In this episode we talk about open source. First we talk about open source software, then we talk about a concept called open innovation, and then we wind up talking about common based peer production. We touch a bit on how crypto might allow some amazing things to happen with these networks.
How I fell down the blockchain rabbit hole and went from normie to noob.
I was familiar with the Bitcoin headlines, the term blockchain, and more recently non-fungible tokens or NFTs. The $69 million dollar sale of Beeple’s ‘Everydays’ at a Christie’s auction registered a blip on most people’s radar, and introduced the acronym NFT to non-blockchain enthusiasts. It was hard not to be aware that people were paying big money for jpegs, something that most people consider free. But there was more to it than the sensationalized headlines as I was to discover.
Now there are many new concepts with emerging technology and it took me a while to get my head around them, and I am still learning more everyday. But understanding ideas like decentralization, blockchain, cryptocurrencies, and smart contracts are essential to keeping up with the tech. I will summarize as best I can, how I understand it.
At the core is the concept of a decentralized system that removes any one single stakeholder. This is the idealized concept that exists to varying degrees. A blockchain is a book of records, aka the ledger, that is controlled by thousands, maybe millions of computers that store the information and confirm it’s veracity. Crypto currencies are the tender of a specific blockchain and its value reflects the network’s adoption and usage. And then smart contracts are agreements written in code on a blockchain that can automatically be executed when certain conditions are met.
Therefore using blockchain technology, one can write something to the ledger, create unique digital stuff, sometimes referred to as tokens, and document ownership. As long as the lights stay on, and the computer nodes that make up a given network are plugged in, the record of ownership of any item, digital or not, can be verified and exists forever. In addition the smart contracts can be written to govern the tokens, and do things like pay royalties to original creators that automatically occur on a resale. Head spinning yet?
First came Bitcoin which is only a store of value, but then came Ethereum which enabled developers to create programs on a blockchain, and now there are dozens of competing blockchains with different approaches, with their own currency to incentivize the network, because someone has to pay for the electricity. (More on this in a later post)
I first became aware of these ideas a few years back when Nye talked my ear off about Crypto Kitties and the idea of verifying ownership of digital assets. I remember reading up on it and learning how each one was entirely unique, and that owners could breed them to create other unique non-fungible kitties. I thought it was a cool game mechanic but I left it at that.
Flash forward to earlier this year and I saw that Beeple, artist Mike Winkelmann, was selling his art as NFTs. (This was before the Christie’s auction) He was offering his artwork as NFTs, but was creating slick packaging to help bridge the gap between a physical collectible and digital artwork. If you didn’t fully grasp the concept of digital ownership, you still got a physical thing.
Around the same time I learned about Crypto Punks, one of the first collections of generative art profile pictures, or PFPs, also referred to as avatars. Crypto Punks were a creation of Larva Labs and the 10,000 pieces of algorithmically generated pixel art characters committed to the blockchain were given away for free in 2017. The intriguing concept, in addition to proof ownership being tracked on the Ethereum blockchain, was that the images were randomly assembled from a list of visual traits, and every single one was unique. Programmatically generated art is an important and reoccurring theme in digital art. These now blue chip NFTs resale for an average of $360,000 each. Punks have reached the pinnacle of popularity in the space and the team has recently signed on with the entertainment talent agency UTA.
In May of this year Nye and I came across another 10k generative project called the Bored Ape Yacht Club, or BAYC. They were these awesome illustrations of cartoon apes. Both of us said cool, let’s pick one up. They were offered for .08 Eth at minting, the term for documenting a new thing to the blockchain, but we never did. As of this writing the current value of the least expensive ape is around 35 Eth, or $130,000. Missed opportunity, oh well. But the interesting thing about this project to us was the movement towards added utility. The creators, Yuga Labs, were not just offering cool artwork on chain, but a membership to a club. How it would be manifested was to be determined, but as this market for NFTs has grown, the communities that are formed around ownership have been integral to a project’s success. Yes it is art, but it is art with benefits.
When Gary Vaynerchuck, entrepreneur and influencer, announced his project called VeeFriends, I figured maybe I would participate in the offering. To do so I created a non custodial wallet and bought some crypto, both a prerequisite for purchasing anything on a blockchain. When the details came out, price structure and utility, I had second thoughts. I loved his take on utility for the token, they doubled as a ticket to his soon to be created conference, but I could not commit to travel to unknown times and places of the events. In addition the price, with Ethereum near its all time high, seemed like a lot. “How much for a jpeg?” I imagined my wife saying. So I didn’t buy one.
At this point I had Etherum burning a hole in my non custodial wallet, and I began looking for interesting projects that I could afford. That’s when I came across the Visitors of Imma Degen, or VOID, and I began to see the potential of where projects might go.
At the time, there were very few 3d avatar projects, most were 2D cartoon characters of animals. A lot seemed like retreads of other projects. But VOID, in addition to a high resolution render, were offering the 3D models of your purchased Degen. As an artist who works daily with 3D software, I saw this as a real bonus and added utility. So I bought one for the studio. Then we bought 2 more.
After downloading the geometry of our Degens, I started messing around and dropped some animation on the characters in Maya on a simple rig, kit bashed some stuff together in the Unreal Engine, then posted my derivatives on twitter.
The community response was great, and when I engaged with VOID collectors I started to see other creators using their own VOIDs to make content. Making derivative art is a big part of these communities, be it memes or full blown pieces that are minted and resold. In fact, many projects give you full commercial rights to the token you buy, and artists who sell their derivatives are encouraged and supported by the community.
The next step was to actually make an NFT. Dip our toes in the blockchain waters so to speak. So both Nye and I experimented with different platforms. Nye minted our Founders’ token on NiftyKit which allows you to customize your contract on the polygon network, and I lazy minted an animated Box Rocket Bot “Cheers!” on OpenSea with Ethereum.
A large portion of the current NFT market is what I would call collectibles with benefits. In addition to being used as a digital identity on social networks and in the emerging metaverses, they can also be used as unique identifiers which can provide access and assets to holders on line and in real life. It can be even more than this of course, and it is evolving. Some of the best use cases are still out there, not just when you consider how games and metaverses will integrate ownable digital assets into their platforms, but how a shared intellectual property can be leveraged by the crowd to create new and interesting content and revenue models.
With that in mind we are building, because we believe there is opportunity for novel approaches, and at this point I am too far down the rabbit hole to climb back up. Stay tuned for more….
NFT launches of character collectible lines have seen an explosion of investment. This exciting trend has provided start up capital to a variety of new teams. This isn’t simply a matter of art collecting, but seeding investments that could morph into community developed cartoons, games, or… unimaginable content. We believe there are three clear trends.
As someone who has watched blockchains for a couple of years, I kept asking myself if Cryptokitties was some speculative fluke. When the Bored Ape Yacht Club skyrocketed, it sobered me to the potential reality of it. This may actually be the development of a new business model.
It is almost impossible to predict, and only time will tell of course, but we at Box Rocket believe that blockchains, and the smart contracts they enable, will combine with creative intellectual property, and yield new forms of communal content creation.
Despite the uncertain volatility, it is our hypothesis that three trends are converging to generate economic validity to the decentralization of entertainment.
The three trends are as follows:
- Automated Game Systems
- The Collective LOL
Cyptopunks and Cryptokitties are break out NFT content systems. Both have earned millions by what, seemingly, look to be jpegs with smart contract on Ethereum. But both follow a similar form of construct. They are proceedurally generated characters with a series of traits, where unique rarity is bred by randomness or by speculative breeders.
For us, the interest about cryptokitties was that these kitties could be bred. You could take one unique kitty with another unique crypto kitty and create – a wholly unique other kitty.
This is possible because each of the kitties contracts prove that they have unique hash ID’s, but also because because their traits are designed to be “interoperable.” That means that the framework (or the structure for the character) remains consistent across all the characters in the system, the variance and rarity is within the DNA itself.
This idea of interoperability stems deep in the video game industry, where digital assets are optimized and standardized to a cohesive look and feel. Keeping assets interoperable and modular is the art of keeping the game system performant at real time. But interoperable assets continue far beyond just the game itself. Interoperability creates more modding in the community. This allows the community to take the content, and make it their own. For some centralized games, like Minecraft and Roblox, interoperability is a core tenet.
The real promise of blockchains in entertainment is that multiple narrative assets (like characters, story components, game designs) can be interoperable within different projects. A key component in decentralized finance becomes a narrative opportunity in decentralized game design.
Automated Game Systems
This past spring, The New York Times covered the rise of the virtual horse racing platform, Zed Run, showing the mainstream world that speculation on NFTs aren’t just for pieces of art and collectibles. The virtual horse’s smart contracts can be purchased for cryptocurrency and then, for modest entry fees, the virtual horses can be raced in matches that are hosted several times a day. This platform is yielding some of its participants some significant returns. It’s true value, unlike real horse racing, is that many more people can own and race virtual horses than the time, cost and energy to race real ones.
Mike, in the video below, got into Zed Run for a small investment and now performs well in the market by watching the performance curves of the horses. Crazy.
These virtual horses are “breathing NFTs” (as they are called) and have a series of traits encoded into their smart contracts that make them competitive racers in different ways. Unlike most video gaming, where users control the player characters and dictate the skilled outcome, once the starting gun goes off in Zed Run, the horses race themselves.
Horseracing is called the “sport of kings,” partly for the prestige, but mainly because it is a natural device for those of executive privilege to spend their extraneous money – put it simply – they are perfect for gambling. Horses aren’t the only ones who people let ride.
Vegas sees millions of speculative dollars on football, baseball, basketball – anything with a competative outcome. There is a reason that NFTs are fairing well in basketball.
This kind of gambling – or speculative gaming – creates its own ecosystem. Owners manage components, argue over strategy, rules and organization of the competition. However, besides being actively involved, they don’t actively play.
If you look at DraftKings and Robinhood, or the proliferation of fantasy football leagues, you’ll begin to see how this model runs. People will set players or parameters, then the system will go on running algorithmically. Payouts will be will be handed out based off of the selections in the parameters that had been put onto the chain.
This means that it becomes a more persistent game than something that you engage with and actually play.
The LOL of the Collective
The final component is about the content itself. A new art form must and will represent the culture that it embodies. Imagine Rap without the Run DMC Addidas, or Punk without the Mohawks.
It takes a rebellious kind of mindset to consider that there are alternatives to the centralized banking industry. And being so heavily technical, it makes sense that many hard core gaming types have also been early speculators. There’s a huge populist movement in the political space, as well as a large unbundling trend to services and organization. And let’s not forget about a global virus that’s freaking us all out. It’s contributing to a collectiveness on the internet of “what’s the point.”
If you imagine the capitalist and centralized Disney on one side, you might be able to see the Rick and Morty Reddit as the other. Why the hell is DodgeCoin doing so well? How could Robinhood file for an ipo that could see it valued at up to $35bn?
The more we become “the collective share” of information, the more we value the meme culture of collective humor.
Despite not being on the blockchain, Blaseball is a community influenced autonomous sport league. The players names, traits, rules of the game… the culture itself… are constantly changed, ‘modded,’ and rearranged by the participants. The community influences the ideas, powered through fan art and endless discord chats about “what would be funny.” The joy of this mish mash creates something unrecognizable to most of us who haven’t followed the development.
Essentially, this content is very different to what we are used to in centralized content systems. The decentralized content will increasingly be misunderstood by all who don’t participate. Hip Hop, the world’s most lucrative form of music, was outright rejected as art. Only those who own Cryptopunks, truly understand why Visa bought one.
Chances are, decentralized content, despite earning insane value on the blockchain, will be misunderstood by the mainstream as well.
As content developers, Box Rocket is exploring each of these ideas. Only by creating and participating can we realize the opportunity to contribute ourselves.
We are building (YAY!) with some of these ideas in mind. We are always looking to collaborate with like minded artists.
Please reach out to us on twitter @boxrocketstudio – our DM’s are always open.