exist or manifest themselves associated with this mechanism. Everybody's talking about proof of work, proof of stake, proof of authority—a variety of different mechanisms associated with establishing legitimacy and ownership. These are all very computationally intensive mechanisms that we're talking about sort of energy consumption and we're all very heightened in terms of our understanding, if you will, associated with climate change, especially with what's going on these days. But, once again, there are phenomenal different technologies and mechanisms associated with reducing that energy component, keeping some of the viability and uniqueness associated with proof of work and proof of stake and transferring to other mechanisms. So, the technology will catch up to deal with environmental and social issues associated with the NFT space. Regulatory and legal issues will take longer because people will have to understand all the different facets around it. And, you know, even looking at social media, they're thinking about regulatory issues around social media now, and we've been living in the social media space for...since 1995 when Classmates.com came out, 2001 when MySpace was popular, so a long period of time. So, it's going to be very interesting to see what happens associated with this notion of ownership and how a community-based model can help with sort of establishing proof of ownership and what is that historical record of ownership.

B: We just heard Ari reference the environmental impact of NFTs and cryptocurrency in general. Katie and I actually talked about this at length, so I want to hop back to my conversation with her now.

Katie: With the environmental impacts of NFTs and how much of a negative impact they've been having, there's been a lot of controversy thrown at artists. And I think, more recently, more artists who've decided to release NFTs have received so much backlash from their artistic communities because NFTs have a really negative impact on the environment and there's such a controversy over the mining of NFTs and how this is connected to blockchain technology that more and more artists are very hesitant to even go about selling them, go about creating them. In fact, I believe there was one organization, ArtStation, this platform for digital artists, decided that they were going to start selling NFTs, and they received so much public backlash that they just rescinded that and came out and said, "Okay, nevermind," you know, "You guys don't want this. That's fine." More and more, we're starting to see way more controversy over it. There's more and more artists that are coming together and saying, "We're not going to do this. We're not going to be a part of it because of this negative impact."

B: I think it's tricky. I think I saw there was an artist who commented on how an extreme standard is being placed on artists here, that artist felt.

Katie: Yeah, and I'm so glad you brought that up. I actually have the quote of it. So it's a digital designer and artist. His name is Gareth Stangroom, and his quote was actually to the New York Times, and he said, "Why is it when the little guys get a foothold, everyone’s on their case about the ethics of it—instead of criticizing the big players that have been abusing our planet for decades?" So, it's that exact point of, “Hey, you know, we finally got this opportunity. You know, you've haven't been fighting the airline industry, the gas industry like this. Why all of a sudden is it fighting the NFT industry like this?”

B: Mhm. People who are really involved in blockchain and crypto and this technology are talking about some solutions to try and overcome that environmental impact. I wonder if you could share about that a little bit.

Katie: There’s an analogy that one person made which is kind of comparing it to the airline industry, and he’s saying, you know, there’s no harm in one artist selling an NFT, obviously. NFT production and crypto mining is still going to continue on no matter what. However, it’s, you know, when everyone starts buying airline tickets and the airline industry just has a foothold in our economy, that’s when it becomes a problem because then there’s no getting rid of it, there’s no getting rid of this crypto mining, there’s no wavering from it. So, a lot of people have argued that just because people want people to stop buying NFTs or stop producing them does not mean that crypto mining is going to stop. You know, even the Ethereum blockchain, which is what NFTs are based on, it’s not going to go away if people stop buying NFTs or stop producing them. So, a lot of people argue that even completely stopping buying, selling, and producing NFTs or even being a part of it isn’t going to actually do anything to change the environmental impact.

Now, a lot of people argue that the method of crypto mining is moreso the problem. In fact, there’s these concepts called proof of stake versus proof of work. Currently the blockchain uses proof of work, which is where the computers have to go through basically like puzzles or games is the comparison—obviously it’s a little bit more complex than that—and they basically have to make an attempt at mining the crypto, so these crypto miners have these just massive set ups that work and mine crypto, and it just uses a ton, a ton of energy. And obviously the more popular that crypto mining has become, the more people that have kind of become involved in this, the more set ups there have been, the more crypto mining, so obviously there’s just a massive environmental impact that’s coming from it. And that’s proof of work, where everyone has to kind of work to mine this crypto. Proof of stake is something that, instead of mining or instead of using these kind of problems, there’s no competition anymore. It’s just kind of assigned. So, proof of stake doesn’t have all that mining, there’s not just massive quantities of miners mining at the same time trying to get one block out of it. And that’s been a huge argument too because, how is this algorithm going to decide who gets that block? How is the algorithm going to define who doesn’t get the block? And obviously that depends on people’s set ups, people’s history in crypto mining, how much stake they have in the game essentially, so that’s not a perfect solution either at this point and it takes away that kind of decentralized nature of it. People love the decentralized nature of the proof of work where all these computers are mining because anyone can get involved in the game for the most part versus the proof of stake, it’s not decentralized anymore.

The other part of it, too, is that just so many miners already have these massive set ups that are based on proof of work. Even if theirs is pushed to proof of stake, how many people would really switch over to it unless there was some sort of hardcore policy line, you know, put in the sand saying you have to move or this has to happen, people aren’t going to really just naturally move over to the proof of stake method. It would be very expensive to move, it would change the entire process, and that’s where a lot of people argue that maybe policy should be enacted in the cryptocurrency realm, but once again that’s why so many people love it because there’s not a lot of policy around it, there’s not a lot of hardcore rules in it, there’s not a centralized nature to it. A lot of people argue it’s hypocritical to say that we should move to proof of stake and put all these rules and policies in, but once again the environmental impact is still something that’s occurring regardless.

B: Right, right. I'm referencing your article right now: the footprint of a single Ethereum transaction equates to the power consumption of an average U.S. household over 4.2 days. That's a single transaction, in terms of the use of electrical energy, and in terms of the carbon footprint, it's equivalent to 130,809 Visa transactions, or almost 10,000 hours of watching YouTube.

Katie: I think where a lot of the problem is that just cryptocurrency in general is, you know, creating this horrible environmental impact. So, there is a lot of talk about just Ethereum in general, and Ethereum is just kind of one of these blockchains. It's not even all of them; it's just one part of this. And yeah, it's producing enough energy and the same carbon footprint as countries, so another article from Digiconomist mentions that it's comparable to the country of Hungary for electrical energy and, for the carbon footprint, comparable to the country of Sudan. And, obviously, just the thought of crypto mining putting out the same electrical impact and carbon footprint as a country is crazy to think about in the fact that this is just adding to the issue of climate change that we're facing as a whole entire generation at this point. And so the argument really comes down to: are NFTs kind of the worst part of this? And a lot of artists and a lot of people are still arguing that even though NFTs are part of those blockchains, even though it's part of the Ethereum blockchain, is it the sole reason the Ethereum blockchain exists? And a lot of times it's...no. There's so much other things and other investments, apps, and other technology that is relying on the Ethereum blockchain that, even if we were to just completely get rid of NFTs, it wouldn't stop the Ethereum mining. Now, do NFTs contribute to that—the more and more popular they become, the more people buying them, selling them, the more this boom occurs? Yes, it's absolutely going to add to it. And so it just becomes a question of how long, you know, is policy going to ignore this environmental impact? And, really, when is policy going to start affecting blockchain technology at all? We still haven't really seen too much policy enacted with anything in the cryptocurrency world, so I think at this point, NFTs will exist indefinitely until we start seeing more policies and more rules regarding the production of them.

B: I had to ask Ari and Josh to dig into the subject of NFTs environmental impact a little more from their perspective.

Ari: So yeah, this is a conversation that, you know, Josh and I have had on a regular basis when we looked at the crypto space and now looking at the NFT space. This notion that each transaction requires you to do a variety of different validation and proof as opposed to utilizing a variety of resources. Josh mentioned there's a tremendous amount of intermediaries that need to be in the process. Once again, we're seeing a flattening of the structure and it's just me interacting with somebody like Josh when we want to make an exchange, whether it's a house or whether it's an NFT or whether it's a cryptocurrency. I think that different mechanisms, and once again, technological mechanisms associated with the blockchain are ongoing on a continuous basis...there's a variety of different types of techniques, including sharding and other sorts of mechanisms that are aimed specifically at increasing the transaction volume and quality and efficiency, while decreasing the environmental load, while still remaining sort of the true essence associated with blockchain distributed ledger fundamentals, which is community-based consensus associated with who owns what and value and those sorts of things, as well as data extrapolation. So, as Josh mentioned, these things are relatively open, so we're getting tremendous amounts of data around load capacity, mining versus minting, a variety of different aspects associated with a blockchain that we can analyze. Once again, openness and transparency is a wonderful thing because you can't hide anything. You can sweep anything under the rug, and that includes environmental load associated with your transaction volumes, in which case a variety of different very smart folks from an engineering perspective are looking at solving the problems in ways that stay true to the blockchain but, once again, decrease the environmental cost and load associated with transactions.

Josh: I think that it's a balance at the end of the day. Obviously, we assign some things enough value to say that they're worth the electricity usage, right? So if we took Google, for example, it uses, like, 12 terawatt hours per year of electricity, which is a lot. And you would say that that's probably relatively worthwhile. And then you look at something like Bitcoin, right? You could make an argument that Bitcoin is probably more secure than, like, the digital U.S. dollar. So you could ask yourself: is that security worth the energy usage that you're getting or is there a more efficient way to do it? At some levels, there's probably a more efficient way to do it, but, at other levels, the proof of work is creating an increasingly more difficult algorithm to crack that allows for that security. So if Bitcoin is worth...I am just pulling a number today, but let's say Bitcoin is worth a trillion dollars. Is securing a network with a total market cap of a trillion dollars worth the energy consumption? And I don't have an answer to that, but that's a question that I think is worth asking. And if the answer is no, then why? And then I think you also want to parse down a little bit deeper and say, "Well, what part of this is clean energy consumption," right? Like, what part of it is hydroelectric power? And China just outlawed Bitcoin mining and, arguably, China's Bitcoin mining was probably some of the more dirty energy usage that's associated with the Bitcoin mining, so the hash rate has gone down considerably and you might make an argument that over 50% of the energy usage is now clean energy. So, if those things are all the case, I think it's a more complex question than is this good/is this bad? I think the answer lies more in, how do we continue to make it more clean? And how do we continue to do that while keeping the network secure? Because there is an extreme value to having an incredibly secure network like Bitcoin has.

Ari: Josh brings up a really good point that we have to take into consideration. We need to weigh sort of everything in totality, right? When you look at sort of a Bitcoin exchange, or let's say we're talking about an NFT exchange, those sorts of things, we have to look at the entire energy load associated with replicating it in a physical environment, right? So NFT allows you to do authentication, allows you to do provenance. I'm a big fan of shows like—I hate to admit it—I love watching Antiques Roadshow. I just love these shows because it tells you a little bit about the historical artifact. I even watch Pawn Stars and those sorts of things. And you think about all the mechanisms associated with validation, authentication, right? There's a lot of intermediaries—as Josh mentioned, middle people—that have to come in and have to take part associated with understanding, what is this particular object worth? There is an environmental load associated with that that we're now replicating on it digital front. Yes, there's an environmental load associated with, as well, but if we really want to measure the two, we really need to measure them on equal footing, if you will.

B: I'm curious, Ari, is anyone actually measuring the environmental load of NFTs versus, to use a fine arts example, the resources required to sell a piece of artwork through a gallery in the traditional way?

Ari: There's so much work being done on the societal costs associated with transportation, associated with manufacturing, associated with energy transactions when we talk about Bitcoin and NFTs and those sorts of things. I'm sure there are some folks that are taking a look at this. It would be really interesting to understand how sort of a market space that gets created via OpenSea or those sorts of things in an NFT world compares to a Christie's auction in terms of environmental load. Now, Christie's is doing more things digitally, so that's reducing the load. And we've already seen a reduction in carbon load based on, you know, everybody being socially distant and doing more things online. So I think, you know, the NFTs is sort of a natural extension associated with that that really saw an uptake from the, you know, the CryptoKitties and the CryptoPunk world back in 2017 to where we are now. So people are thinking about the energy consumption as we're looking at evolution of NFTs into new markets, which is something that Josh and I are very interested in.

B: One of my last questions I had for you two revolves around this idea of accessibility, and I know that can mean a lot of different things. If you're talking about flattening, be it the art market or real estate, partially I think about that transparency and the efficiency that you get, but I also have to think about our technological fluency and issues with relying on a system when a lot of people in society struggle to even get access to the internet.

Josh: Let's take a look at access and let's talk about one of the most important things of access, which I think is banking, right? How many people in the global ecosystem, in the world, are unbanked? Well, the number is relatively high. And why is that? It's because the unbanked would traditionally have a balance that is low enough that a bank would not be able to profitably operate with them as a customer. They'd create a net loss for a bank. The ability to use Bitcoin could solve that, right? If you want to be banked with a Bitcoin wallet or address, all you need is an internet connection. All you need is to get a MetaMask wallet or some sort of wallet that's free, and it creates a large solution for the unbanked. I think the number of people that have access to the internet is actually pretty high and the barrier to entry to getting access to the internet right now is a relatively low-cost computer or cell phone and, like, everyday, those become more accessible, more affordable. And I think that that's going to do a lot to flatten the access to people. And, you know, you look at something that's like really predatory, like a check cashing place, where people that are really working hard and struggling to earn enough to live are getting these huge taxes on a percentile basis levied against them just to get access to the money that they worked for, or Western Union, where you're looking at, you know, people that are coming here from different countries, that are sending money back home, have to pay these really large fees. And then you can take it a step further and even look at there's a danger associated with going to a Western Union in some countries to get your money. So, that creates a big amount of flattening, where you can send Bitcoin or Ethereum or other cryptocurrencies very, very easily over long distances, and you don't require bank accounts. You can take it a step further and say that there are people in countries that don't have access to a stable currency, which might be about 20% of the world, where you have hyperinflation, whether you're looking at, like, a Venezuela or an Argentina. And that can create some flattening of an ability for somebody to work and have some level of savings where their savings aren't eroded immediately. And I think that is probably a reasonable way to look at a flattening. And I agree, some people don't have access to the internet, but I think there's a lot of efforts being put out there to get free or very affordable access to the internet for people. And I think that, you know, these cryptocurrencies create a reasonably better solution for the unbanked and for people that are having trouble getting and sending money.

Ari: Yeah, so Josh brings up some great points. On my side, I'll talk a little bit about operational capacity to get into the mass market, value proposition. As NFTs mature and expand, if you will, the infrastructure will be there to allow them to be much more seamless, ambient, frictionless...all those buzz terms that we always talk about. You know, I have a Coinbase wallet, I have MetaMask setup, those sorts of things, but there are processes that you have to go through in terms of acquiring NFT. You have to know a little bit about the OpenSea marketplace. It's not quite like eBay: I set up an account, I see a bunch people auctioning on this product, I go "I want that," right? There's some processes that you have to go through and some things you have to know about and most of the transactions are done on Ethereum, right? And Ether's value fluctuates on a minute-by-minute basis, so we have to take that into consideration and understand that. I think when we get to value for participants, the value that Josh might have in going into the NFT marketplace and acquiring items might be completely different from me, might be completely different from you. Understanding that is really important. I love the fact that, you know, Kings of Leon basically said, "Listen, you can acquire an NFT that will give you front-row access to any single one of our shows." That is something that is incredibly valuable for fans of Kings of Leon. And that transferability is something that people will say, "Wow, that's phenomenal. I'm not locked into this." It's not a timeshare. If I wanted to transfer this to Josh and Josh can put a value on it based on how much he likes the band and how much he values this experience, we're really thinking about the experiential economy. We're thinking about these things that aren't consumption-driven but are sort of memory-driven, if you will. This experience that I'm getting that's unique to me and I value it in a way. And that's partially what we're seeing is, you can't go to eBay and buy rights to a front row ticket for all Kings of Leon’s concerts. That's something that's totally not fungible. And we see these things happening and occurring, and I think this is going to drive value for the mass market to say, "I want to come in and I want this, because this is something that is only available in this space, uniquely tailored towards what my needs might be." And it'll drive people into the NFT market in a very interesting way, until we see a point in time where we see a lot of the things that we value from a consumer perspective. Josh mentioned sports memorabilia and sports collectibles, but it also might be toys, right? Like Mattel and Fisher Price and those sorts of things that offer an NFT component associated with a premier value around an experience around a physical object. And that might drive the mass market into the NFT space.

B: Yeah, that's really interesting. And I think we are preoccupied with the kind of very basic digital imagery in NFTs and I do think that we should be thinking more about the experience economy because that's really where the arts live. So, yeah, thank you for bringing that up.

Ari: I don't come from the arts. I get exposed to the arts just based on being at Heinz College, but I think part of the arts is really about education, right? How do you educate different consumers associated with the history of particular pieces, the societal implications, those sorts of things? I remember working with the Getty, working with the Tate. There's so much education that can be delivered that might be customized to a particular user. So, Josh might be very interested in the history around a specific piece, the brush quality, the stroke, the canvas, the tangible fundamentals associated with creating it. And these sorts of things are really fascinating if they can be tailor-made to specific audiences and confer a premium associated with the purchase of a particular piece of art.

B: My final question in my conversation with Katie, as well as with Ari and Josh, concerned why people who work in the arts and culture should care and consider paying attention to NFTs, and I also asked them to summarize their thoughts on what's ahead for the NFT space.

Katie: I'm not going to be surprised if we start to see a lot more data popping up regarding the individualized, you know, footprint for one NFT, if people are going to start trying to, you know, figure that out, or if more and more controversy is going to be brought to these different arts organizations that are selling and producing NFTs. Obviously, there's definitely some controversy now, and we've started to see more controversy even faced at museums regarding their climate impact and regarding who's investing in them, what money they're taking. I think the same controversy as it, you know, regards to museums and arts organizations, we're seeing with NFTs. I think a lot of organizations have been really hesitant to start producing and selling NFTs and start supporting them because there's this negative impact and this controversy around them. So I think as arts managers and administrators, we might see ourselves in organizations or in situations where we're wondering if we should support the NFT realm or if we should support digital artists producing NFTs. And I think that's something where more managers and administrators are going to think how this aligns with their ethics. Does it really affect the environment to them? How does this look for the public eye? How does it look regarding the organization? So I think we're all going to see ourselves put in these situations regarding whether or not our organization should support NFTs and support the digital artists that are selling them as well.

NFTs have started to expand to live performances. I believe it was, like, a DJ, his name was Umek, U-M-E-K, who was releasing an NFT of his live performance. And I think we're definitely going to see, especially with these hybrid performances coming up and more in-person performances and a lot more organizations and actors and artists relying on digital performances now, I think we're going to see way more NFTs come into this experience economy. I think so far there's already been, like, a New York Times article, there's been a tweet that's been sold as an NFT, and there's even been films that people have been rumoring that they're going to release as NFTs. So it's crazy to think that we're going to see way more live performances get sold as NFTs because it's something that's really similar to digital art in the fact that people can be at an in-person performance, they can leave from it, they can watch a recording of it, but when you attach the NFT to it, that one single instance of it holds value. And it can be invested in and sold and it's just crazy to think what the next iteration of NFTs are going to look like. It changed so fast in the past year already that, what's it going to look like in 2022? Are we going to look back on this conversation and be like, "Wow, how did we not see, you know, NFTs coming to this realm either?" [Laughter] So, it's just something crazy to think about.

Honestly, I think it's just such a fascinating technology at this point that I think it's worth looking into. I know for me personally, before I dove into the topic, I had no understanding of the realm of cryptocurrency, how it worked, how the technology worked. I didn't understand how people were investing in NFTs, how did they hold individual value, how are they being sold. It's really worth kind of even taking 10-15 minutes on your morning commute or when you're just feeling bored to kind of look into the technology a little bit more because I think that it's going to be something that we as arts managers and administrators are going to slowly start seeing pop up way more often. Just looking at NFTs, it's helped me kind of understand the concept of cryptocurrency and understand why it's worth so much. Why is Bitcoin worth so much? Why do these technologies have such a big foothold in our news? Why do we see so much about them? And how are there just billionaires that have been made off of these technologies? So it's something you know, it's crazy. It's not always ethical. It's not environmentally correct, but it's definitely something interesting to at least understand. So when these technologies start finding their way into the art world more and more and more, it's something that we as arts managers and administrators can kind of understand and at least be ready for.

Ari: If we strip out the technological piece and not talk about the fundamentals of blockchain, this is a trend that's been happening for several years. Many, many years. Which is providing greater levels of autonomy back to the creator or the owner of copyrighted pieces of art, which is great. Once it flattens, we reduce the transaction cost associated with that and it allows this direct connection, which is, I think, some of the things that we've seen in music and creating associated with screen-based entertainment, is going directly to the audience. Why? Because, once again, it captures more information and reduces intermediaries and allows more revenue to go directly back to the creators. But, it also creates some unique data. That data was normally collected by intermediaries and held, and that they held a tremendous amount of power associated with that. Josh mentioned Google, you know, Facebook...these are intermediaries that collect and aggregate all this and utilize it. Now, in terms of a crowd-based phenomenon, looking at consensus and those sorts of things, there is more community-driven opportunity around transparency, around value definition, around increased access and use, those sorts of things, right? Now that's not to say that there won't be somebody who comes out and intermediates it and creates power out of it in terms of aggregation and holding, but for now, the concept is really interesting. It's sort of the fundamentals associated with blockchain: more power back to creators and sellers to really come together in a consensus-driven approach, a community-driven approach, as well.

B: Thank you to Katie Winter, Ari Lightman, and Josh Bobrowsky for the conversation and for bringing their expertise. Listeners, if you're interested in NFTs, the AMT Lab website has a ton of recently published resources and research from our contributors, so definitely check that out at amt-lab.org. Thanks for listening.

Lutie: Thanks for listening to the AMT Lab podcast. Don't forget to subscribe and to leave a comment. If you would like to learn more, go to amt-lab.org. That is A-M-T dash L-A-B .org. Or, you can email us at amtlabcmu@gmail.com. You can also follow us on Twitter or Instagram at Tech in the Arts, or on Facebook and LinkedIn at Arts Management and Technology Lab. You can find the resources that we referenced today in the show notes. Thanks for listening. See you next time.

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