The Revolution Will Not Be Tokenised (essay)

Feature article, Spike Art Magazine 70.
Written Sep/Oct'21, published Jan'22

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PDF with images:
https://assets.pubpub.org/zxw3ygbu/21643728406108.pdf

Scarcity and legend have long been central to the commodification of
the art object; then as now, value, uniqueness, and authenticity
matter in both material and immaterial realms. The conversation around
possession and collective participation, thrust again into the
forefront thanks to the latest digital gold rush, is treacherous,
littered with unpassable moats and gatekeeping grifters. There's a
tidal wave of tokenisation taking place before our very eyes, in art
and beyond -- but do crypto-believers' calls, promising emancipation
for creatives whose work has long been underpaid, hold water? Who
gains and who loses when we "tokenise everything"? Digital utopias, in
the ruins of our planet. We can surely imagine it so. But is this new
world actually fairer than the old? 

The art world is -- for better or worse -- a scarcity economy; objects
and experiences are desired, valued and traded based on exclusivity of
access, ownership, and association. A mix of soft (socio-cultural) and
hard (financial) capital go into reifying the art object as something
tradeable. It's central to this equation that each artwork in the market
is considered unique in its own right, or at least provably limited. To
that end, the art market has always required means of record keeping --
ledgers, in whatever form they might take -- to assess provenance and
authenticity, verify ownership, and document the conditions of a work's
storage, carriage, display, and transaction. Enter the non-fungible
token, a way to digitally instantiate uniqueness thanks to the magic of
blockchains like Ethereum. NFTs made all this administrative headache --
verification of scarcity, provenance, and possession -- relatively
straightforward in the virtual domain. 

What does tokenising art actually do? Does the owner of an NFT own the
artwork that it represents? Or is it closer to a certificate of
authenticity? That depends. An NFT, as a cryptographic unit for
record-keeping, could be seen as analogous to a signature or autograph.
Perhaps they're simply wrappers for a quantum of spectacle. The history
of this grey zone is functionally the history of conceptual art. Yves
Klein's Zone de Sensibilité Picturale Immatérielle (1959) involved the
sale of documents detailing ownership rights to empty space. The buyer
could participate in an optional ritual by burning the receipt, after
which Klein would throw a corresponding amount of gold into the river
Seine. More recently, a metaphysical arbitrageur purchased a (physical)
work by Banksy and destroyed it as it was being (digitally) tokenised.
In a similar vein, Damien Hirst's NFT project The Currency (2021)
encoded, within its logic, a commercial Faustian bargain. Buyers had to
choose whether to retain a physical artwork -- one of a series of paper
notes resembling dollar bills -- or a non-fungible token representing
it. Opt for the token, and the tangible piece is destroyed. What does
that token represent, absent an associated object? What seems to remain
is the intervention, an aura of aestheticisation, a cryptographic
vibe.

Beyond the questionable telos of tokenisation, one of many epistemic
elephants in the room concerns the semantics currently being employed
around NFTs. Terms like "collector", "edition", "authenticity", and
"exclusivity" are all carry-overs from the offline artworld of yore, but
the precise nature of the relationship between creator, collector, and
asset are very different in the digital realm. If a token is indeed "the
autograph, not the artwork", then the current linguistic contortions do
not earnestly reflect this change of circumstance from object ownership
to authorised certification. A similar linguistic trip-up is evident in
the common lack of distinction between "NFTs" and "cryptoart" more
broadly. Cryptoart comes down to the medium. As a category, it includes
any practice that leverages the unique affordances of the blockchain:
leaderlessness, transparency, public verifiability, native computation
and novel mechanisms for social and economic coordination. NFT art, on
the other hand, is primarily concerned at present with the oft-inelegant
commodification of art into tokenised packaging -- a stealthy
tech-broification of art, folding everything into e-commerce.
(Presumably, that explains the plethora of eBay or Amazon lookalike NFT
bucket shops. Pile them high, sell them ... expensive?) 

Exceptions, of course, exist; there's an admirably vibrant landscape of
boutique digital exhibition spaces such as left gallery in Berlin,
TRANSFER gallery in Los Angeles, and the online platform folia. And
indeed, there are some fine justifications for tokenising the world.
Crypto offers new ways to mitigate the structural inequality and
gatekeeping of the "trad" artworld, and solutions to these problems are
sorely needed. Today's scarcity-based art economy is deeply enmeshed
with exclusion and elitism. But can the crypto-utopians' lofty promises
of liberation live up to the hype? Are the foundations of these
supposedly creator-oriented economies truly stable and equitable? Or are
we (once again) building castles -- or pyramid schemes -- in the sand? 

The NFT market is the locus of some of the most fast-paced and frothy
speculation that the world has ever seen. Hyped NFT drops sell out in
the blink of an eye. In this regard, the venues for NFT trading are
analogously structured to any kind of market. Despite the ostensible
horizontality of peer-to-peer networks, these crypto-economies replicate
the existing power dynamics of the incumbent financial system. As a
conversation between buyers and sellers, crypto markets net out close to
zero-sum (allowing some margin for the platform to take a cut), meaning
there are necessarily winners and losers. Those with existing knowledge
will inevitably have an advantage; insider trading is widespread in
token markets, though it is a little more sophisticated and
surreptitious here. Asymmetries run wild and unencumbered, as insiders
take advantage of their intimate knowledge -- whether of market trends
or blockchain economics -- in order to covertly extract advantages over
those less familiar. 

Another bone of contention: the eye-watering costs involved in minting
and transferring tokens. In Web2, we've come to expect that services and
digital products are free at the point of use -- or have gratis tiers
with limited functionality -- as the consumer is the product, their
data corpus harvested as a valuable resource. With Web3's move away from
this data-brokering business model, the costs have come home to roost.
Want to send a token from one Ethereum address to another? That'll cost
you. Trying to mint a token or deploy a smart contract? Depending on the
platform, you could be looking as much as five hundred to a thousand
euros. Now that data-driven extractivism is out, the marketplace for
blockspace -- for a transaction to be included in the network's
permanent record -- is the precious resource, and it is marketised to
the hilt. And because of the way these exchanges are structured, the
users -- and the use cases -- that can pay more on a popular network
will always outbid those that cannot. In Bitcoin and Ethereum, this
translates into profit-seeking and financialised activities outcompeting
altruistic or mutualistic ones. Arthur Röing Baer, the cofounder of
Berlin-based "utopian conspiracy"-cum-coworking space Trust, calls it
"the gentrification of cyberspace". As the stakes (and transaction fees)
snowball, there is an inevitable narrowing of possibilities. Meet the
new Plutarch: same as the old one, dressed up in a rainbow-tinged veneer
of decentralisation. 

Other asymmetries, too, give rise to a panoply of externalities. One of
the principal flashpoints is the already bewildering domain of taxation.
The mismatch between crypto networks and nation-state regulation takes
multiple forms. On one side, the geo-fluid crypto rich decamp to
Panama, Puerto Rico, or Portugal to "sidestep" tax obligations on their
holdings and gains. On the other, nation-states engage in a game of
regulatory musical chairs: some, like China, adopt adversarial stances,
whilst others throw open their doors to attract inward investment. Tax
avoidance and money laundering are no newer to art than to finance, but
the blockchain creates an even more secretive channel for such
insalubrious activities. Though Web3-enabled economies are ostensibly
more transparent, there are also new mechanisms and opportunities for
obfuscation. Buyers and sellers' wallet addresses are visible in a token
transaction, but their identities aren't necessarily transparent.
Further, in a global marketplace (such as that of art), value flows to
wherever regulation is the most relaxed. With the advent of NFTs, the
technology might be changing, but the same shady market logics still
apply. When will we see NFT freeports?  

There is a danger of history repeating itself -- or at least rhyming --
when we could be building a new world another way altogether. And as is
clear by now, NFTs, rather than breaking away from the inequities of the
existing art market, reproduce them. Perhaps this should come as no
surprise: for all their talk of decentralisation, how do most NFT
marketplaces operate? Trusty, rusty old Web2 infrastructure: cloud
servers, clients, databases, and Amazon Web Services. Hardly
revolutionary, unless we understand "revolution" in the sense of a
revolving door that brings one to the same place as one started. And
nascent as the medium may be, the communities forming around
blockchain-based art are already ridden with gatekeeping. For instance,
look no further than the trend of early-access whitelists for insiders,
collectors, and VIPs, granting exclusive access to anticipated token
projects before they go on sale to the wider public. Token-gated
communities abound, functioning as insider buyers' clubs, creating
self-fulfilling market-based imaginaries through a combination of
influencer clout, public hype, and concentration of existing economic
resources. Imagine what will happen when -- not if, but when -- law
enforcement subpoenas Discord for their message logs. 

The same pyramid of value, privileging a combination of insider
knowledge and existing capital, is even more central to proof-of-stake,
the leading alternative touted to the current energy-guzzling
proof-of-work block creation lottery. What's not to like about "clean
NFTs"? Ethereum's long-awaited 2.0 upgrade promises a new consensus
mechanism, a switch away from Bitcoin-style mining to reach agreement
over the latest state of the network. The much-vaunted proof-of-stake --
replacing its predecessor's unhinged energy consumption with a process
that validates transactions by rendering tokens illiquid -- has been
slated for implementation since 2015, with constant delays due to the
ceaseless challenges of upgrading a network in mid-flight. Even when
it's deployed (latest figures quote sometime in 2022), proof-of-stake
remains a replication of interest-bearing modern finance -- and thus
also reproduces the inequities that came before. It threatens to create
insider clubs of network stakeholders that are even more entrenched than
in proof-of-work; the rich tend to get richer, because those with more
stake to start with almost always end up with even more. As the network
ages, new coins are issued to those who already have sufficient balances
to participate in staking -- removing their existing coins from the
liquidity pool -- thus, the collective pie grows, but unequally. As with
so much in this rapidly-emerging space, not everyone has the tools --
capability, infrastructure, knowhow or time-horizon -- to participate.
Perhaps that's why there is already quite a graveyard of proof-of-stake
projects, launched between 2012 and 2018: most experienced oversupply,
hyperinflation, or debasement of value due to economic or technical
attacks. Blockchains might never die, but their economic relevance can
fade to almost nothing, like so many black dwarf stars.

Still, could we see through the scepticism to envision a scenario where
the proof-of-workers of the world unite? It's possible, especially given
that the technical affordances of the blockchain can be harnessed to
make works of art that would simply not have been possible before. Novel
coordination games, facilitated by cryptography, challenge normally
atomised parties to find ways to organise, uniting in pursuit of a
higher goal. One such example is Sarah Friend's Off (2021), where a
secret essay is embedded across a set of 255 NFT assets. Only through
collaboration with one another can the token-holders unlock the
clandestine content -- two thirds of owners must agree to decrypt the
text; otherwise, they're all left holding Malevich-esque black squares.
Similarly, crypto might enable us to imagine newly cooperative modes of
art collection. Kudzu (2021), a quirky project by Billy Rennekamp, Dan
Denorch, Everett Williams and Sam Hart, spreads an "NFT virus" through
one's social graph, "infecting" new owners through their interactions
with friends. There is no transfer function, taking the emphasis away
from resale. Perhaps we can see, in projects like Kudzu, a new space
opening up for anti-speculative -- or even anti-capitalist -- design of
technology-mediated artworks.

Ultimately, we still live in a society, and it is governed by a
scarcity-based economy. Little seems to have changed there. Can we
really call this a paradigm shift? The rallying cries in favour of
crypto -- including, but not limited to, cryptoart -- have been howled
for years, but the people making them have changed a lot since Bitcoin's
Genesis Block was minted back in 2009. What was at first the terrain of
anarchists, transhumanists and cypherpunks is now overtaken by the
techno-glitterati. Time has revealed Ethereum's foundations, from the
technical to the economic to the ecological, to be less secure than the
perpetual optimism of blockwashing marketeers would have us believe. And
the friction between crypto-networks and the outside shows no sign of
going away. Legislators will struggle; there will be high-profile
actions, heists and honeypots. Keys will be lost, ownership contested,
collective experiments will end in acrimony. The spectacle will keep
delivering: it has no alternative. But alongside the emperor's new
(digital) clothes, which presently look like just another step towards
the homogenisation of art and consolidation of wealth, we ought not to
lose sight of these tools' potential: enabling new creator economies,
facilitating novel forms of collaboration, and even opening up modes of
collecting and sharing that run contrary to the present distribution of
entrenched power. It is there -- not in the speculative fervour of
gentrified cyberspace land grabs -- that we may ultimately find a truly
revolutionary cause worth fighting for.

Thanks to Martina Cavalot, Nick Houde, and William Kherbek for
helpful comments. Thanks also to Adina Glickstein, Isabella Zamboni and
team at Spike Art Magazine for the invitation and for many layers of
editorial polish.

Wassim Z. Alsindi is the founder and host of the 0x Salon, conducting
experiments in post-disciplinary collective knowledge practices.
Wassim specialises in conceptual design and philosophy of peer-to-peer
systems, on which he writes, speaks and consults. He has an editorial
column at the MIT Computational Law Report and co-founded MIT's
Cryptoeconomic Systems journal and conference series. Wassim has
curated arts festivals, led a sculptural engineering laboratory and
published experimental music, poetry, improvisatory theatre and
speculative scripture. Originally with research specialisations in the
natural sciences, Wassim holds a PhD in ultrafast supramolecular
photophysics from the University of Nottingham.