Digital Art is the Reese’s Peanut Butter of Crypto

tl;dr: the emerging market for crypto-art and the business innovations that come with it.

Back when I was a lad, one of the commercials I remember was a guy and a girl running into each other on the street with a serendipitous outcome.

It was the accidental combination of chocolate and peanut butter that led to the glorious innovation that is Reese’s Peanut Butter cups.

Leaving aside the fact that this type of interaction would never happen in a world of coronavirus, the idea became the gold standard reference point for the proverbial “1+1=3”.

Chocolate and peanut butter really is bigger than the sum of its parts. I mean, that’s obvious, right? 

Peanut Butter or Chocolate?

We could probably have an endless debate about which is peanut butter and which is chocolate and vice versa, but for purposes of this post, it doesn’t matter.

What does matter, and the key point that you’re going to take away from this fascinating interview of Jake Brukhman on the Zima Red podcast ,is that digital art and blockchain are MUCH better with each other.

By way of introduction, Jake is as “OG” as they get in the crypto space. He, along with partner, Aleksandr Bulkin, were instrumental in helping me get an early understanding of the world of crypto-economics. If you think I’m on the cutting edge, you should know that I am many miles away from the edge where Jake and Alex are.

Jake’s been quoted and cited on this blog multiple times and also wrote Community Ownership As A Blockchain Adoption Model as a contributor to Blockchains in the Mainstream, back in late 2016.

While Jake is certainly a man of many talents and passions, it’s clear that the chocolate-peanut butter of art and crypto is high on the list.

What he does well in this podcast is make the case for a few things,

  • art gets value because it is rare and scarce. Blockchains prove scarcity better than anything else. And, as Cialdini tells us, people really, really value scarcity.
  • digital art, when secured as a non-fungible token* on a blockchain, provides artists with an entirely new way to monetize their creative talents through markets SuperRare, and OpenSea
  • that the digital art market is growing rapidly, with the total value of non-fungible tokens on Ethereum now exceed that of fungible tokens (though I can’t find the source he mentioned at that time)
  • new business models, such as First Edition give artists long-term upside in their works through smart-contract based profit-sharing that allows for a percentage of downstream resale value to go back to the original artist.

In short, there’s a new market emerging in front of our eyes, but that only tells a part of the story.

And it’s the less important part.

Stories of Crypto-Led Liberation

As much as I like to geek out on crypto (someone recently told me that I have an “obsession”), the marketer in me loves the stories of how people’s lives are improved when a new tech arrives on the scene.

It’s one thing for a crypto VC to talk about all of the things he is doing “on chain,” but the coup dê gráce are the stories about real people (no offense to VCs intended).

There’s the one about Osavage, an immigrant from Nigeria who drives an ambulance 6 days per week, and is now finding a new source of income from digital art.

Then, there’s Osinachi, who is now regarded as the foremost crypto artist in Africa

This is the single most important part of the podcast.

It is the fuel for the counter-narratives to “you can’t do anything with crypto” or “crypto is only for criminals.” (Now that I think about it, those two cancel each other out, but I digress).

The more that these types of stories become known and are spread, the more that “blockchains hit the mainstream.”

These are real people who are now making money in ways that didn’t just exist 3 years ago, but were literally impossible then.

Now, these models are real and Jake makes a strong case that digital art may be one of the best on-ramps around.

I had an idea (though not yet executed) to get my daughter’s 6th grade class of friends to make digital art (which they do anyway) and then sell them. They’ve got plenty of corona-related downtime and access to devices.

We might yet. We’ll see.

Opportunities in Emerging Crypto Art Assets

About a year ago, I wrote How Art and Blockchains Come Together.

That post was the culmination of a multi-month exploration of the world of Non-Fungible Tokens (NFTs) that began with How Buying a CryptoKitty Helped Me See Some of the Crypto Future, working with the team at Dapper Labs in a small part of the Flow blockchain project, and, of course,

Once I got my head around that (which took a while), I saw all kinds of new business opportunities open up.

This ranges from the use NFTs as collateral and the end of the appraisal business to the NBA Top Shot to my new secret wish…an NFT ETF/mutual fund on a place like tokensets.

That’s where where someone like Jake could buy up a portfolio of NFTs and anyone could buy fractional ownership. I’m not an art collector or aficionado, but I would invest behind someone who is with a strong reputation..

The point is that when you take something that is unique and make it provably so via a blockchain and digital token, there is an entire new world of possibilities that opens up.

We’re going to see a disruption/transformation of the art market, driven by crypto-native business models.

After you listen to the podcast, you’ll have a much better understanding of why.

Then, you can let me know which is chocolate and which is peanut butter.

*Fungible and Non-Fungible: In the crypto world, like in the non-crypto world, there are “fungible” and “non-fungible” assets. Fungible can be exchanged with no obvious differences. My $20 bill and yours are fungible. A “non-fungible” asset doesn’t have an obviously equal opposite.

The diamond on a finger, the Picasso painting, the baseball card in mint condition, the rare stamp. These are all assets, but each has unique properties which can affect and impact its value.

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