What the hell is an NFT?

For nearly a millennia artists have served as human conduits to the spiritual dimension. Through various artistic mediums such as painting, music, dance, and folklore, they express what words cannot. They push the boundaries of our reality and challenge us to see the future in ways that are different from the past. Today, we are at an inflection point in our society. This is true in many aspects of our culture: economically, socially, artistically, and technologically. 

This past February, shortly after picking up the Prodigal Son painting from Gabe Weis, a series of fortuitous events took place in the short span of about two weeks. I was having lunch with my friend, Chris Messina, who I’d describe as technologically futuristic. (Side note: He created the hashtag). We were discussing what was coming up next for Subtle Spirits. I was telling him about the next piece of art we had commissioned and he asked if I had ever heard of NFTs, or Non-Fungible Tokens. I hadn’t. He summarized it in a way I could finally understand: a digital certificate of authenticity. We talked about the different uses for NFTs in the art, collectible, and music industries. I departed that day with a bunch of articles to read and more questions than answers. 

Perhaps it was a frequency illusion, or maybe my friend is really just from the future, but in the days after that meeting, NFTs were everywhere. The artist Beeple sold his piece titled “Everydays: The First 5,000 Days” in an exclusive NFT format for $69M. And just like that, a nascent market that was created by meme pheens and cyberpunks obsessed with crypto kitties circa 2018 had now seemingly tripled overnight. A few days after the Beeple piece sold, Gabe Weis gave me a call and asked the same question. “Have you ever heard of NFTs?”

Over the next two months, the NFT marketplaces exploded, coinciding partly with the boom in the cryptocurrency markets. At first glance, it appears to be fueled by a small population of die-hard early adopters and newly minted crypto millionaires, but upon closer examination, there was a massive, yet subtle shift happening underneath the surface of the water. It wasn’t just digital artists who were using the new blockchain technology to authenticate and protect the copyrights of their work in perpetuity. Athletes were minting limited edition small numbered runs of their collectible trading cards with NFTs. A flashpoint had been reached in the niche trading card market that had gone quietly unnoticed in the shadows for the last few decades. MLB and the NBA would later become involved, as well as musicians. Well-known artists like Kings of Leon were minting NFTs to tokenize and secure exclusive access to brand new music, concert experiences, and merchandise for their most dedicated fans. Death Row records even launched a new virtual museum featuring their most iconic artists’ works of music.

One of the most extraordinary and exciting things about blockchain technology is the use of smart contracts. These simply designed ‘rulesets’ are programmed and recorded into the blockchain, providing full transparency and traceability to various types of binding agreements. Think about how the music industry changed when DJ radio was introduced, followed by the popularization of albums you could listen to on your home record player, tapes, and then later CDs you could take with you anywhere you went. This coincided perfectly with tape-trading, giving rise to an entire generation of bands that preferred to buck the traditional corporate-funded record publishing system in favor of a free for all community-based model, driving around touring and playing as much as possible. 

Then came the internet and with it a (nearly) unrestricted way to exchange information. AOL chat rooms with users trading lists of songs stored on hard drives that you could request be ‘e-mailed’ to you for download. Soon after that came Napster, which paved the way for one of the most technologically advanced changes in music history, the creation of the iPod. This small device which promised the ability to hold 1,000 songs in your pocket did more to revolutionize the music industry than we have seen in a generation, yet it also created an even greater barrier to financial scalability for creators. Until now. 

With the use of smart contracts artists, musicians, photographers, and content creators can tokenize and monetize their work like never before. Now artists can get paid directly for the creation of their work, even if it is re-sold or the ownership of that digital asset is transferred. Contracts and agreements like licenses, royalties, or trademarks can all be enforced with absolute traceability, guaranteed on the blockchain. Blockchain technology has the power of upending more than just the music or other creative industries. The legal, insurance, mortgage, and of course banking (hello Crypto!) all stand to change, forever.

We are still in the very early stages of this technological revolution, and the utility of digital coins and tokens like NFTs remains to be fully defined. I am very intrigued by the usage of tokenization in communities like the art and spirits world. Wine producers have been recording serial numbers in analog ledgers for hundreds of years. Having an official certificate of authenticity attached to every bottle or every cask that is minted and traceable on the blockchain is game-changing. The same applies to fine art, the vast majority of marketed art is sold predominantly in ‘secondary’ markets immediately after creation. The overlapping similarities in the spirits markets are too obvious to ignore. I’m not sure where this is going, but I’m very curious and I want to be there.