Last week we made the announcement that we were dipping our lil' toes into the world of NFTs and web3 and it was met with extremely mixed response.
Whilst the response was mixed, the general consensous and the themes were forever recurring, despite which location they were coming from. For some reason, our comments were full of negative reviews and our direct messages were full of positive, negative, confused, intrigued and conversational tones with voice notes galore. You will have to make your mind up as to why that is.
Before announcing, we did roughly 150 hours of research about what on earth was going on. We looked into web3, NFTs, the metaverse, what a blockchain was, what a smart contract was, why everybody was so excited about the creator economy and artists futures and also, sustainability.
So we wanted to give you a full low down on NFTs, the new space, review the good, the bad and the ugly and provide all the references in all of the land so you know we are not pulling information out of our cute and perky cheeks.
NFT'S AND WEB3?
To help us with our research and understanding, we purchased one Fame Lady from the Fame Lady Squad, a 8888 generative art project that is stored on the Ethereum blockchain.
It is a project that is incredibly special to us because it is the first of its kind, has an incredible back story involving Russian men and finally, has given us access to arguably the most diverse project in the whole space, consisting of the most INCREDIBLE group of supportive women and marginalised groups who have helped us make sense of the NFT space from a non-white male point of view. We cannot thank the community at FLS enough for all their help on this.
NFTs stand non fungible token. This word is beginning to feel like Brexit or COVID-19 to be honest it's leaving such a bad taste in our mouth. But, ultimately, an NFT is means its unique and digitally you can prove you own it, which you've never been able to do before. It's one small step in the next stage of the internet, known as web3 .If you own something, it becomes an asset and therefore you can make money on that asset. So what is so good, bad and beautiful about this space?
Artist rewards & Creator Economy
Babe, did you know that when you see Tracey Emin's or Andy Warhol's pieces selling for millions of pounds, it's not actually the artist that receives it? Instead, its middle men in the form of art galleries or auction houses. They just sell it to them for a crazy low price and then never cash in again.
With smart contracts that exist within this space, artists are able to set a royalty figure for EVERY single time that piece of art sells. So, that's not just when the gallery sells it, its when the next buyer sells it and the next buyer and the next buyer. The money is also released to the artist as soon as the sale goes through. No invoicing, no waiting 60 days for payments and as a freelancer, that is VERY exciting.
Another thing a lot of people are extremely excited about is the way the creator economy is going. The reason digital creators haven't been in full control of their careers in the past is because the only way they can monetise their work is by representing brands in order to maintain their income. Content creators may have millions of followers, and plenty of influence, but they'd still have to bend to the companies that fund them. This means they're not fully in control of their own image, brand, or personality.
Right now we are living in a centralised web, which basically means a small number of key players own most of the attention (Instragram, TikTok, Facebook, Snapchat, Twitter etc etc).
In blockchain, decentralization refers to the transfer of control and decision-making from a centralized entity (individual, organization, or group thereof) to a distributed community network.
When a small group of companies own all the attention and dictate the standard of living and interaction, they create distance because they are unable to understand smaller local communities needs and instead create a one size fits all policy. Governments for example, takes measures that ignore local community needs and, therefore, lack credibility.
Decentralisation creates an efficient and reliable administration, intensifies and improves local development, better ensures the rights of the local population to have a voice in government, and better protects minorities.
Redistribution of wealth
The way that the internet works right now is simple. Middlemen social media applications like Facebook, Instagram and TikTok create an app, collect our data and attention and then monetise on that in a way that we see no benefits on. We literally are volunteering for these companies in the form of content without seeing any form of financial reward unless we are monetised with ad revenue.
Not only do these middlemen sell our data however they see fit, These middleMEN set terms of the relationship between us and can have racist, transphobic and xenophobic bias’ which gate-keep opportunities for these groups.
We do not benefit from this type of web monetisation but the core stack of Web 3.0 technologies will be a great enabler to redistribute power and wealth on the internet.
Babe, we knew of Lizzo YEARS before she hit the mainstream. If she had released an NFT, I would have been able to prove it.
Web3.0 is built on the back of something known as public wallets, which basically stops people from lying LOL. If you purchased a NFT from your favourite musician that their music single or you purchased an NFT that gave you royalties for their album, not only would you be able to invest in their success and be part of their growth, there are also tangible ways to prove you knew them before anybody else.
Right now, social media consists of people presenting you with a curated version of who they would like you believe they are. Soon, paper receipts will be a thing of the past and all purchases will come with an NFT in the form of a receipt. These NFTs are tied to a public wallet that everybody can view at any time, which means people can’t say one thing and do another. Did that business really send 10% of their profits to that LGBTQ+ charity?
If everyone’s transactions are publicly displayed, it means customers have even more of a voice than they do now which means businesses and brands have to listen more. You will start seeing a lot more ‘community voting’ and a redistribution of power. Board rooms owned by 10 men no longer have overriding say because of this transparency
They are supporting unstable countries / economies
NFTs are traded using crypto, a currency that the government doesn’t own. If countries dont trust a governments transparency, morals or leadership, there have been examples of countries boycotting their traditional payment systems and investing in crypto as a result. Some example of this include Zimbabwe and Turkey
Other ways NFTs are supporting developing countries is by something called the Play-2-Earn model.
This is the easiest space to understand the real life application of NFTs. In the past when you play games on your xbox or even your computer (RuneScape, habbo hotel im looking at you) and you buy upgrades or coins for that game? Well, hate to break it to you babe, but you do not own it.
With new web3 tech, a lot of games are one being built so that you own them and are interchangeable with other games. But also, games are integrating a Play-2-Earn model, where you can physically make a living from playing games by competing against your character and levelling them up and earning in game assets which can be transferred into real life currency. The best example of this is Axie Infinity.
CRYPTOCURRENCY IS UNSUSTAINABLE (right now)
Let's not get it twisted, some elements of the web3.0 and crypto space are absolutely disgusting for the environment. It takes approximately 1544 KwH for one single Bitcoin transaction to take place, equivalent to powering a house for two months.
Yeah, I know. It's disgusting.
Bitcoin was the first ever cryptocurrency to be produced, so it's likely its software is older and more energy heavy (think those huge computer monitors everyone had in the 80s).
Ethereum, the second most popular crypto currency & the one most wildly used in the NFT space, consumes 93% less energy per transaction than bitcoin at approximately 90 kWh , equivalent to having a fan on 7 hours a day for six weeks.
NFT transactions on the Ethereum network takes 48kwh of electricity, equivalent to power your house for around 1 - 2 days.
In recent months especially, art theft has become a huge problem in this space.
It is much easier to make forgeries in the blockchain space than in the traditional art world. It’s as simple as right-click, save. It’s also harder to fight forgers. How do you sue the anonymous holder of a crypto wallet? In which jurisdiction?
Other artists have discovered up to 90,000 NFTs based on their work, priced at $10 each. This number suggests users are using bots to relist.
Firstly, I didn't realise this but energy consumption is not equal to carbon emissions which are responsible for climate change so it totally depends on how companies and industries are getting their energy that determines its impact on the environment.
Firstly, we won't touch Bitcoin. That shit is just too much. However I did do some research and found the following:
- Almost all of the energy used worldwide must be produced relatively close to its end users but Bitcoin has no such limitation, enabling miners to utilise power sources that are inaccessible for most other applications. They are using power sources that otherwise would go to waste anyway.
- 40% of Bitcoins energy usage currently comes from renewable sources.
- When mining for fossil fuels, it produces flared natural gas that cannot be used. However, Bitcoin miners have found ways to monetize this otherwise-wasted resource and reports suggest that there’s enough flared natural gas in the U.S. and Canada alone to run the entire Bitcoin network.
- According to a recent report, when 100m people engage in the NFT space, it will account to 0.1% percent of overall energy consumption.
Secondly, we will dabble with Ethereum (Eth).
ETH2.0 is set to be 90-99% more energy efficient than the current solution as a Ethereum are switching from a proof-of-work model (very energy intensive) to a proof-of-stake model, something that can be done from your laptop. This means a single transaction will take under 1kwh of electricity, equivalent to approximately 100 VISA transactions. It was due to come out in 2021 but hasn't made an appearance yet.
If the energy used is from renewable sources, this is far easier to manage and is very easy to make the whole space carbon neutral. On top of that, if crypto replaces traditional currency, or at least reduces demand, this can easily be offset from the saving on transportation costs
Alternatively though, there are already solutions that are 90% more effective. We will be using a blockchain called Polygon for our first project. something that is 99.95% more energy efficient than Ethereum. The process takes just 1kWh of electricity, your laptop takes 72kWh just to put it into perspective. If the smaller players can do this at the BEGINNING of mainstream adoption, then imagine what the possibilities are.
People are also not talking about how much energy will be saved from other industries when the combination of web3 technologies makes web3 go mainstream.
Also, This space will never go mainstream if sustainability isn't an absolute massive priority. Both sustainability and the web3 space are innovating FAR faster than a lot of other industries & even if the only priority was to create another capitalist machine, we are at a stage where sustainability is core to a business model
Art theft is not a new concept, it's not unique to this space & actually, it's not the spaces fault. It's the immorality of thieves, which it always has been. However, it is a HUGE issue and secondary platforms need to be making this an absolute priority alongside sustainability to ensure that this space is worthwhile fo the the people it was meant to benefit. Otherwise, there is no point in it.
In the real world, its very difficult to find out who has copied your artwork. Although the NFT space has amplified the problem for artists right now, companies are already implementing AI technology that is able to detect art theft. Those who have already implemented it are seeing the problem decrease by 57%. Already. Before mainstream adoption. The best thing this space does is connect digital with physical, so if the norm was that artists attached NFTs to their physical pieces which was attached to AI technology, it could also help in reducing physical art theft aswell.
We’re in an incredible mushrooming of opportunity for digital artists. It’s 1,000% better than a year ago, two years ago, when there was no marketplace for other types of art such as video art.
So yes, the NFT and Web3 space is not present right now without it's problems. But, as somebody who owns a business, these things remind me of teething problems, most of which are already in the process of being solved. When you start something new, its not the best it can be and it takes time and energy to fine tune and ensure its serving the people who want it in a better way.
And I get it, why would a vintage fashion brand step one foot near an industry that is pumping out energy like no tomorrow?
Well, it's because there are already solutions. And once those solutions are mainstream, there is nothing but endless possibility for the NFT space and for artists.
I think a lot of people dismiss new projects and new opportunities like this out of fear & when something comes along that backs up their reasons for not liking it (i.e. sustainability and art theft) they completely dismiss it in order to keep themselves safe. Totally understandable, we're all human.
However, the questions I think you need to be asking yourselves are:
- How can this technology change my life?
- What are the the things about this technology / space that i'm not happy with?
- Are there solutions to rectify that?
- If not, are they in development?
Being dismissive will mean you'll miss the bus, and I genuinely want us all to win
Until next time,