Of Flowers and Digital Folly

As it is finally Spring in this part of the world—despite the three inches of snow a week ago—the flowers that started to emerge had a pause but are now blooming. Among them are tulips, pretty flowers that are all-too-soon blown, leaving a bizarre-looking remnant as the pedals all fall away. (Daffodils look even more strange, as though the life has been sucked right out of them, leaving an empty suit, as it were.)

Which brings me to Tulpenwindhandel, a four-year period in Dutch history in the 17th century. Early in that century, tulip bulbs, which came from Turkey to western Europe in the second half of the 16th century, were prized such that their value was crazy high. Apparently a brewery in France was exchanged for a single bulb. (Keep that in mind the next time you are going through Schiphol and see the bags of bulbs that are there right next to the wooden shoes and nijntje knuffel. With a single bag you could buy Twitter—and quite possibly Tesla.)

Although the bulbs had been restricted to the professionals prior to 1633, the hoi polloi managed to get their hands on bulbs, and with the increase in demand (i.e., there are far more regular people than there are experts, even now, although given the number of people who are now bloviating on all manner of channels, digital and otherwise, you might think the experts outnumber the norms), there was a rise in prices for the bulbs. And not surprisingly, the rise led to a fall in 1637. And while the whole phenomenon of Tulip Mania became exaggerated over time (e.g., there weren’t all that many financers who jumped out of windows when the 1929 Wall Street Crash occurred: they also used other methods in the subsequent weeks), it did have an effect on the finances of plenty of people who thought they were ever-so clever getting on the proverbial financial bandwagon to wealth. (It also gave rise to one of the best book titles of all time: Memoirs of Extraordinary Popular Delusions and the Madness of Crowds, which was written by Charles MacKay in 1841.)

While this isn’t a perfect analogy (after all, there really is not such thing), this activity of several hundred years ago brings to mind what is an exceedingly popular purchase that some argue could be the salvation of many artists, musicians among them.

This is the NFT, or non-fungible token, which is a string of bits that doesn’t exist in the physical world, but on a blockchain. This could be a special album cover or an album. A clip of a performance or a singular photograph (perhaps of a musician with a nijntje knuffel).

Being on the blockchain, the record of the transaction exists and it cannot be messed with.

One’s NFT exists in one’s crypto wallet, which can be opened only by that individual, which is arguably the definition of “safe keeping.” So that special music track or whatever is not going to be messed with.

And then the shoe drops.

João Marinotti, associate professor of law at Indiana University, focuses on property law, tech policy and legal ownership.

Consider: You buy something, be it a tulip bulb or an NFT. And you own it, right?

Well, according to Marinotti, it may not be quite that simple for the latter (the bulb is yours, probably buried; don’t bury your money). He writes in an essay in The Conversation, “I believe that what many companies are calling ‘ownership’ in the metaverse is not the same as ownership in the physical world, and consumers are at risk of being swindled.”

Marinotti explains:

“NFTs purchased and the digital goods received are almost never one and the same. NFTs exist on the blockchain. The land, goods and characters in the metaverse, on the other hand, exist on private servers running proprietary code with secured, inaccessible databases.

“This means that all visual and functional aspects of digital assets – the very features that give them any value – are not on the blockchain at all. These features are completely controlled by the private metaverse platforms and are subject to their unilateral control.”

And: “platforms merely grant you access to the digital assets and only for the length of time they want.”

This means: “one day you might own a $200,000 digital painting for your apartment in the metaverse, and the next day you may find yourself banned from the metaverse platform, and your painting, which was originally stored in its proprietary databases, deleted. Strictly speaking, you would still own the NFT on the blockchain with its original identification code, but it is now functionally useless and financially worthless.”

You’ve got the bits, but. . . .

You know those terms of service pages that pop up before you use a new program or service that you never read? Marinotti writes that there are terms of service contracts for metaverse platforms that few read (he cites a study in which only 1.7% of people in a study of awareness of what’s in a terms of service contract spotted that it required giving up their first-born child), and which can be modified “at any time with little to no actual notice.” Who knows what you’d be giving up? Possibly whatever very, very special thing that you bought conceptually is.

Still, the phenomenon is growing in the arts community.

I’ve got an NFT bridge to sell.

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