Almost overnight, it seems like non-fungible tokens (or NFTs) have shot into the mainstream. Every day there's a new headline about a celebrity, social media influencer, or youtube star selling a piece of digital art on the blockchain for an insane amount of money.
Everybody's talking about NFTs, and it seems like everyone's an expert on the topic... A few days ago I sat with my old friend Rare Scrilla, aka DJ J-Scrilla to explain and discuss the new boom in NFTs.
Who's Rare Scrilla?
Rare Scrilla (or DJ J-Scrilla) is actually the reason that I became interested in cryptocurrencies in the first place. While Scrilla was the first in my circle to get involved with bitcoin and trading altcoins, he's also been at the forefront in this new world of mixing art with the blockchain.
Scrilla has been creating tokenized collectibles since 2016. He first got involved with crypto-art by creating Rare Pepe trading cards. Many credit the early Rare Pepe platform as the catalyst for this NFT mania we're seeing today.
Q: Scrilla, thanks for agreeing to talk NFTs! You've been creating and discussing art on the blockchain for years. Tell us a little about your background?
A: Glad to be here. So, as you've mentioned, I was involved in the Rare Pepe community, I've created several cards on that platform. Over the last few years, I’ve created tokenized trading cards, artworks, proof of purchases, pre-orders for bandcamp, mixtapes, memes, tweets, emails, music and audio-reactive digital pieces.
I’ve experimented with Bitcoin, CounterParty, Ethereum, Ghost, Waves, Avax, and more. I’m bullish on NFTs for their proof of provenance, chain of custody, artists’ perpetual royalties, programmable pieces, for video games, the metaverse, rewards, as patronage and a variety of other uses.
I’m bullish, but I also am a realist and stress that NFTs, even though they’ve existed for a few years, have now just hit the "innovation trigger" point and the “peak of inflated expectations” won’t be nice to everyone. We will have to endure a “trough of disillusionment” before the next phase, “slope of enlightenment” will bring a better idea of what NFTs will really accomplish. Right now, we are in the highly speculative and experimental stage.
What are NFTS?
Q: For someone that hasn't taken a trip down the crypto rabbit hole, what are NFTs?
A: NFT again stands for non-fungible tokens. They commonly refer to any unique tokenized good or service that uses a blockchain. NFTs can be anything really. You can tokenize art, music, wine, real estate, a moment, and anything else you can imagine.
Basically, it’s a digital time stamp on a blockchain that can provide proof of provenance and chain of custody. In addition, you can program an NFT using a smart contract, use an NFT to give rewards or unlockable content, or use it as an entry into a private discord channel.
NFTs, technically mean a 1-of-1 issuance, but the term has become more meta over the past couple of years and generally refers to tokenized goods, collectibles, art, etc. Many folks are touting it up to be a trillion dollar industry that could change a lot of how we interact with people and products.
Q: When you were sending me Rare Pepe trading cards five years ago, I thought it was interesting, but would have never imagined it to hit the mainstream like this. Everyone from Gary Vaynerchuk to rapper Meek Mill is out there talking about NFTs and crypto-art. Why are NFTs Important? Why are they getting so much attention now?
A: They’re seen as a way to claim ownership in the digital world. Imagine your seed (son or daughter) playing Roblox for three years and you spent $3,333 on skins, emojis and whatever else kids buy on there.
They leave the game because they are over it or Roblox shuts down. You lose your items. The idea is that NFTs will revolutionize ownership of digital assets and centralized marketplaces will slowly evolve into decentralized ones that allow folks to monetize and collect.
Q: When we went to the first 'rare digital art' auction in NYC, a Rare Pepe sold for $39,000. That was back in January 2018. We’re hearing more stories now about people paying outrageous prices for non-fungible tokens. What is the most anyone’s ever paid for an NFT?
A: There was just a Beeple NFT that sold for around nearly $70 million. There’s been a number of high priced, headline-grabbing sales of NFTs commanding millions lately. Most notably the cryptopunks, which are considered the first collection of ERC-721 tokens that hit the Ethereum blockchain. That Homer Pepe you mention from the show in NYC just fetched around $300,000 last week.
Q: What are some other current NFT use cases?
A: NFTs have mostly been crypto-art pieces where the artist sells a digital token associated with an image, gif, movie or 3D upload to IPFS or some other long-term storage solution. Another use case are NFTs as Proof-of-share tokens.
I gave out tokens to everyone who supported my "Can't Smoke a Bitcoin" video in 2018. To be eligible to receive one, all you had to do was tweet out support for my video. After about 80 participants, I contacted them and was able to send out about 60 tokens and burn the remaining I had minted (I made 1,000 tokens.)
Now, those folks have a time-stamped proof on the most decentralized and robust blockchain that should seemingly run for at least another 120 years minimum, Bitcoin.
I can send these holders rewards or more NFTs as time goes on and easily see who supported me early. In the future, these tokens could even be part of a game or trading card series, or a number of other possible instances. All a developer has to do is program it.
This isn’t saying that anyone will (add additional rewards later) or a promise of future - anything just to be clear. But, these intrinsically worthless, air-dropped, proof-of-purchase coins are unique and seemingly encompass a moment in crypto-art history as the first proof-of-share token.
Q: In simple terms, a non-fungible token refers to a hash of a file that is stored on the web. Let’s say that I purchase an expensive piece of art. I’ve spent thousands of dollars on this. How can I be sure that the artist is storing that data long-term? How is the buyer protected and ensured the file will never be taken offline?
A: Right, so the hash is stored in a block on a blockchain. When purchasing NFTs, you want to make sure you are aware of the blockchain it uses. Is it one that you think is long-lasting?
There are thousands of them. Bitcoin is the most trustworthy, with Ethereum second and then some others falling a truly distant third. But, it’s so early in the space, there’s room for a highly competitive NFT-specific chain. FLOW, POLYGON, PHANTASM and more are working on this it seems. As far as storage, you have to use the tools you have and that’s IPFS, torrents, small images, data stored directly on the blockchains, and more. Ultimately, you have to trust the artists’ reputation that this won’t be re-produced. But even if it is, you have proof because it (should) uses a transparent immutable blockchain.
Q: You create digital artwork, but you’re also a hip hop music producer. How do you see NFTs affecting the music industry?
A: I’d like to see smart contracts as split sheets that immediately pay the creators and all involved as the music is consumed. Some have tried with music tokens, but ultimately they’ve all failed thus far, as the token’s only use case becomes silly swag and privileges on the site and most artists immediately cash out to a more liquid currency.
The audio-reactive 1/1 pieces I’ve done for my music have been pretty well received and they give my music and art another level of expression that I can also monetize, as many collectors collect these for their art galleries in virtual worlds and the likes. The music business is scared. Artists taking their releases into a peer-to-peer and artist-to-fan world cuts out a lot of the fat... that the industry throws seasoning on and barbecues in their pearly castles.
Q: In 2015, the Wu-Tang Clan pressed only one CD copy of their album “Once Upon a Time in Shaolin.” They had this one CD stored in a secure vault until eventually selling it via a New York City auction house for two million dollars. I’ll link the whole story in the article for anyone not familiar with it. While this was an awesome publicity stunt that worked out great for Wu-Tang, very few people have been able to hear this album.
Wu-Tang pulled this off without the help of any advanced cryptographic technology. NFTs now make it a lot easier for other artists to follow Wu-Tang’s example.
Is there a risk here that best-selling artists might price out their fanbase by releasing ‘exclusive’ music for a bigger payoff?
A: Yes, this high-price mania will settle down and artists will figure out their target base and what they want. Some collectors want exclusive rares, just like the sneaker-head or luxury brand collector.
Most of the NFTs will be multi-tiered or layered I think. If the space does blow up then you will have some influencers, entertainers and artists releasing sets of higher run “digital prints” like 100 issuance or 1000, song with rarer 1/1 unique pieces. Some will provide open editions, where you have a specific time frame that the contract will mint an unlimited supply.
The space is still is so wide open, we truly are in an experimental state here of what works best. I have recently been advising artists to air-drop or gift NFTs to their base if they pre-order an album. You can easily do this using freeport.io (BTC) or opensea.io (ETH).
This would give you a chance to get your supporters and fans in the game by providing them with a reward that they may not want to - or know how- to buy. But now they have an incentive to figure out what this “NFT” thing is they received. Thats an organic way to come in the space and not seem like a leech or a cash grabber. The market can even be made by your following from NFTs that were once free. The cryptopunks that sell for 7 figures were once free to claim as well!
Q: What NFT projects are you most excited about?
A: I am most excited about programmable NFTs and so the best platform would be async.art and async.music. I really like the minimalism and ease of use of Superrare.co. I have released my high quality 1/1s there up until this point.
Scarce.city is a great new bitcoin-focused site that runs weekly auctions using the Lightning network. Look out for my Sound Money vinyl album drop on May 24 through their site.
Rarepepewallet.com is the oldest and still runs well. If you consider yourself a crypto-art collector then you must run through that wallet and grab some collectibles. DJPEPE resides on that platform - the first use of tokenized music.
I also like freeport.io which is a chrome extension, similar to metamask, that lets you easily issue BTC NFTs to send and receive. Also, I love what cryptovoxels, decentraland and somnium space are doing for virtual land NFTs.
We've discussed some of the crypto-art you've worked on. Can you give us a run down of all the NFT projects that you’ve launched?
As mentioned, I’ve been a part of the early platforms like rarepepe trading, superrare, rarible and counterparty mainly. I created the first unlockable music token in 2016, DJPEPE. It’s still active and alive today.
I’ve helped some hip hop folks get on the blockchain, most recently Rome Streetz, FARMABEATS and I released a 1/1 NFT and 1/1 7” vinyl record of a song that will never see the light of day. It fetched about $1,600 in Ethereum. I also have a podcast thats still streaming everywhere you listen to podcasts “ART ON THE BLOCKCHAIN” which Cynthia Gayton, esq., and I ran from early 2017 to early 2019. A lot of early crypto-art and NFT history can be found in those podcasts.
Q: If someone wants to buy your NFT artwork, what’s the process?
Where can people find you online to learn more?