Proponents of the use of NFTs for establishing ownership of creative works have a correct diagnosis but an incorrect prescription. They correctly observe that the status quo for creative production does not work well for creators. I.e.,, given the current economics, it is difficult for artists who are not already rich to sustain themselves.

However, the proposed solution — bringing production of creative works more comfortably into the commodity fold through representation as NFTs — misses the mark. This is for a few reasons.

1. Further commodifying creative production warps the incentives for creators. It turns them away from artistic expression and toward producing for the purposes of profit maximization. This is how we get algorithmically-directed soulless drivel by Netflix. It degrades all of our lives by robbing us of meaningful art.
2. Putting creative production in a market/commodity context of atomized producers intensifies competition between those producers. This has the tendency to reduce wages as they are incentivized to undercut each other.

Both 1 and 2 are dynamics that are already at play to some extent in creative industries. NFTs would not fundamentally change either of these dynamics and would probably worsen them in certain directions.

I would add to this a third dynamic specific to NFTs. Increased commodification of creative production makes it feasible to have speculative bubbles for kinds of creative products that weren’t possible before. This is a dynamic that has been observed in the fine art market. The occurrence of speculative bubbles is disruptive to people producing meaningful art and I don’t think it’s desirable to expand this aspect of the fine art market to creative production more generally.

Why NFTs have become popular despite this

I think NFTs have become popular of late due to the combination of three conditions:

1. The reality that the status quo does not work very well for creative producers, and so there is a willingness on their part to try something new.
2. A general desire for speculative commodities. See e.g., the skyrocketing of the sports trading card market during the pandemic, not to mention the stock market. To speculate on the causes of this phenomenon, I would guess it has something to do with the government printing tons of money, and maybe a perception amongst some that the only way to avoid miserable conditions is by winning some kind of lottery. (A perception which, if one restricts oneself to individual and not collective action, is probably correct at this point in history.)
3. A crypto industry full of people eager to boost and adopt essentially any crypto use case that sees some traction, in order to increase the value of their cryptocurrency holdings. And, the fact that there are few strong voices articulating alternatives to blind acceptance of whatever gets traction.

What to do instead

For those in the crypto industry, point 3 is the relevant one. There is precious little thought within the industry about the potential consequences of the systems being built, and as a result of the industry’s eagerness to adopt whatever gains traction, the societal effects are at this moment essentially being driven by a process which is totally blind to those effects.

The ideological background of the crypto industry is currently suffused with a libertarian common-sense that endorses our actions as system-builders being driven by the blind dictates of whatever finds traction in “the market”.

However, the conditions of the moment actually permit much more flexibility than this. Because there is sufficient capital floating around, our actions as system-builders are much less constrained than this view suggests — if we are able to open our eyes, choose our destiny and will ourselves toward it rather than consenting to being driven by the (for the moment, mostly imaginary) dictates of the market.

This will only happen if groups are able to form that have

1. Clear visions of systems that can provide real use-values.
2. Sufficient capital to bring them into being and sustain them.
3. The will, understanding, and organization needed to resist the pressures (which are currently primarily ideological and not material) that tend to push projects into the direction desired by the market.

A decommodified vision for creative production

This post would not be complete without at least an attempt to articulate an alternative solution to the problems that NFTs claim to solve.

As mentioned above, commodification has serious negative effects on creative production. The solution is not, as NFTs propose, an intensification of that commodification, but rather a decommodification. In a good world, all people and communities would be free to create art according to their own individual and collective creative visions.

In the NFT vision of the future (and to an extent in the art-market and streaming-platform present) people are unfreely coerced into producing art that is meaningful according to the alien standards of either a commodity market, or an idiotic machine-learning algorithm.

Can crypto-systems be used to support the vision of the good world, in which individuals are truly free? Let’s examine the possibility. What is ultimately needed for such a world is a system by which those who want to make art can receive the food, housing, art supplies, etc., necessary for them to produce art. The dynamics of capitalism make it unlikely for any monetary-type system to support such a structure in the long term, but in the short-term it may be possible due to the slack in the crypto industry.

So, we can articulate a short term and a long term vision.

1. Short term: a system in which artists are supported by money (in the form of payments from a blockchain) in an egalitarian, not market-mediated, manner. To make a concrete proposal, Ethereum (or Mina, though obviously at a smaller scale) could allocate a percentage of new issuance toward a program of grants for artists which are awarded at random to applicants (paired with an outreach program to spread broad awareness of the program). This would be like a version of governments’ arts programs, but made radically egalitarian through the use of randomness and unrestrained by national boundaries.
2. Long term: crypto networks are decentralized bureaucratic apparatuses. In a world of decommodified networks of production of the necessities of life (food, housing, entertainment, art supplies, etc.) crypto networks could be built to mediate the flow of resources through these systems in a fair way which avoids some of the problems created by centralized bureaucratic apparatuses (although of course it would introduce new problems specific to the form, like reliance on programmers who understand how these complicated systems work.) This long-term vision is a complicated political and technological project, and could only be possible through collaboration of system-builders with as-yet non-existent political movements and other industries.

This essay is an attempt to start to articulate an alternative vision for what crypto technologies can be. If you are interested in discussing or realizing these possibilities, DM me on Twitter.