Why Should I Care?
Instagram, Reddit, (insert social media platform here), are introducing or will be introducing digital collectibles in the near future. But haven’t digital collectibles been around forever? Why are people making such a big deal?
The importance of the answer to this question is hard to overstate. The Internet was a world-changing technology that forever altered the way we operate as a species. That world-changing technology is getting its largest upgrade ever.
The upgrade hits two major technological areas: blockchain and Artificial Intelligence (AI). This article will focus on blockchain, a way to trace and authenticate digital files not AI, a way to automate, accelerate, or generate code, writing, and images. If you would like to learn more about AI, I will be doing a series on it shortly, so please check back in the next few weeks.
The answer to “why you should care about blockchain” relates to how the Internet has been operating for ~15 years and how it will operate in the future. The Internet as we know it (web2) is a system of interconnected users, marketplaces, and corporations. These individuals or groups sign up for accounts in order to access services provided by organizations. The future of the Internet will have blockchain integration (web3) that enables the tracking, authentication, and sale of digital items. “Digital collectibles” is a confusing term because they can be web2 (corporate owned) or web3 (user owned) digital collectibles. I’ll explain the difference and why you should care below.
Web2
Gaming and Digital Avatars
Consider gaming. Web2 digital collectibles can be in-game items on League of Legends, Fortnite, World of Warcraft, Runescape, etc. You can either earn or pay for these collectibles to boost the look or skillset of your digital avatar. Maybe you stand out from other people because your avatar is gold and has a party hat. Maybe that party hat is recognized by the community of players as being something awesome. Maybe you got that party hat for doing something awesome. The value of the collectible doesn’t matter, as long as it is something that you as a user care about.
What happens if the game company goes bankrupt? What if the servers are fried and they lose the backup data? How will people know that you owned the party hat? All of that hard work (or money) is down the drain. This issue is one of centralization and lack of interoperability between different platforms.
Social Media Algorithms
Now consider web2 social media. Have you heard the phrase “if you’re not paying for the product, you are the product”? That is a web2 mentality. For example, to use Instagram, you must agree to their terms of service and create an account using your email address. Instagram then tracks and stores this data and uses an algorithm to promote both user generated content and advertisements. You may own the copyright over the photos/videos you are posting, but all of the value of your Instagram account (followers, engagement, network) is owned and stored by Instagram.
This centralized storage and ownership means that Instagram can delete your account without you being able to do anything about it. All of your photos, followers, and friends could be gone, just like that. Relying on a single social media for your income as a creator can be dangerous, which is why it is best practice to operate on many platforms (Twitter, Meta, Insta, Reddit, TikTok, Vero, YouTube, Pinterest, LinkedIn, etc.)
It might feel as though you are not paying anything for these services, aside from a slight annoyance from the occasional ad (every three posts), but there is a deeper mechanism at play. This mechanism is called the attention economy. We only have a finite (limited) amount of attention that we can use throughout the day.
Web2 social media has developed trying to maximize the watch time (attention) of users on their apps. The algorithm promotes user content that maintains watch time of users that come across their content. When something goes “viral”, it is likely because the first group of test users to see the post watched almost all of the video and shared it with other people (“viral” = spreading = more watch time).
Mental Health
Unfortunately, this has led to an algorithm that favours short form content with rapid transitions, pressuring creators into modifying their style to make the algorithm happy so that they can gain followers, attention, and catch the eye of brands to partner with so they can make money from their art/content. Perhaps even worse, the algorithm has developed into an insatiable beast that is only satisfied if it is fed every day, often multiple times a day. Content creators/artists are favoured by the algorithm if they post every day, consistently, with stories, posts, comments, likes, etc.
This constant feeding of the algorithm has many, many negative consequences, including creative burnout. The vast majority of users (something like 98%) are consumers of content, not creators, so they are not directly affected by this burnout. However, consumers are still affected by the consequences of this burnout, which is lower quality content that is pushed regularly to sate the algorithm, instead of higher quality content shared in-line with the artist’s vision and mental health.
Another negative consequence is that the shorter form, rapid content intended to catch your attention actually decreases your attention span. The average human attention span is now ~ 8 seconds or less, which is worse than the attention span of a goldfish. How are we supposed to solve global issues like peace, poverty, and climate change if we cannot pay attention long enough to come up with solutions?
Additionally, the rapid changing from different topic to different topic leads to a feeling of FOMO (fear of missing out) that there is going to be something else out there even greater than the last thing we saw. This FOMO is why users doomscroll for much longer than they intend. Doomscrolling leads to a decline in mental health as we begin to train our minds that there is always something better out there. We become so used to the constant dopamine hits of social media that real life begins to dull.
The only solution to this dulling of life is to pick up our phones and get another dopamine hit. In other words, many users of smart phones are addicted to them. I could write a book on this, but in the meantime, I recommend reading Stolen Focus by Johann Hari.
Authenticity
Another negative consequence is that with such a large volume of content being created, it becomes harder and harder to tell if what we are seeing online is authentic or not. For example, if someone screenshots my photo on Instagram they can share it to their profile and I will never know unless I happen to come across it. There is no tie between the content that is created and the source that created it. This lack of authenticity leads to user confusion across a wide range of topics, including science, politics, economies, world issues, etc. I wrote a paper on this topic in 2017.
Accordingly, when someone creates something and posts it online, there is no way to tell who actually created it. This lack of source information leads to user confusion and a system that is very easy to fake and take advantage of others. It also leads to the creation of bot across all regions of the internet. I don’t know about you, but I find bots very annoying.
Web2 Conclusion
Back to digital collectibles. The current digital collectibles in web2 are owned and stored by the corporation that issued them. The current state of content creation leads to creator burnout, lower quality content, decreased attention span of users, and increased mental health issues. Can you start to see why people are interested in an alternate system?
Web3
Web3 is a blockchain layer that is added to the internet. More details can be found in this intro to blockchain and the metaverse or in this web3 FAQ. Tl;dr, blockchain enables the tracking of digital files across the Internet. Additionally, each digital file can be associated with a digital certificate of authenticity, so that you can tell who created and owns the digital file. In other words, web3 enables scarcity (a limited amount) of digital files online in a way that has never been possible before.
When I create a digital collectible, there are two components to the digital collectible: (1) the digital file itself (photo, poem, scan of a drawing, book, digital art, etc.) and (2) the digital certificate of authenticity. The certificate of authenticity means that even if someone screenshots my photo on Instagram, they have NOT stolen the digital collectible. It is only a web3 digital collectible if it includes the digital certificate of authenticity.
When you buy a digital collectible, you are not actually getting the digital file itself. Instead, you are purchasing the digital certificate of authenticity that links to the digital file. Accordingly, you can trade or sell the digital collectible and the person you are transacting with will know that the digital collectible is authentic. Additionally, you can trace the ownership of that digital collectible all the way back to the original creator of the digital certificate of authenticity to make sure you are collecting a Wanderloots original.
How does this certificate of authenticity fix all of the problems I listed above?
Right now, content creators and artists can make money online by mass producing their content/art for a massive audience of people. Only once they have significant enough reach/following do brands contact them for partnerships, allowing the creators to make real money and make a living off of their creations. The use of digital certificates of authenticity allows a creator to introduce scarcity to their digital creations.
Introducing scarcity is an extremely undervalued power to add to the Internet, a power that enables the transition from “content creator” to “artist”. Art has historically been associated with scarcity. By the way, when I say scarcity, I don’t mean “limit your works to a very small amount of digital collectibles”, I mean “limit your works from infinite to finite”. An artist can sell 50 editions of the same painting and that is still a scarce resource that can be purchased, even more so if the artist sells a unique 1/1 work that there will only ever be a single copy of. In both cases, the limited number of works makes those works inherently more valuable than a work that is infinitely accessible to everyone.
Digital collectibles offer a way to be recognized for sharing your work with the world at large through social media, but also creating a representative token of that work that is indicative of ownership of that digital collectible. This token is able to be purchased by a fan of the artist to either collect the work because they like it, invest in the artist because they expect the work to increase in value, or some combination of the two.
For example, my digital collectibles are animated astrophotos that are timed to the ideal breathing rate for mindfulness and relaxation. This art is meant to be viewable by anyone for free, to provide a resource that helps people with their mental health and anxiety. However, I put a lot of work into the creation of these art pieces. I travelled to Africa, I spent money on camera equipment, I spent years researching psychology, neuroscience, and content creation. If someone finds these things valuable, they are able to purchase my digital collectibles (though I only have one available). More on this story here.
The ability to create a scarce aspect of the digital file gives a lot of power back to the creator to monetize their work in a way that is healthier for them. The healthier way to operate is often more slowly than the algorithm likes. This slow creation method may frustrate the algorithm, causing the creator’s reach to drop, but that’s okay. The point is not to reach everyone in the world, the point is to reach a smaller subset of people that truly values your work. You can work at fostering a tight knit community of people that value you as an artist. This concept is often referred to as 1000 True Fans, a topic I discuss in my web3 FAQ.
As the creator economy develops, more and more creators will gate keep their content. Gate keeping content enables better monetization opportunities so that the creator can focus on making high quality work that appeals to their smaller group of fans. One way that they will gate keep an aspect of their content is through digital collectibles. You will only be able to access some part of the creator’s work if you own a digital collectible. In this situation, you can think of a digital collectible as a key to the creator’s world.
Marketplaces
Instagram is going to become a digital collectible marketplace. You will be able to buy and sell digital collectibles through the Instagram app. Until 2024, Instagram will not charge for the minting (creating of digital collectibles), but that will change in the future. In the meantime, if you purchase a digital collectible on an Apple device, you will get charged a 30% commission for that purchase. That commission is unnecessarily high, in my opinion. 30% takes far too much from the creators for a technology that is intended to be decentralized.
Instead of purchasing through Instagram (when that feature is available) with the high in-app purchase fee from Apple, you can purchase digital collectibles through other marketplaces (Foundation, Opensea, SuperRare, Rarible) or from the creator directly (independent transactions or Manifold Gallery). I will write another article explaining how to purchase digital collectibles independently. Independent transactions offer more freedom, but do have higher risks than going through Apple (for now).
Self-Sovereignty
The future of digital collectibles is uncertain. It is possible that the centralized social media companies will succeed in forcing people to purchase digital collectibles through their marketplaces at high commissions, taking money away from the creators that deserve it.
A way to avoid this centralization is to create a self-sovereign digital identity that is independent from any individual centralized organization. Decentralized social media companies are being developed that will allow a user to follow a smart contract instead of having to follow the creator across seven different platforms. I talk more about this concept and why it is so important to the development of the creator economy here.
Effectively, creators will be able to create a single source of provenance (digital signature history) that can be viewed across different marketplaces, without having to limit the display of the digital collectible to a single marketplace. This self-sovereignty opens up a world of potential for creators to build their personal brand in a way that does not rely so heavily on centralized social media platforms.
Conclusion
Owning a digital collectible is a way to invest in an artist to show your support for the work that they do. By doing so, you are contributing to a shared value system that improves the mental health of everyone involved. There is a vast range of pricing for these digital collectibles, so you should consider whether you are buying one to collect or invest in the artist. Either way, this is a volatile industry, so be careful and do your own research.
Over time, more people will participate in the web3 creator economy, valuing the quality of the work over the quantity of output. This value will lead to an overall better Internet that reduces the pressure of creators to create constantly and improves burnout, dopamine addictions, and attention spans. It will also lead to a more direct connection between creators and consumers that allows people from all over the world to connect with each other over shared values.
Oh, by the way, a web3 digital collectible is an NFT, powered by a cryptocurrency, using a blockchain. The marketing has been changed by social media companies to make the collection aspect more understandable to the average person, but the technology is the same. The more you understand the technology, the faster we will begin to build a true creator centric economy.
Next steps
If you are interested in learning more about blockchain, I wrote an intro article here.
If you are interested in learning more about web3, I wrote an FAQ here.
If you are interested in learning more about my journey in the creator economy and web3, I have a short series here.
If you would like to view my NFT collection, it is available on Foundation for viewing in 4K.
