The AI (artificial intelligence) narrative for investors continues to remain strong. Yet, you probably haven’t heard about AN (artificial nature). The idea is still young and it is one of a handful that has impressed me for its creativity in this cycle.
It also goes by the name Digital Matter Theory.
Finding patterns in nature is what we call physical matter theory, more commonly, physics, chemistry, biology, et cetera. Finding patterns in the blocks of some blockchain (e.g., in Bitcoin) is digital matter theory.
Just as the patterns in nature are something we discover and can not control, so too the patterns in a blockchain can only be discovered and not controlled. The blockchain patterns operate like nature does. Yet we, humans, originally created the blockchain, making these patterns a kind of artificial nature.
To illustrate I am going to simplify Bitcoin architecture rather dramatically. For a full understanding, read this for a description of BTC blocks and this for a description of how ordinals work.
You may imagine a Bitcoin block as containing two components: the transaction data and the meta-data. Most of the new innovations on Bitcoin can be thought of as inscribing new information into the metadata of blocks. These inscriptions could be words, or images, or even code. The inscription of images are what allows for “NFTs” on Bitcoin.
The breakthrough at stake, Artificial Nature, turns on the realization that the transaction data, and not only the metadata, could be useful on its own. A simple, and appropriately juvenile, pattern that the developers present in their whitepaper is the occurrence of ‘69’ in a block’s hash data (witness the image below).
The developers of Digital Matter Theory have released a beta-phase protocol that allows you to inscribe that pattern, such as the repetition of "69" as a ".element" (pronounced "dot element"). In this way, these patterns are converted into artificial "elements" that can furnish the basis of new digital matter artifacts.
Suppose that you wanted to launch a new token on Bitcoin (like a BRC-20 token) that uses the "69" .element as its basis. The rules for your 69 token issuance could be that the number of tokens is equal to the number of occurrences of the ".69 element" in the history of Bitcoin’s blockchain. As the blockchain expands, every 10 minutes, so would the supply of your 69 token.
Notice how that issuance of the 69 token isn’t arbitrary. Its supply expands according to well-defined rules that inexorably execute since they are immutably inscribed on the blockchain. That’s quite different from existing token launches whereby the number of coins and the schedule of their issuance is programmed from the beginning according to whatever arbitrary idea the developer had in mind.
To mark that difference, call this new kind of token a Non-Arbitrary Token (NAT). They constitute but one kind of digital (artificial) nature.
To explain, let’s take that idea a step further.
I wager that the fundamental artistic breakthrough for “NFTs” is that they are Non-Arbitrary Art. For example, in developing the art for the Kaze metaverse that we shall launch shortly, the team first made some conceptual drafts using MidJourney. Those images, while in need of some touching up, were impressive. But they also weren’t the right sort of art that could be used as an NFT project.
Instead, we took those initial images and gave them to our team’s artist, and she rendered them as vector art images. Each character has a base layer and there are a finite number of combinations of hats, hoods, eye patches and the like that can be added to them (examples below).
The resulting collection, from the base characters + all gear, is a Non-Arbitrary set that results from the combination of all possible such pairings. The MidJourney images, by contrast, were wildly arbitrary (see below).
The term “NFT” is an engineering idea no more at home with artistic endeavors than “TPC-IP protocols” or “React JS frameworks”. It fails to identify what is new artistically about “NFTs.”
The qualitative difference at stake is best expressed if we call these collections Non-Arbitrary Art. This articulates the intuitive sense that many had, even top artists such as Murakami, that they constitute a paradigmatically different sort of artistic activity than what you can find in “Trad Art,” whereby the artist arbitrarily (creatively) produces an image.
Now combine the above ideas into a metaverse.
What would happen if you made a metaverse wherein the parcels of land were indexed to ‘.elements’ of the BTC blockchain (see below)? Each time a ‘69’ element is registered, for example, a parcel of land is added while each time a ‘420’ occurs plots of land divide in half. Wouldn't the resulting metaverse land grow and divide much as real city does?
What if you further constructed the rules so that each parcel had a building on it, but only when (if) the appropriate ‘.element’ was found in the blockchain? And why stop there? Why not continue with all the features of that metaverse, such as the weather, actions of animals, the likelihood that special weapons drop for characters, etc.?
In that case, wouldn’t you have a Non-Arbitrary Metaverse? Its growth and development would be as inexorable as the blockchain itself, thus making it a fundamentally different sort of digital entity than the "metaverses" which presently exist.
Just as traditional tokens are arbitrarily given generation and issuance properties, or traditional art is given arbitrarily (creative) properties, so too traditional metaverses such as Minecraft or CyberPunk 2077, are given arbitrarily designated properties. Non-Arbitrary Metaverses would not function as they do.
The immutability of the blockchain, when given this new technology through ‘.element’ inscriptions, implies inexorability. And that inexorability makes anything index to it function just as nature does. It becomes Artificial Nature.
I am uncertain about the investment implications of this technology. I do know that it started on Bitcoin first and ecosystem effects are such that a market landscape tends to go "from zero to one” (to quote Peter Thiel). This is to say that they go from a state in which no such firms, such as Amazon, exist, to only one firm in existence, Amazon, and there is no need for competitors.
Since we have a team developing a metaverse, that makes the coin materially more interesting for its possible development. Maybe also Bitcoin’s price into the halving looks good too. Right now, I only wanted to bring to your attention the first “new thing” in the crypto space to impress me this cycle.
👉Subscribe to our Free Investment Bulletin.
Finally, if you learned something, hit 👍 and SHARE. 🔁
Disclaimers and Disclosures
This post is provided for educational and entertainment purposes only and should not be relied upon for business, investment, taxation, or legal advice. You should consult your own advisors for those matters. References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by 1.2 Capital Management. (An offering to invest in a 1.2 Capital Management fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation--all of which should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by 1.2 Capital Management, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results.
The views expressed here are those of the individual author and are not the views of 1.2 Capital Management, 1.2 Labs, or their affiliates. Certain information contained herein has been obtained from third-party sources. While taken from sources believed to be reliable, 1.2 Labs and affiliates have not independently verified such information and make no representations about the enduring accuracy of the information or its appropriateness for a given situation.
Finally, as the author of this report, you should recognize that I do actively invest. Many of my trades are quick and I do write about many investment items, whether stocks, digital assets, collectibles, and the like which I do not own. For the purposes of disclosing any conflicts of interest, assume that if it is covered, I own the investment item. Or if my coverage is negative that I am short the investment item.
