Blockchain, NFTs & Fine Art Theory

Sovereignty over creation

We were somewhere between the Red Sea and Arabian Gulf aboard the USS Boxer in 2013 on my first deployment in the Marine Corps. In the midst of flight operations and the Wardroom, I read the November 11th issue of TIME. I then re-read the cover story of?Ross Ulbricht?and The Secret Web. I was thunderstruck to learn about three things: Bitcoin, the Dark Web, and Silk Road.

I became a firm believer (HODLer), even before I owned any crypto. I was completely infatuated with the fundamental principles of why this thing worked. The story of how the Silk Road investigation unraveled is absolutely insane. The founder of Silk Road is currently serving two life sentences. Two Secret Service agents who stole bitcoin from the FBI and US Marshals are in jail (Link).?This all seemed like a complete shit-show and I remember thinking, “I want some, too.” The fact that the Secret Service agents would risk their careers to acquire it, validated the burgeoning fact that Bitcoin had more than a passing value. (anonymity?on the Blockchain. ??)

Heists and hacks are still happening today. Just ask?Axie Infinity?after they lost?$615 million?worth of crypto in March 2022. The latest scandal is,?#ETHgate.

?At some point while I was reading the cover story, I hopped on the?NIPR?computer to check the price of BTC, it was about $1,100 at the time. This was before China put their first “ban” on Bitcoin. My initial thought was that I totally missed out. My first experience of FOMO.

?Bitcoin Mining Business Plan

I started writing out a rudimentary business plan to mine Bitcoin. If I had only moved on this idea. My biggest uphill battle would be convincing my wife that this was the direction I wanted to go in. (Ha!) The “plan” in hindsight was more scribbles on paper than executables, but I knew I was hooked, forever. I had an indescribable prescience that the blockchain would be a game changing protocol for the entire world. It will bank the unbanked. As you can imagine, connectivity was an issue while on a Navy ship, hundreds of miles from civilization, so I was forced to bide my time and start learning more about the why behind the why.

By late 2014, I finally acquired my first BTC (on the dip) at about $340 per coin. Feeling good about the purchase, but also a little trepidation since it lost 75% of its value in such a short period of time. Thanks so much, China!

Since my time at sea, I’ve spent hundreds of hours diving into every type of crypto, use-cases, ICO's, researching founders and their code, reading white papers and how they were going to change the world. Now after many years of studying, reading and listening about Blockchain. Not to mention the many hours explaining (and often re-explaining) Bitcoin, Ethereum and now?NFTs?(Non Fungible Tokens) to my wife, friends and family, I realize that I actually know nothing. I believe once you understand this space, a?fractal?splits off to an entirely new dimension.??

I’ve put this article together to organize my thoughts and create an anthology of my experience with all things blockchain related. Hopefully, in some way, it’ll be helpful to you as you endeavor to get clarity about these topics. This article is just scratching the surface of the Metaverse, which will prove to be very lucrative.?JP Morgan?thinks so too. They believe it will be a?$1 trillion dollar?a year market. While anyone can create a bank in the Metaverse, they may have their work cut out for them. How does a traditional bank work in a deflationary, decentralized, trustless system that is limitless?

NFTs are actively giving creatives and artists unprecedented sovereignty over their work by changing how value interoperates across the digital landscape of media and humanity at large. To be clear, 95% of the current NFTs are?vaporware. Many people are leveraging their?social credit?for quick cash, because the barrier to entry is low and ANYONE can invest. These unique assets span across almost every vertical due to their ability to create verifiable digital scarcity. (scarcity like 21 million total Bitcoins) It’s my opinion that Fine Art, video games, blockchain domains, claims on physical assets, and even decentralized identities (just to name a few) will be revolutionized. There are almost unlimited use-cases that will help businesses, individuals and creatives.

Recently, I came across this Reddit?thread. I was looking for an interpretation of the relationship between NFTs and Physical Art. I’ve amalgamated for my purposes, but couldn't say it much better. This is just one way to interpret how Fine Art interoperates with the Blockchain. This is Web 3.0 version 1.

?Traditional Physical Art

To create a baseline of understanding for the conversation the first 8 points below are a representation of the value derived from a physical piece of art:

1. The artwork itself is where the value is stored.
2. Evidence of originality of creation of that art is based on scientific dating of the creation of that specific artwork (who created it first) or other complex methods to prove originality.
3. When the creator sells that artwork, they get the money.
4. When artwork is sold through a gallery, they take about 40% to 50%.
5. When that artwork is later sold commercially, the artist gets a resale royalty, sometimes.
6. Resale royalties are unpredictable.
7. Destruction of the original artwork would result in destruction of the value.

How that translates to NFTs.

1. The artwork is created and recorded to the blockchain. This is called minting an NFT. (7 options for minting?Here) In order to properly represent this artwork on the register and reflect it accurately, the physical artwork is often captured digitally, through photography or scanning and uploaded during the minting process. Because visual evidence of the artwork exists on the register, the first record of it on the register proves its originality, therefore subsequent copies of it can be detected as copies.
2. The value of the artwork exists in two places, the physical artwork and the NFT.?
3. The Artist owns the NFT and the physical work (see above).
4. When the creator first sells the NFT after minting, they receive 100% of the sale price depending on the marketplace.
5. Minting the NFT includes a mostly hidden technical process of adding the NFT to the blockchain. This process costs money to complete. It is usually a very small fee, but has been increasing as the price of the cryptocurrency increases.
6. During the minting process, the royalty percentage rate can be set. When the NFT is later sold, the creator will receive a percentage of the sale based on whatever the royalty rate was set at. This is all automatic and happens as part of the sale transfer process and is written into the smart contract.
7. Every transaction that occurs to the NFT is publicly available on the blockchain. An artist can review who sold their NFT to whom, when they sold it and how much they paid.
8. When NFTs are created, they can be destroyed (Aptly called "burning"). A record of destruction is written onto the blockchain. By the other token (pardon the pun), the physical object can also be destroyed. Many people believe that this means that the entire value of the destroyed physical object is transferred to the NFT, making the NFT value equal to if not higher than the physical object and the original NFT combined. The determination of who authorizes and verifies the destruction of the physical object comes down to the related contract of the NFT.

Banksy?Art Burn

I believe “People came to the US for property and freedom.” Blockchain and NFTs represent this for 8 billion people. This all started with an idea and pseudonym.?Satoshi?created “a perfect digital gold on an open monetary network” that “the financial gerontocracy has declared war on.” So, I guess I'm part of the “revolutionary youth movement”.

I appreciate comments, questions, feedback and discord!

Semper Fi,

Blake Fisher

P.S. Digital artwork is a whole different game. You can create?10,000 NFT’s in 30 minutes?with an App or use an AI neural net that can create realistic images and art from a description in natural language like?DALL·E 2?. Again, unlimited use-cases are at creatives fingertips!

Source Materials:???

https://www.reddit.com/r/NFT?

https://www.reddit.com/r/NFT/comments/kw8tu3/what_are_nfts_how_to_mint_an_nft_why_are_nfts/

https://www.reddit.com/r/NFT/comments/m04ec8/nfts_for_physical_art/

Mintable Guides

NFT blog

What are NFTs

NFT info from opensea