How NFTs Will Blaze a Path Towards the Issuance of Creator Coins & Social Tokens
NFTs have become a $27 billion US dollar per year business. Eye-opening and jaw-dropping by any measure, considering that the market barely existed at a global scale just one year ago. In fact, for comparison purposes, NFT market sales totaled “just” $340 million USD one year ago, an impressive number still — but nothing compared to 2021 figures. The newly released data shows a $7,940% increase in sales in only 365 days. Difficult to find a faster growing industry or sub-industry — not just from this year, but ever.
Driven primarily by digital art and the growing cult around the popularity of Beeple’s art pieces and Cryptopunks, it may be even more shocking to the casual observer that this sub-market of the blockchain industry has significantly more room to grow.
While the exciting rise in the popularity of NFTs has been fueled by the speculation of how much today’s digital art pieces will be worth in the future, NFTs are destined for so much more than that. As covered in a previous piece, NFTs are on the fast-track to disrupting our lives in almost every imaginable industry. From video games to supply chains, these new class of digital assets will give rise to possibilities and use-cases which are simply unimaginable today.
In the creator economy space, there is steady, but growing interest surrounding the concept of creator coins and social tokens. Perhaps one of the biggest updates in the past few months has been Patreon’s acknowledgement of this increasingly interesting space — to the point that it has now made available the option of its users using creator coins as a membership benefit.
While Patreon will not be helping its creators to issue coins or social tokens, the support being provided by the Company is a sign of things to come. As positive as this is, it is becoming increasingly clear that the road towards adoption for such currencies needs to begin with NFTs.
Why Creator NFTs Will Precede Social Tokens in the Creator Economy
The first Bitcoin was mined in 2009, making the OG cryptocurrency just one year shy of being a teenager (and four years away from getting a US driving license — yikes!). Yet, let’s be honest, it is far from global adoption. With the initial concept that it could be used as seamlessly as money in everyday transactions, time has quickly proven that the infrastructure supporting it simply does not make this feasible. With the ability to “only” handle five transactions per second (TPS), and with block confirmation times averaging ten minutes, it is not a currency built for everyday usage. For the sake of comparison, Visa is able to process between 1,500–2,000 TPS, although admittedly, these transactions are not “final settlement”, as is the case with Bitcoin (but for the average person, the end result feels the same; people can have the confidence that the transaction is more or less “good”).
The point here is that more than a decade after launch, Bitcoin (or any of the thousands of other cryptos which have been launched) has yet to gain traction as a currency that can be used for everyday purchases. Using this logic, how would a creator coin / social token be able to achieve mainstream adoption before other blockchain coins/tokens are able to do so? Is it possible that a Kardashian Koin (see what I did there) could achieve some sort of critical mass among their fanbase so that it would be transacted more regularly than Bitcoin, ETH, or others? Of course. Likely? Probably not.
The road towards a Kardashian Koin begins first with Kardashian NFTs.
Frankly, it’s just easier. Buying into a creator coin or social token requires users to buy into a token economy. Individuals will be concerned about liquidity, and ask themselves quite simply — what am I supposed to do with this social token? Do I really need a Kardashian Koin?
NFTs on the other hand — can be viewed under a slightly different lens. Kim Kardashian can release NFT artwork, or even KardashianPunks (pretty interesting idea, actually), and sell them as exclusive items. Getting a community to buy 10,000 KardashianPunks seems a lot easier than convincing them to be part of a token economy which revolves around the Kardashian Koin.
How Creator NFTs Will Be Leveraged in the Creator Economy
In many ways, NFTs are more interesting than their counterparts (fungible tokens) because of their uniqueness and scarcity — which are literally built into the definition of an NFT. NFTs are extremely dynamic, in that they can more or less be anything. From digital art to a physical car title, there is hardly anything that an NFT cannot represent. Such flexibility makes these digital assets extremely powerful — and could very well mean that its use-cases and potential are virtually unlimited.
For creators, NFTs can become a valuable “first step” for them to create direct relationships with their fans. An interesting talk was held recently on the Unconfirmed podcast (hosted by Laura Shin), where the buyer of Beeple’s HUMAN ONE piece (Swiss Venture Capitalist Ryan Zurrer) joined Laura for a discussion on NFTs. It was revealed during the episode that one of the reasons that Ryan purchased Beeple’s piece is that he thought it would essentially be cool to have a direct relationship with the artist through their artwork. In fact, Ryan and Beeple (aka Mike Winkelmann) seem to have a real friendship today, wherein Ryan is able to visit Mike “in real life” and to have real conversations about various topics.
While this is certainly unique and not likely to be replicable across ALL creator and fan NFT interactions (after all, Ryan dropped $29 million USD for HUMAN ONE), it does highlight a different dimension that NFTs enable, and really does seem to have the potential for creators and fans to have a more direct (and thereby more fruitful) interactions.
The Flexibility of NFTs — How Creators Will Use Them
For creators, NFTs will become this generation’s loyalty rewards program. They will be the equivalent of airline miles for Gen Z, locking them into an ecosystem wherein the NFT regularly gives the holder benefits (similar to airline miles being redeemable for free flights, upgrades, lounge access, magazine subscriptions, products from the gift catalog, and more).
Back to Kim K as an example. Assuming that Ms. Kardashian releases 10,000 KardashianPunks — what could she (or her fans) do with them?
In fact, the sky is the limit on such digital assets. The NFTs could be designed wherein the holders get exclusive access to various things in the Kim Kardashian empire. Anything from behind-the-scenes footage of the latest television appearance, to having first “dibs” on new products (clothing, makeup, accessories, etc…) that are released on any Kardashian lines, and more.
Going further, if structured in such a manner, a KardashianPunks Decentralized Autonomous Organization (DAO) could potentially form. Kim could engage her NFT community to vote on various matters that could have an impact on the real world (e.g. at a more granular level, what color should be released next for a particular product? Or at a broader level, which endorsements should Kim or the rest of the family potentially pursue?). For the latter of the DAO example, NFTs could be programmed to have revenue sharing capabilities, wherein creators can reward their holders for their support and guidance on the direction that they should move in their career. Not likely for someone as established as Kim Kardashian, but for an up-and-coming musician, digital artist, or other creator — such possibilities could potentially be extremely lucrative for both the creator and their community (especially as the creator reaches higher and higher levels of commercial success).
From NFTs to Creator Coins and Social Tokens — The Eventual Shift
For the uninitiated, a previous article defined what creator coins and social tokens essentially are and what they enable. It may be worth taking a look there.
The move from NFTs to creator coins and social tokens will be a gradual one — likely to be dragged out for many years. The general public needs to first get comfortable with NFTs and adopt these new technologies before buying into a token economy centered around a certain creator. In addition, solid infrastructure to properly enable and support a direct creator to fan decentralized relationship via NFTs needs to be in place.
However, make no mistake — this shift is a likely one, and one that is viewed more from a “when” versus an “if” perspective.
As noted in my other article, for creators, social tokens can enable even more for individuals than NFTs. With an entire economy centered around one entity, the sky is the limit on what can be done and the level of success that one can achieve.
NFTs are the first step. Getting creators and fans together on a decentralized platform, without third party intermediaries, where exclusivity and direct interactions reign supreme — this is the long term vision.
With this, the next generation of Kardashian level creators and influencers will be found — minting new celebrities and global icons from around the world. The difference with this new generation will be that, more than just having their names associated with clothing lines and product endorsements, the new celebrity creator will have their own NFTs, their own currency, and their own economy, completely centered around them.