Session 3-3: This article is a thread originally posted on Twitter (linked here) summarizing study notes from the Fall 2022 semester of the University of Nicosia’s online course, META-511: NFTs and the Metaverse. Course materials can be found at the UNIC META-511 github account here. The author is not affiliated with University of Nicosia or the META-511 faculty.
1/ Summarizing my notes from session 3-3 of @unicmetaverse META-511 ✍️
This was a discussion between @punk4156 and @punk6529 that went far beyond PFPs, touching on social currency, remix culture, cc0, Nouns, and how NFTs enable value accrual that was previously impossible 🤯
2/ 4156 first encountered BTC in 2013, after which he became obsessed with the subject, as it engaged both the financial and creative sides of his mind.
After building up capital through investing, he decided to leave his job and build things on BTC and blockchain.
3/ NFTs were the 3rd crypto rabbit hole he fell into, after BTC and ETH. His theory was that while many thought the application layer of blockchain was financial, it may actually be cultural.
This is because NFTs enable value accrual based on on-chain actions.
4/ When you do something online, or create something digitally, NFTs are able to soak up cultural value by serving as a focal point of provenance.
They allow us to trace the origin of an idea or image (e.g. meme), with the attention generated turning into value for the NFT.
5/ 4156 claimed some CryptoPunks at launch in 2017, but at the time more from an interest in holding them, rather than building an identity around it.
When he bought Punk 4156 in February 2021, it was with the intention to build a brand, as a character that makes fun artworks.
6/ Soon after, questions arose in 4156's mind regarding IP rights of CryptoPunks. If culture accrues to the NFT, if you do not own it completely, why would one invest the time and money to build on top of it?
These questions went unanswered by the Larva Labs founders.
7/ The narrative around CryptoPunks shifted to historic/cultural value rather than identity, with the consensus view that the token was more valuable than the license.
4156 did not agree with this, and continued to have concerns around the copyright.
8/ Larva Labs' DMCA in response to CrypoPhunks (NFTs with images of CryptoPunks flipped to face left) confirmed the fears 4156 had over their stance of copyright.
As Punk 4156 was a high value asset, he decided to sell it and use the capital to build his own creation.
9/ The subsequent sale of CryptoPunks to Yuga Labs further confirmed 4156's concern, and sowed doubt in some CryptoPunk holders.
While the usage license became more permissible, seeing the IP sold reminded people it was owned by a company and could be sold again.
10/ 4156 views the CryptoPunk IP as valuable because the community spent time making them valuable by creating characters and proliferating visibility.
No matter how permissive the license may be, the fact that it is revocable leaves the possibility that it may be taken away.
11/ 4156 views cc0 to be a good match for crypto-native culture, which is heavily based on remix culture of the Internet.
The token represents provenance, and derivatives and remixes only reinforce the importance of the original work.
12/ Nouns are a reaction to the issues that emerged with CryptoPunks.
They have the following characteristics;
1 noun a day (fair distribution)
Sales proceeds go to community treasury
Team receives 1 in each 10 nouns for first 5 years
Art is cc0
No royalties
⌐◨-◨
13/ Chosen as the most extensible metaphor, nouns can be anything, and token distribution is designed to happen over a long period to increase fairness.
Nouns may eventually become like a “flag” for communities, shifting from representing individual identity to group identity.
14/ 4156 views royalties make for poor incentive alignment, and instead views NFTs as a form of social currency where Artists have tremendous power in they have full control over their money supply.
Creating new art increases the social currency in circulation.
15/ The market will assign value, and the more valuable a given social currency is viewed to be, the more value would be derived by the Artist in releasing more artworks.
This also syncs with how NFTs are able to accrue value directly; a first in history.
16/ Blockchains are enabling society to move from a world where governments have a monopoly on money, to a world where individuals and entrepreneurs are able to create their own currencies, which are able to translate attention into tangible value.
17/ As put by 4156, the killer apps of blockchains are NFTs and public goods.
The ability to be open and encourage people to build on existing ideas, creating new value while also accruing value to the originator, is a far more important concept than generally recognized today.
18/ It is difficult to place NFTs in existing regulatory categorizations, as it is likely a completely new concept.
Democratization of the ability to create currencies may be something truly revolutionary, with potential clashes with regulators and governments in the long term.
19/ Composability of NFTs as a technology, combined with remix culture, will allow people to continue to make fun and interesting things. cc0 enables monetization of that, without dampening the ability to proliferate.
It is important not to lose sight of this.
20/ That's it for session 3-3.
The concept of “social currencies” was new to me, but it helped put a framework to a vague picture I had in my mind of how NFTs enable direct value accrual, without using money as it exists now.
Fair regulation will be vital for decentralization.
21/ If you missed the session, the replay is available here 👇
https://twitter.com/unicmetaverse/status/1585156501567688704?s=61&t=o3etYW3kJqtX8wJSmWEbgw