The thing I struggle to understand about NFTs (non-fungible tokens) is their use-value. I know that an artist (or a celebrity like Martha Stewart or Naomi Osaka) can create a digital asset like a song or gif, and then sell it, often for staggering amounts of money, on the open market-place. But I don’t really get what happens after. Does the owner of the NFT display it on one of those horrible digital screens in their house, the sort otherwise used to display photographs of their families? Do they host a Zoom cocktail party for their best frenemies, and use the NFT as their own personal, fully copyrighted backdrop? Do they log on to Grand Theft Auto, don their NFT and then brag about it to other characters who may or may not be 11-year-olds?
To get a better grasp of why people are buying NFTs — according to nonfungible.com, there have been 5,436,295 sales of NFTs over the past year — I turned to Jeff Gluck, an intellectual property litigator and the founder of CXIP, a company that describes itself as the “standardized marketplace-agnostic NFT minting technology.” CXIP (pronounced “chip”) does not produce or sell NFTs, and is currently in beta testing. Instead, it provides an entry point where creators can mint an NFT — i.e., enter it into a system of commerce, generally the Ethereum blockchain — that will feature a “smart contract,” authenticated provenance and copyright protection. NFTs minted with CXIP also feature “PA1D,” a system whereby the creator receives royalties for their product, no matter where it is sold or traded in the future. Minting an NFT on CXIP is free — users just have to pay the “gas fee” associated with minting, which averages somewhere between $70 and $80 in the current marketplace.
“The predominant draw for NFTs right now is the access and the community,” explained Gluck when I asked him why — and who — was buying the products. “So, when you buy an NFT, you’re becoming part of the family, and get access to invitations and events.”
Right now, that seems to be enough to drive the market. But what Gluck, and other people working within the NFT space, ultimately envision is a game-changing, revolutionary technology that will completely transform the way we live. “A tsunami of change is coming our way,” says Gluck. “This is as important as the birth of the Internet.”
MORE FOR YOU
“This” being a future in which humans spent most, if not all, of their time in virtual worlds that do not yet exist (but was outlined in chilling clarity by Mark Zuckerberg in the annual “Facebook Connect” conference last week.) In these worlds, people will buy accessories, outfits, homes and tickets to events in virtual reality; they will host meetings, conduct trade and receive educations in the digital realm. NFTs will serve the purpose of denoting taste and social class in this new metaverse in the same way a framed print by Banksy or a sweater from Gucci does in real life. “There’s going to be a point in time where millions of NFTs are being minted every minute for one thing or another,” Gluck says.
Gluck, who built his career winning landmark cases for artists and creators including Revok vs H&M and Dash Snow vs. McDonald’s, saw an opportunity to “be the most popular shovel company during this Gold Rush.” But he wanted to democratize the shovel so that any old prospector could afford it — not just the mega-celebrities with lawyers on staff leading them to the process. “Anyone who mints their NFT with CXIP will have an unbroken royalty stream that no other technology is offering at the moment,” he says.
Gluck notes that many of the NFTs currently being minted and sold have faulty metadata, or insecure smart contracts. “There’s a narrative developing that an NFT has a gradable condition,” he says. “Just like if a Michael Jordan rookie card has a crease on it, it’s not a perfect 10. Similarly, if an NFT wasn’t minted the right way, and if it doesn’t have permanent metadata storage, then it’s not a perfect 10 NFT.” Ideally, as the market grows, CXIP will be known as the place to mint that pristine collectible item. It will mint the Rolexes of the Internet.
Thus far, NFTs minted by CXIP have performed well on the market. Jen Stark’s NFTs, “Drip Cascade,” which was minted by CXIP, sold for $35,280 at an auction at Philips on October 8 (on an estimate of $100). And the Haas Brother NFT, “Fruit Picker,” also minted by CXIP, sold for $9,258.28 in a benefit for AMFar in July.
The real test, however, will be if CXIP technology is widely adopted by people who are making the NFTs that the average person can afford. (According to data collected by the Canadian artist Kimberly Parker, 53.6% of NFTs sold on OpenSea, the largest NFT marketplace, in March 2021 were for less than $200.) “The historical gatekeeping of the traditional art world has made it impossible for the majority of artists to make a living,” says Gluck. “The NFT space not only gives a home to these artists, but it also provides community and social engagement around art.”
In a dreamworld, CXIP would provide profits to millions of creators, finally paying people for the inordinate amount of time we spend on the Internet, creating content for free while billionaires get richer off our dopamine addictions. But the metaverse, after all, is being invented by the company formerly known as Facebook, which is run by Mark Zuckerberg, whose motto “move fast and break things” has led to worldwide civic unrest. And has any effort to democratize the art world ever really worked? Forgive me if in my dream world, I’m spending less time online contributing content that will make Zuckerberg richer, and instead, just sitting in my backyard on a chair, staring at a tree for free.