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Punk6529: Why Crypto Matters

Tue Jun 27 2023

The Metaverse

00:01 - 08:04

  • The metaverse is just the internet with better visualization and persistent digital objects.
  • Visualization on the internet has gotten better every year since the internet has been formed.
  • Persistent digital objects are more valuable as the internet becomes more visual.
  • Facebook changing their name to meta marked the peak of the metaverse narrative, which has turned over.
  • It's important to build an open permissionless metaverse instead of a closed one from a company.
  • Mixed reality will replace virtual reality in 7-10 years, and it will be as small as a pair of fixed sunglasses.
  • The visualization on the internet will continue to improve beyond what we have now.

Identity and Community in the Metaverse

07:45 - 16:43

  • People have different avatars for different social media platforms and will soon have three-dimensional avatars that reflect their identity.
  • Markers of identity and community are used in every aspect of life, including video games, art collections, and donations to religious institutions.
  • Digital objects will become more persistent and immersive as we move towards a metaverse.
  • Ownership of digital objects is an emergent property of the metaverse's rich and expressive digital environment.
  • It is important that the metaverse is built on web3 rails instead of being owned by large corporations like Facebook or Google to ensure socio-political behavior remains unaffected.

Twitter and Tech Companies

16:14 - 24:38

  • Twitter flirted with the idea of being a protocol, but by the time they could deal with it, it was a public company and hard to change.
  • Twitter has strong network effects as a short messaging protocol for the English language world.
  • The battle over who is allowed to use Twitter is a social political issue that should not be determined by the CEO of Twitter.
  • Email does not have this problem because there is no one single email provider.
  • It is impossible for any tech company to rank order 8 billion people and decide on any given day who has been sufficiently nice or naughty to have access to SMTP.
  • It is not the role of a tech company to solve every global dispute. It's random and oligarchical.
  • There's no theory why everyone should have to use a product from one company. No reason why.
  • Rent seeking happens when you have a monopoly/oligopoly. Companies rent seek in areas where they have a monopoly or gobbling.

Competition and Monopolies

24:09 - 32:49

  • Charging a percentage of revenue is not the correct price for commodity providers of email communication.
  • Seeking happens when there is a monopoly/oligopoly.
  • Competition law for physical products runs into network effects and zero marginal cost digital products.
  • Apple controls half the phones in the US and has decided to ban cryptocurrency on mobile devices.
  • Apple has banned in-app purchases from Amazon's Kindle app, forcing users to buy books through a web browser instead.
  • Web 2-ish protocols consolidate and become monopoly-like, with private technology companies effectively becoming speech regulators.
  • Mixed reality goggles will make phones look like privacy-preserving devices, with cameras permanently pointed at users' field of vision and AI algorithms personalizing environments around them.
  • There is no platform more prone to abuse than mixed reality goggles.

Digital Ownership and Interoperability

32:22 - 41:37

  • Knowing the emotional state of a group can be powerful for targeted messaging.
  • There is no real choice when it comes to centralized systems like Apple and Android.
  • Network effects should accrue to protocols, not services.
  • We don't seem to be able to make the leap into digital space where everything is behind an end-user license agreement.
  • Private ownership and public commons are just as important in digital space as they are in physical space.
  • NFTs allow for non-custodial ownership of digital assets.
  • Owning non-custodial wallets is being debated in Congress and the European Union.
  • Banning non-custodial wallets infringes on the ability to own property digitally.
  • Governments should favor public protocols instead of solidifying big tech companies as winners.
  • Interoperability can be achieved by letting users own their data and avatars, and allowing application providers to compete for the user.
  • NFTs have solved the problem of owning everything else in the digital world.
  • People haven't felt emotionally that their digital life is real because they haven't had a disaster yet.
  • Central bank digital currencies may eliminate crime, but no society has eliminated crime completely.

Eliminating Crime and Owning Digital Assets

41:11 - 49:22

  • Eliminating crime, money laundering and tax evasion are positive social objectives but it is impossible to eliminate crime.
  • A political leader can make sure none of his political opponents can buy a tomato by flagging them in an unreviewable AML system.
  • Once everything is on a permissioned digital, honeypot being in charge of who can spend money, it will be possible to freeze people's payments and digital life.
  • The end goal is to have zero ownership or counterparty risk of digital ownership which can be achieved through open web free rails and open crypto rails instead of corporate rails and inside permissioned walled gardens.
  • Blockchains offer a database without one person in charge which makes them preferable for any properly democratic state.
  • NFTs untie viewership from ownership of art.

NFTs and Digital Art

48:53 - 56:37

  • NFTs are a broad technology that can transport avatars, PFPs, digital wearables, in-game objects, brands, community identity and off-chain non-fungible objects.
  • Art NFTs are exceptional because they natively exist digitally and don't require bridges to the physical world.
  • NFTs separate ownership from viewership of art and allow anyone to see the authentic piece in as much detail as it was originally created.
  • The owner gains zero value from hiding their art from others.
  • Buying art is ultimately about expressing something about your identity.
  • The goose was purchased post-men for one or two eath and is an example of how NFTs can be used.

The Value of NFTs in the Art World

56:14 - 1:03:53

  • NFTs are arguably the socially optimal way to distribute digital art.
  • Artists generally prefer that their art is seen and NFTs make it available to everyone on Earth forever.
  • The provenance of an NFT is huge as anyone can view it and no one can dispute the ultimate owner and authenticity of said piece.
  • The history of the collection of an NFT is also available for all to see.
  • The art world complains about NFTs, but they are vastly more efficient than physical art in terms of energy consumption.
  • NFTs expand artists, collectors, and reduce narrow distribution channels of art galleries.
  • With the internet, we all get to decide what's important. This shatters the worldview that what the editor of the New York Times thinks is globally important.

Generative Art and NFTs

1:03:38 - 1:11:07

  • The internet has taken editors off a pedestal and allowed everyone to write whatever they want.
  • Art will be more abundant with the elimination of pre-internet distribution channels.
  • Humans will perceive art created by machines differently, but it is still valuable.
  • The Goose is a generative art piece that was minted for 0.1 ETH in early 2021.
  • Vincent Van Doel offered 500 ETH for The Goose, which was rejected as too low.
  • 3AC offered 1750 ETH for The Goose, which was accepted in August 2021.
  • The Goose is one of the most memetic generative art pieces and has cultural significance.

Collections of Generative Art

1:10:38 - 1:18:28

  • The speaker was sad that he couldn't buy a generative art piece called the goose, but it wasn't a real problem.
  • He spent the last year worrying about what would happen to the goose.
  • Generative art is art generated by an algorithm and long-form generative NFTs are different because the artist doesn't know what the pieces will be.
  • Collections of generative art are valued based on aesthetic beauty, rarity, and emergence.
  • Emergence is when the algorithm produces an effect that nobody expected.
  • The Ringers and Fidenzas collections have differentiated aesthetics and strong DNA running through them.
  • Rarity matters more when collections are very pretty, but less when pieces are very good.
  • The most famous Ringer was called and looked like a goose, which was unexpected.

The Cultural Significance of Generative Art

1:18:02 - 1:26:11

  • The collection was meant to show off the different ways colors and strings come out differently for each one.
  • The algorithm of pegs and strings through astronomical odds produced an elegant, attractive piece of art in its own right.
  • It became memetic and a part of our combined NFT/criptive culture.
  • 3AC owned it because it was valuable. If you're a valuable piece of work, interesting people.
  • The museum is primarily the speaker's money plus some close friends' money. It is never getting sold.
  • There are two things missing from the space - traders and collectors. The speaker thought that collectors were needed.

Community-Owned Digital Network Museums

1:25:45 - 1:33:48

  • Artists need a space for their NFTs to be valued as art, not just trading tokens.
  • NFTs may be bought by centralized players if they work, which goes against crypto-native values.
  • The museum is working on an open metaverse protocol for decentralized display of NFTs.
  • Crypto needs to build actual activities, institutions, and communities that are doing something else on a decentralized blockchain besides gambling with tokens.
  • NFTs are powerful because they are not promising investment returns like other tokens.
  • NFTs can help coalesce a culture that values crypto beyond speculation.

Investing in NFTs for Cultural Reasons

1:40:36 - 1:48:44

  • NFTs are more than financial speculation and can be used to showcase amazing art.
  • Crypto is a neutral space and public commons, making it a safer place to invest in expensive pieces of digital art.
  • Centralized services for buying digital art are not trustworthy and may shut down, whereas NFTs provide a higher level of confidence.
  • Investing in NFTs is important for cultural reasons and sends a message that they have value beyond just financial gain.
  • The fund for the museum will sell assets at the end of the tenure period, but many investors have put their names on them.
  • It is unlikely that someone who has not had intellectual interest or curiosity in crypto would suddenly jump into investing in NFTs without prior exposure.

Challenges and Opportunities for NFTs

1:48:15 - 1:56:00

  • It is unlikely that non-crypto native money will get into NFTs.
  • People need to buy ETH before they can buy their NFT on the blockchain.
  • Let's get people who have already bought Bitcoin and Ethereum to buy some NFTs.
  • We should worry about convincing people who weren't even convinced by Bitcoin later.
  • Community-owned digital network museums are important.
  • The design space for community-owned digital network museums is unexplored.
  • Owning an NFT is fun, but owning an ERC 20 token that represents a percentage of that NFT isn't cool at all.
  • A lot of ideas that could be good ideas are effectively illegal in the United States.

Regulation and Future of NFTs

1:55:32 - 2:03:05

  • Crypto assets in the United States need a more nuanced regulatory regime.
  • Punks are an important piece of art and should be left alone to solidify into history.
  • Adding utility to punks will not help them.
  • Cryptodickbutts are fun and accessible, but their cultural power is greater than their metrics.

The Potential of NFTs

2:02:36 - 2:09:25

  • Crypto dickbuds have more social and memetic capital than their financial metrics suggest.
  • NFTs are still in the early stages, and most theories about them will be wrong.
  • Many business models for NFTs are broken and prematurely optimized.
  • Non-financial messages need to be emphasized to get more people interested in NFTs.
  • Louis Vuitton using Ethereum protocol for NFTs is positive from an onboarding perspective.
  • The goal is to get everyone to use the same protocol for network effect.