BROOKE GLADSTONE On this week's On the Media, where art, internet, culture and money converge. Some see a bull market...Others see...bull.
NEWS REPORT Charlie Bit Me. Ow! This famous viral video has been auctioned off overnight as a non-fungible token or an NFT. [END CLIP]
ANIL DASH I do not pretend that most of the art being traded in NFT's is the Mona Lisa.
ALEX GOLDBERG That's the kind of thing in crypto, sometimes it's like the dumber the investment, the better it is.
MICAH LOEWINGER Why is that?
ALEX GOLDBERG Because the community is around sort of flexing. Its the more useless thing you can throw your money at. Like the bigger status symbol it is,
ANIL DASH We can say the bubble will burst as they inevitably do, but NFTs are already too big to fail.
MAXIMILLIAN ZIM You know, you can call it a scam all you want, but at the end of the day, here's how the market works. If you buy something and somebody is willing to pay more for it than you, then you can make money.
BROOKE GLADSTONE A much needed primer on the world of NFT's coming up.
[END OF BILLBOARD]
BROOKE GLADSTONE From WNYC in New York, this is On the Media, I'm Brooke Gladstone. 21 months into the pandemic, the economy is recovering in a way that can only be called uneven.
NEWS REPORT The global supply chain crisis continues to slow the economic recovery from the pandemic and is threatening to continue into next year.
NEWS REPORT The Federal Bureau of Labor Statistics reported this week that 4.3 million U.S. workers quit their jobs in August. That's the highest number of out now job quits since the tracking started way back in 2001.
PRESIDENT BIDEN Today's economic report showing unemployment continued to fall, but consumer prices remained too high. Tell us the American people have missed this economic crisis. A recovery is showing strong results, but not to them. They're still looking out there? Everything from a gallon of gas to a loaf of bread cost more, and it's worse [END CLIP]
BROOKE GLADSTONE Amid it all, one sector is doing smashingly, exceedingly, gobsmackingly well.
NEWS REPORT Let's talk crypto. The market now was more than three trillion dollars. We understand.
NEWS REPORT Bitcoin, well, if you didn't think it could go any higher, think again. If you think you missed the boat, guess what? Might not be too late?
NEWS REPORT We got bitcoin and Ethereum at record highs. We even have the laggards. Litecoin up 22 percent.
NEWS REPORT Tim Cook says he's a crypto investor and Apple is looking into digital currency features. [END CLIP]
BROOKE GLADSTONE Yes, it's crypto season, again, and this time local politicians are staking their claim as leaders of this brand new future.
NEWS REPORT Miami's mayor is betting big on a growing tech community and especially crypto. Even announcing the city's own cryptocurrency a few weeks ago. Miami-coin.
NEWS REPORT Incoming New York City Mayor Eric Adams wants schools to start teaching students about cryptocurrency after vowing to take his first three paychecks in bitcoin. [END CLIP]
BROOKE GLADSTONE Even the animal kingdom is getting in on the game like Mr. Goxx, a hamster who some months ago was outperforming the S&P 500. Really?
NEWS REPORT We don't know who Mr. Goxx human handler is, but we do know where he makes his trades, "The Goxx Box." It's rigged to automatically trade crypto, then it can enter either of the tunnels. The decision tunnels: buy or sell. [END CLIP]
BROOKE GLADSTONE Amid this crypto feeding frenzy, one form of accumulation stands apart from the rest.
RONNIE CHIENG NFT's, their non-fungal toenails or naked flag tricks or nonfungible tokens. Whatever they are, everyone is talking about it.
[MUSICAL PARODY OF EMINEM "WITHOUT ME"]
SNL [SINGING} ]Now. What the Hell's an NFT? Apparently cryptocurrency. Everyone's making so much money. Can you please explain what's an NFT? I said, What the hell's an NFT? [END CLIP]
BROOKE GLADSTONE NFTs are unique units of data that can be linked to images and other types of media for purchase.
NEWS REPORT Right now, NFTs are very much focused on art. [END CLIP]
BROOKE GLADSTONE Last week, a buzzy conference all about NFTs came to New York, and the city's tech journalists poured in. At the times. Journalist Kevin Roose met a crypto enthusiast who likened the event called NFT NYC, to Woodstock. We sent our correspondent, Micah Loewinger and you'll hear from him later, but first, how did the non-fungible token ever come to be? He may feel ambivalent about his invention, but it all begins with Anil Dash, who today is the CEO of the tech company Glitch, and his collaborator, artist Kevin McCoy. Welcome back to the show and Anil.
ANIL DASH Thank you so much for having me.
BROOKE GLADSTONE Speak to me of how NFTs came to pass and your role as progenitor.
BROOKE GLADSTONE Started 2014, the event called Seven on Seven that annually connects artists and technologists to spark new ideas. You were paired with artist Kevin McCoy. What was the problem you aimed to solve?
ANIL DASH Both Kevin and I had been poking around the edges of this idea of digital ownership. Kevin's motivation he and his wife, Jennifer, are very accomplished artists, and the work's been exhibited everywhere, and they have collectors very interested in their work. And so they had a very visceral need for, when you make digital art, how do you transfer ownership to a collector and say this is the original that you have?
BROOKE GLADSTONE They were getting ripped off?
ANIL DASH Well, I think they were worried about it. They also want to make sure that collectors who bought their work felt like they got a real value wasn't just something that somebody is just going to reblog this on Tumblr and then the work isn't original anymore. And so it was a real concern. I've long been interested in equity and ownership, especially in digital space, especially for creators and artists. The big deal auction world was not something I knew really much about until the consultancy I worked with had started working with some of the big ones, and I learned how much they very earnestly cared about provenance and title and ownership and whether it was, you know, all the way traceable back to the original creator. They had been thinking about these problems for hundreds of years.
BROOKE GLADSTONE So you came up with your idea with McCoy in the wee small hours of the morning?
ANIL DASH Yeah, yeah. They have what's called a hackathon where you're supposed to stay up all night coding or something. And the truth of it is we're both middle aged dads. So at that point, we put a couple of hours in and we got something working and we're both like, OK, we're going to go home, go to bed and we'll pick this up in the morning. And it was pretty amazing because we realized that all the pieces had been laid out there and all the technology was available.
BROOKE GLADSTONE So what was it?
ANIL DASH Well, blockchain had already been hyped within tech circles at that point.
BROOKE GLADSTONE What I understand the blockchain to be is a kind of technology of record keeping for facilitating cryptocurrency transactions.
ANIL DASH Mm-Hmm. It could do some things that systems that came before couldn't and primary among them was conceivably it could certify that a certain digital work was unique was original.
BROOKE GLADSTONE The whole point with blockchain is you have a copy of the same verifiable record. You know that something is real and not forged. Right?
ANIL DASH Yeah. If everybody had a copy of the same spreadsheet and you could verify that any change was made was made in all of them, then one of the things you could do is you can keep track of art in there and say, This is this original artwork. This is who made it and this is who owns it. The idea was to use a blockchain called Name-Coin, which is similar to bitcoin, that everybody's heard of it. But the thing about name coin is it had a little bit more room to store information, including information like, Hey, here's the original location of this artwork and who owns it. And so they gave us just enough space to work with, and we made a system where you could take an image in. The first image was actually art that Kevin and Jennifer McCoy had created.
BROOKE GLADSTONE You bought it.
ANIL DASH Yeah, I did. So as I said the next day, after we'd gotten the code working, we did a demo. And during that demonstration, since Kevin made it, I was buying it and I actually gave him $4 in cash out of my wallet. That's all I had. And he said, Now you own this and we transfer the title on the blockchain. And that was what I've been told later. Very inspiring to a lot of folks.
BROOKE GLADSTONE You didn't call it a non-fungible token.
ANIL DASH No.
BROOKE GLADSTONE You called it a monetized graphic or a monograph.
ANIL DASH It was a bit of an ironic name, which hasn't probably aged as well as I'd hoped. Was this tongue in cheek thing of like, no artist would ever call selling their work, monetizing their graphics. It was deliberately absurd. Of course, as soon as the tech people started hearing about it, you know, the tech companies went to the next week. They're like, Sure, monetize your graphics.
BROOKE GLADSTONE Not funny.
ANIL DASH Yeah, exactly. Just very straight, faced-ly. And to his great credit, Kevin took the idea and ran with it and actually built a company and a product and a platform around that over the following years.
BROOKE GLADSTONE For most of us normal folks, the digital elephant in the room is the fact that you were trying to create a form of ownership for digital properties, digital art. But anybody who wants to can just save a picture identical to the one that you have claimed is the first one and the one that you own.
ANIL DASH Yeah. Well, I recently bought a photo print from an artist I love, and the original was actually a digital photo. But because it was the artist and I got the certificate of authenticity and got it framed at the gallery they sold it from. It was a lot more expensive than it would have been had I just printed that thing, you know, off of a website, right?
BROOKE GLADSTONE I've paid a pretty penny for digital photographs. They're beautifully printed,
ANIL DASH But conceivably you could have done that on your own. You could have taken the original photo file and print it yourself.
BROOKE GLADSTONE I didn't have it, but I take your point.
ANIL DASH This is the thing that today's NFT advocates talk about a lot, which is even if you made a pixel perfect copy of the Mona Lisa, it doesn't mean anything because the original has social, cultural, historical value. Now, I do not pretend that most of the art being created in NFT's, is the Mona Lisa. A lot of it is deliberately not supposed to be pushing the boundaries artistically. But we have consensus that art has value because of context and because of community, and because we sort of agree that it does. And I think a lot of the NFT advocates are advocating the same. They're sort of saying, we're not deluded, that you can't just go and make a digital copy of this file. But the fact that one of those that first original before it was copied can be verified as being owned through the system confers some kind of value. It gives some kind of uniqueness. The others are all copies that are the same. This one has been tied in this way to the blockchain, and as someone who collects art, that makes sense to me.
BROOKE GLADSTONE You had written off your project of making verifiably unique digital artworks as a footnote in internet history. You never even patented it, but in 2021, it's now called non-fungible tokens.
ANIL DASH Non-Fungible token as a name. It's not something I would ever come up with. It came out of a very technical discussion of people on a particular blockchain called Ethereum.
BROOKE GLADSTONE The word art is completely extirpated.
ANIL DASH That's right. The fact that it got applied is almost a brand name to the art trading on it is awful. It's bad for artists because it's hard to understand. I think it's been used to exoticize this for consumers, so they feel like it's a little more magical than it is. And I would rather they'd pick something mundane and functional as a name. But you know, that ship's already sailed. But I think if you give it an exotic technical name that makes people feel like I can't possibly understand this, that lets you sort of pull the wool over their eyes around some of the dynamics around it.
BROOKE GLADSTONE We saw that in the run up to the 2008 crash.
ANIL DASH Yeah, or the dot com bubble in the 2000s. The other thing is, as will always happen in a new technology, there are these opportunists who came in and have made copies of art that succeeded. That actually was connected to the people in the community where they sort of said, Well, it's really popular to do like pixel art of animals. And what they called generative art, which is a machine made art. And I love generative art. I have collected pixel art pieces. This is something I've cared about for many, many years and funded the work of. I don't think most of the people buying cloned generative art in the NFT world are in dialog with decades of pixel art that came before. I think they're seeing these as assets that they hope appreciate. It's a financial instrument.
BROOKE GLADSTONE The art market in general has long headed in that direction. Lots of people take art and put it in a warehouse. Yes. Temperature controlled, and they never even look at it.
ANIL DASH That's right. So I fear that we've really, really quickly replicated the worst of the physical gallery art collecting world.
BROOKE GLADSTONE Why is this suddenly the basis of a billion dollar market? Who are the buyers and why are they buying?
ANIL DASH There are a couple of cohorts. I think the one that's most visible is a group of people that is overwhelmingly pretty young, overwhelmingly pretty male. For them, a lot of this is actually about community. So they're going online, psyching each other up about, Hey, we're all going to make some money and get rich. But also they're very genuinely greeting each other and supporting each other and forming a home for each other that is not as antagonistic as the gaming world. And if all along the way they feel like they're supporting art and they feel like they're going to make some money? Those are even better. But I think a lot of ways it's sort of the community driver of it.
BROOKE GLADSTONE But I think you're leaving something out.
ANIL DASH Mm-Hmm.
BROOKE GLADSTONE It's not just guys supporting each other for fun. These people are generally buying this stuff with crypto money. Money that there aren't a lot of places yet to spend elsewhere.
ANIL DASH That's a huge factor. There's all these things you can't spend this money on.
BROOKE GLADSTONE You can pay the New York mayor for at least a little while.
ANIL DASH We'll see. This's a tangent, but if Eric Adams is able to get payroll processing systems in the city of New York to adapt to an entirely new currency in the span of a couple of weeks, I would be shocked and impressed. But putting that aside, I think there's this accumulation of presumed value that can't go anywhere. This actually mimics the income inequality structure in our whole society, where billionaires are so rich, they don't have anything to do except buy rocket ships and yachts. So if you are crypto rich, you can't buy real estate, you can't buy most other commodities. Art is an area that you can funnel it into. And so I think some of that is just this enormous amount of assets being put to work. There's also huge incentives from the power players in the tech industry, especially the investor class, who want to prove that crypto is a legitimate thing. So they've said, 'Oh, finally, we found a consumer use for this because we've been doing this for a dozen years and there hasn't been a single app that people want to use this for.' You could be somebody well-intentioned who just wants to be in community and support artists and be as much a part of this community as the most opportunistic grifter there. And I think that's a tough thing for us to sit with because it's not this bright line distinction.
BROOKE GLADSTONE There are a handful of really big NFT projects, right, that our listeners might have heard of Bored Ape Yacht Club, CryptoPunks. Describe a couple and why the crypto world is so enamored.
ANIL DASH I would add one more to the list, which is Beeple's collection of works, which was the largest sale of an NFT ever.
NEWS REPORT The buyer paid more than 69 million dollars. Beeple created and posted a drawing every day for the past 13 and a half years. And this digital collage of all five thousand of them is the piece [END CLIP]
NEWS REPORT The Christie's sale made him the third most valuable living artist after David Hockney... [END CLIP]
ANIL DASH One thing you'll find common across all of these NFT efforts is they're very much meme art selling again, mostly to young men who have grown up in the meme culture of Reddit and 4chan. And then there's a sort of inherent irreverence to it. There's there's no aspiration to in these works dialog with art movements that have come before or even what is sort of vaunted as the cutting edge of digital art, today. They're instead very structured and repetitive. CryptoPunks are very low resolution pixel art profile of a person's face, variations on a very simple theme, and they'll change their hair color or the eye color or the skin color or what have you. They're all very, very similar. From a creation standpoint, and this is the sort of thing people say about art all the time, anybody who is even minimally adept with a paint program on a computer could replicate a cryptopunk in probably a few minutes. The Bored Ape Yacht Club images are very similar to the CryptoPunks in terms of being this profile of a head, but it's not a person. It's a chimp, I think. They're all facing the exact same way, the same expression and primarily differentiate by the colors and you know which glasses they're wearing and what have you.
BROOKE GLADSTONE Anil Dash is CEO of the tech company Glitch. We'll pause our interview there because now that you can visualize the art, we're eager for you to visualize the people who buy it. But Anil will return at the end of the hour with some essential thoughts about the how and the why and the what it all means to global culture and human civilization. But right now, where the wild things were this week at NFT NYC. Come to see how the other half lives. This is On the Media.
BROOKE GLADSTONE This is On the Media, I'm Brooke Gladstone. In the first segment, you heard Anil Dash describe means that were created specifically to be sold as Mufti's parallel to this trend. Are the finely aged memes being fashioned into valuable NFTs.
CLASSIC YOUTUBE VIDEO [LAUGHING] Charlie! Charlie bit me! Ow! Ow Charlie! Owwwww! [CRIES] Charlie, that really hurt!
NEWS REPORT Yesterday was the 14th anniversary of the uploading of this famous viral video, which has been viewed almost a billion times with a 'B,' a billion times. But guess what? It is officially off the internet after being auctioned off overnight as a non-fungible token or an NFT. The video, listen to this, sold for 760,999.
NEWS REPORT This cat meme, though, downloaded millions of times, sold for $600,000.
NEWS REPORT Remember, this one? The four year old in that picture, known as Disaster Girl, is now in college and nearly half a million dollars richer after selling the photo in an online auction. [END CLIP}
BROOKE GLADSTONE You can view these meme sales as cosmic justice for their creators. Most people who create a viral video or are the subject of one, experience the negative consequences of virality without fair compensation. One person trying to make lemonade out of his own viral meme is Carlos Matos, OTM reporter Micah Loewinger met up with Matos at the NFT auction of the meme that made him famous.
CARLOS MATOS My name is Carlos Matos, and I'm known as the king of all the cryptocurrency memes.
NEWS REPORT OK, so let's start way, way at the beginning. How did you get involved in cryptocurrency?
CARLOS MATOS I get involved into cryptocurrency. At one point in time when I saw a friend of mine through Facebook that shared with me that there was a song idea called BitConnect, and I was just very curious about it. So I put $25,610 and said, Well, let's see what happens with it.
MICAH LOEWINGER And what happened?
CARLOS MATOS What happens? Micah - it just went crazy. Like within a couple of months. My 25,000 became like 125,000 thousand dollars, and I was like, What?!.
MICAH LOEWINGER These massive returns were exactly what Bitconnect, an anonymously run service had promised its investors. But Carlos didn't understand how his money was growing so fast. How it worked, as Bitconnect described it. Was that first he deposited his investment $25000 worth of bitcoin on the Bitconnect app. Then Bitconnect Day traded his bitcoin using software, which the company described as a quote "volatility trading bot" for the bot to work, your bitcoin investment needed to stay locked in the app. So Carlos was paid out one percent per day, a guaranteed profit in the form of Bitconnect Coin, its own cryptocurrency. Carlos says his wife thought this was a big scam, but he brushed her off because – well, look at those profits! And because he had invested more than $20000, he was invited to Bitconnect 2017 first and only annual party in Thailand.
CARLOS MATOS I was very excited because it was an amazing ceremony, an amazing event. There was a party, there was dancing. There was a whole bunch of different things. They were giving Lamborghinis and Ferraris and everything to the highest promoters in Bitconnect.
MICAH LOEWINGER Carlos watched some investors get on stage in the main banquet hall to celebrate Bitconnect. He said he was moved to share his experience, too.
CARLOS MATOS Because I felt like that was a moral obligation for me to go ahead and share with the world and to say to the world that happened to me is very possible to happen to you. So why not take advantage of it?
MICAH LOEWINGER He's looking out over the sea of people sitting at tables, and he begins giving a speech that would change his life.
CARLOS MATOS [SING-SONGY] Hey, hey, hey... Hey, hey, hey... Hey, hey, hey. Whassu-whassu-whassu-whassu [repeats like 10 more times!] Whassuuuuuup Bitconneeeeeeeeect!
CARLOS MATOS They never pay me for this. This is not something that I did because I wanted to have some personal gain out of this.
CARLOS MATOS I am really so thrilled to be right now sharing this amazing. Glorious. Super EX-citing moment of my life with all of you guys. [CONTINUES UNDER]
MICAH LOEWINGER Were you sober when you gave the speech?
CARLOS MATOS Absolutely. I never have been drunk in my life. By the way, guys, I did not practice or did a prepared speech or anything. Its just flow.
CARLOS MATOS I am saying to so many people who say that this was going to be a conartist game. That this was going to be a scammer game. Hey, you're going to lose all your money. My wife still doesn't believe in me. I'm telling 'Honey, listen, this is real.' 'No, no, no, no, no, no. That's a scam.' Faith and belief is the one thing that we all need to be able to change the world. So guys, let me tell you, I loooo[too many o's]ve! Bitconneeeeeect. [END CLIP]
MICAH LOEWINGER What happened when the speech was over?
CARLOS MATOS Oh, a lot of excited people were hugging me, were congratulating me. And we're now feeling like that was like the most amazing moment of their lives. That famous speech became an iconic moment. A moment to remember for the rest of cryptocurrency history. It was after a certain time that I realized the magnitude when it started going viral.
[MUSIC CONTAINING CARLOS' SPEECH]
MICAH LOEWINGER The video was all over YouTube. People started remixing it, making songs out of the speech, plastering GIFs of Carlos dancing on crypto forums.
CARLOS MATOS If you go into any cryptocurrency chatroom and people are talking about cryptocurrency, if you're not saying like, 'Hey, hey, hey.' Or if you are not going whassu-whassu-whassup!' It's like you are not in
MICAH LOEWINGER All this free marketing helped Bitconnect reach a valuation of 2.6 billion dollars worldwide. But not everyone was quite so bullish.
KEEGAN-MICHAEL KEY Hey, hey. hey! [CLIP CONTINUES UNDER]
MICAH LOEWINGER This is Keegan-Michael Key on Last Week Tonight with John Oliver in 2018.
JOHN OLIVER Does this mean I shouldn't just throw everything I own into cryptocurrency.
KEEGAN-MICHAEL KEY That's right, John. That's right.
JOHN OLIVER I shouldn't – I shouldn't do it?
KEEGAN-MICHAEL KEY No, no, no, no, no, no, no, no, no, no. The crypto market is extremely volatile and insufficiently regulated. They pump, they don't.... [END CLIP]
MICAH LOEWINGER In 2018, American regulators started to crack down on Bitconnect, accusing the company of running a Ponzi scheme. The Securities and Exchange Commission alleges that those returns Carlos saw, that were supposedly produced by the Volatility Trading Bot, were just funds from newer investors. A couple of weeks after the government got involved, Bitconnect shut down, and thousands of people who had invested in the company saw their money vanish as the value of the bitconnect cryptocurrency tanked. Earlier this year, the SEC sued the founders of the company, along with a handful of YouTubers who had taken secret payments in exchange for promoting the scam to their followers. Even Carlos got a knock at the door.
CARLOS MATOS The SEC came and they did an investigation on me. I was expecting that because that's the normal thing. They are looking for the masterminds of the organization and all they found out with me was that I was an investor, just an enthusiastic investor.
MICAH LOEWINGER Were people angry with you when it came out that it was a scam.
CARLOS MATOS Yes, I got threatening messages and people saying that I should go to jail.
MICAH LOEWINGER How did your wife at the time react to it? Did she say, "I told you so. I told you this was a scam?'
CARLOS MATOS Absolutely, absolutely. She say, you know, you should have listened to me. Look at what happened. Now you are the laughing stock of everybody around the world. I don't even want to go out anywhere with you everywhere. Somebody must be laughing out of you, you know? She couldn't take it. She couldn't take that shame. What happened after that? We got divorced. I do not judge her, but yeah it was a very dark moment in my life. There was a point in time that I got depressed and that I gained weight that was like, 248 pounds after Bitconnect. Then it was directly related with the fact that I got divorced and all that stuff happened. And then I just took that. In turn it around in my life now is amazing.
MICAH LOEWINGER Carlos says he looked in the mirror one day and decided he needed to start taking better care of himself. Nowadays he's muscular and he keeps a rigid schedule that involves waking up in the middle of the night to stretch for an hour. He's 57, and he told me he intends to live for a very long time. He's laid low for a few years, working as a therapist, treating kids with autism, but he's approaching this NFT craze as his public comeback moment. We're speaking at a comedy club called The Stand in Manhattan just an hour before he's scheduled to take the stage to address crypto investors again. At an event he's calling Bit-redemption.
CARLOS MATOS Bid redemption is Carlos Matos saying to the world, Listen, I am not the one who scammed you. I am simply an enthusiastic investor who w\as run by Bitconnect and who right now is redeeming myself by providing something which I believe is going to help them grow.
MICAH LOEWINGER That something is a series of NFTs based on his famous Bitconnect speech. 28 NFT's related to 28 segments of the speech, one where he says, Hey, hey, hey. Another where he introduces himself. Another where he talks about his wife and so on. Carlos is launching the auction at this event
CARLOS MATOS Once the first NFT is released, and whoever the lucky person is going to be or whatever price they get it. Trust me, that's going to be an amazing, very lucky person.
MICAH LOEWINGER The videos on YouTube, I can watch the video. It's not as if by selling the NFT is the people who own them have the exclusive right to the video. So what is the value of owning an NFT for a meme that's already so popular?
CARLOS MATOS The NFT is coming directly from the living meme that really created the speech. Its coming from my specific wallet address. The MetaMask address has a signature in the blockchain, the signature of Carlos Matos.
MICAH LOEWINGER And you're about to launch the auction. I think just in like, what is it like 10-15 minutes? I'm sure you and your team have had some conversation about how much you think these are worth.
CARLOS MATOS Yeah, metamorphosis and I have an arrangement.
MICAH LOEWINGER Metamorphosis, the company behind this?
CARLOS MATOS Yeah, I get 85 percent of the sales at the beginning up to certain amount. You know, five million...Careful.
MICAH LOEWINGER I've just accidentally knocked over a glass of water.
CARLOS MATOS So if it reaches five million, they only get 15 percent and I get 85 percent. But if we pass a certain amount, you know, twenty five million dollars and then then they can actually get up to 48 percent.
MICAH LOEWINGER And this is for an individual NFT or the sum total?
CARLOS MATOS For the sum of total. We're going to give people all over the world the opportunity to own a piece of cryptocurrency history. Who knows what's going to happen, but I'm going to tell you it's going to happen - BOOM!
MICAH LOEWINGER Amazing. Carlos, though, when I first saw your video. For me, it seemed to like symbolize the caution we should have when approaching these new technologies that we don't totally understand, and I feel like maybe that's why it's so famous. I can imagine somebody is listening to us talk and they're hearing you talk with the same confidence about NFTs. How do we know the same result is not going to happen again?
CARLOS MATOS You know something. My guy, you know something. I'm going to give you a hug for that question. That was just right on. I mean, I love the question. Well, let me let me just share something. It is very probable that it's not going to work out. It might blow up on you. It's true. Yes. But what if? What if its the opposite? What if what you have is something that can dramatically change your life in the life of your family, in the life of generations of your family to come? How are you going to feel when someone else looks at you and say, you remember that time when the opportunity was right there knocking at your door? It was right in front of you? And can you imagine yourself in that position? Is that the position where you want to be?
MICAH LOEWINGER FOMO? It's always been a powerful force in speculative markets and something that people in the crypto world actually talk a lot about.
GWEN Well, the FOMO is kind of real. I haven't slept for days.
MICAH LOEWINGER This is Gwen, one of the people who showed up for the auction. She learned about the event when she met Carlos at another NFT party earlier this week.
GWEN Whenever this hype around something, it's for me, personally. It's just hard to miss out on it because you could be part...you have the potential to be a part of it. So why not? Yeah.
MICAH LOEWINGER They're probably around 50 people here at Carlos's event, but the crowd seems right for this. They're stoked on NFTs. They're young. Almost everyone is in their 20s and they're wealthy.
NFT-PERSON 1 I've been lucky enough to have also purchased an Ether rock and sold that for a ridiculous amount of money.
MICAH LOEWINGER You got to tell me how much?
NFT-PERSON 1 Well, I bought it for roughly 25,000 dollars, and three weeks later I sold it for 1,2 million.
MICAH LOEWINGER Holy crap.
[TO ANOTHER EVENT-GOER]
MICAH LOEWINGER How many NFT's do you have?
NFT-PERSON 2 Like 70? I have quite a few, but I'll sell them and then I'll be like, I'm done, and then I'll buy more. So it's kind of like an endless cycle
MICAH LOEWINGER You would consider putting in a bid on the first NFT?
NFT-PERSON 3 Yeah, 100 percent.
MICAH LOEWINGER How much do you think it's going to go for?
NFT-PERSON 3 Five digits? My cutoff is at six. I would play in the five range.
NFT-PERSON 4 Yeah, you're right.
CARLOS MATOS Hey, hey, hey.
MICAH LOEWINGER Eventually, everyone began to congregate near a stage where Carlos was speaking.
CARLOS MATOS Each and every one of us has the power of property.
MICAH LOEWINGER Carlos made his pitch for the auction very similar to the one he made to me that his NFTs would appreciate into a family nest egg. A ticket to generational wealth.
CARLOS MATOS And you said, Well, that's not true. This is going to happen. What? Don't you see some of the things that are going to the market? NFT's selling at 69 million dollars,
MICAH LOEWINGER there's this one part of the presentation that I can't stop replaying in my head. When we all started watching this video being projected onto a screen on the stage.
ETHAN KLEIN Are you guys like crypto bros? Is that what you would you consider....
CARLOS MATOS Yeah
MICAH LOEWINGER The day before the event, Carlos and his team from Metamorphosis had done an interview with Ethan Klein, host of the H3H3 podcast. One of the most popular talk shows on YouTube. This video, which again is being projected at the club, slowly turns into a roast.
ETHAN KLEIN I don't believe that Carlos owns the rights to that Video, am I wrong? How are you guys licensing that?
CARLOS MATOS Um the actual person in the video is me,.
ETHAN KLEIN But whoever took the video probably owns the license to the work, right? That's how that works.
CARLOS MATOS They are exploiting who I am, and they did it without my consent. So.
ETHAN KLEIN But it is ironic 'cause it's called the redemption arc. It could be funny if you guys got in legal trouble for this.
CARLOS MATOS Yeah, it would be hilarious.
ETHAN KLEIN [LAUGHING] Hopefully the feds, hopefully the feds have a sense of humor, for sure.
MICAH LOEWINGER Ethan goes on to say he thinks the project will make a lot of money, but everyone in the audience was getting a kick out of these jokes at their expense, and no one more than the metamorphosis guys themselves. And at the time, I was confused why they would share this video with the very investors they were trying to impress. My best guess is that it had something to do with what Carlos meant when he referred to himself as a living meme. Perhaps this was proof that he's not just that guy that gave that speech that one time whose value is limited to a viral moment in the past. But maybe the roast illustrated that Carlos and his team could continue to drive attention and clicks and therefore increase the value of his NFTs, now and into the future. That or they were just totally goofing off and making this all up as they went along. Whatever the intent, the Metamorphosis team didn't seem satisfied with selling that first NFT to the people here tonight. Instead of holding the auction in person, they did a last minute announcement saying that it would be up for sale on OpenSea, one of the popular sites for buying and selling NFTs. I pulled aside Alex Goldberg, the company's 26 year old COO, to try to make sense of their business philosophy and what they saw in the Carlos Matos NFT. Alex told me the group got their start when they made close to a million dollars, flipping an NFT called the Ether Rock, a play on the pet rock.
ALEX GOLDBERG Back in, I think it was the 70s,.
MICAH LOEWINGER The pet rock.
ALEX GOLDBERG The Pet rock. It was just like the dumbest thing, but like people bought them like hotcakes, so someone decided to say, I'm going to bring pet rocks to the blockchain. So I just made a hundred rocks. It was like a free clip art picture of a rock from like Windows 95, and that just made 100 of them, and put them on the chain. And we saw that we're like damn, like, that's so stupid. It's going to move. That's like the kind of thing in crypto. Sometimes it's like the dumber the investment, the better it is.
MICAH LOEWINGER Why is that? I mean,.
ALEX GOLDBERG Cause the community is around sort of flexing and what they are flexes at to say. I just spent $2 million on a pet rock. The more useless thing you can throw your money at like the bigger status symbol it is.
MICAH LOEWINGER I left the club to speak with Maximilian Zim, the 25 year old founder of Metamorphosis.
MAXIMILLIAN ZIM This idea of possession, this idea of we own something is evolutionary in our culture. He's vaping and waiting for an Uber. It's why we wear Gucci shoes or designer brands or people buying Basquiat's and and spending all this money at Christie's just to show that they own it. You know, whatever sex we're interested in, you know, potential mates. We're showing them. We have this bountiful well.
MICAH LOEWINGER Some people are going to look at this and they're going to say, here's this video of this guy who got scammed. Right? But a lot of people look at NFT's and they say NFTs are a scam. And I think a lot of people listening are going to find this quite ironic. Because they're going to say, here's a scam about a scam.
MAXIMILLIAN ZIM Sure. You know, you can call it a scam all you want, but at the end of the day, here's how a market works. If you buy something and somebody is willing to pay more for it, than you, then you can make money. If I sell a pencil to you for a million dollars, it's not a scam. Only if you don't want to buy another one. Now, if you want to buy another pencil for me for a million dollars, I didn't scam you.
MICAH LOEWINGER You're so deep in it, but there's extraordinary wealth inequality in this world. There are, and.
MAXIMILLIAN ZIM It gets worse every day.
MICAH LOEWINGER There are people who are dying because they can't pay for a hospital bill. And you and I are standing out on the streets of Manhattan talking about spending tens of millions of dollars on a Clip Art, a picture of a rock.
MAXIMILLIAN ZIM Yeah.
MICAH LOEWINGER Does that ever strike you as absurd?
MAXIMILLIAN ZIM It doesn't, because this is this is the way the world works. I mean, wealth inequality has always been that game. The rich want to get richer, and it's not just crypto people. I mean, look, we got my boy, Mike here. Mike, s an example, right, of somebody who had hardship his entire life but understood crypto was online due to hustles like I've never seen anyone before, right? It's not about the the rich surviving, it's about the intelligence surviving. Mike is extremely intelligent. The intelligent are surviving the people that are catching the waves, and they really are driven to see where this money is going. Because in this blockchain world, I can see where all the money is headed. People who hustle and want to get more, they always want to get more because they're addicted to dopamine. It's like cocaine. That's why people take cocaine, releases dopamine. It's your brain firing off that want more molecule? It's not that you're actually getting more, it's that you always want more.
MICAH LOEWINGER There's nothing about that, that bums you out? Just this drive for more.
MAXIMILLIAN ZIM It is what it is. Play the game, play to win. All right.
MICAH LOEWINGER Fair enough.
MAXIMILLIAN ZIM What other choice you have?
MICAH LOEWINGER Thanks, guys. I appreciate it. This has been a really.
MAXIMILLIAN ZIM That got really deep. [EVERYONE LAUGHS] That got really deep. Yeah, yeah, yeah.
MICAH LOEWINGER The first Carlos Matos NFT is being auctioned on BitRedemption dot com. At time of recording. Its top bid is 4.1 Etherium, about 477 dollars and 5 cents. For On the Media, I'm Micah Loewinger.
[CARLOS MATOS' SPEECH MIXED INTO A-HA's 'TAKE ON ME']
BROOKE GLADSTONE So if you joined at the start, now you know the when, what, and who. Coming up, we conclude, on the why. This is On the Media.
BROOKE GLADSTONE This is On the Media, I'm Brooke Gladstone, and I'm back with glitched CEO and NFT progenitor Anil Dash, who's just been asked to reckon with what he and his then collaborator, artist Kevin McCoy wrought.
ANIL DASH When Kevin and I talked about it at the beginning, I think we said this could be something really big, and certainly he believed it deeply enough to build a company around it, and he's still doing this work. I mean, he's still a pioneer in the space, and I think we've diverged in our optimism about it. He sees that sort of silver lining to it, for the creators. Within the NFT community, people really believe the bubble will pop and then the true believers will stay, and this thing will all become the happy future we were promised. You know, for me, I come from the community that created the first wave of social media tools. We really thought we were going to empower people to have a new voice, communicate and connect in new ways, and all that did come to pass along with unimaginably terrible harms. You know? And I think that colors a lot of my perspective on it, which is that, you know, be careful what you wish or you can make the technology. It can do the thing you hoped it would do, and you can still lament the impact that it had.
BROOKE GLADSTONE Even people who collect NFTs describe this gold rush as a bubble. What do you think? Are we headed towards a big explosion?
ANIL DASH We could say the bubble will burst as they inevitably do, but I think our reflexive view of that is to say and therefore it'll all go away.
BROOKE GLADSTONE Yeah, that doesn't happen.
ANIL DASH No. NFT's are already too big to fail. The idea of community plus art plus buying works online is too big to fail. At the major auction houses between 5 and 10 percent of their transaction by dollar volume is already happening through NFT's.
BROOKE GLADSTONE Wow.
ANIL DASH They're never going to let that go. They're not going to just leave that money on the table. The ship has sailed. The question is, what do we do about it and how do we have it be something that is positive for artists and creators. Positive for the people who are collecting and not destructive in society, especially when the entire blockchain world, but especially NFT's have such an egregious environmental cost?
BROOKE GLADSTONE Let's talk about the environmental cost. It uses up a lot of energy.
ANIL DASH Mm-Hmm. The environmental impact is true of all of blockchain technologies and crypto technologies, especially in the earliest implementations like Bitcoin. In order to keep things honest and keep them in sync between all the people that had a copy of this ledger, this record, they used tremendous amounts of electricity. They have a concept they call proof of work. You prove the computer did these increasingly complex computations, but it effectively, if you're a layperson, can be known as proof of waste. The way they verify this is really a correct and true change to the blockchain ledger is by verifying that you really did burn that many computing cycles on absolutely nothing of worth. There are newer technologies that are not so wasteful. However, those are not what underlies the vast majority of NFT transactions today. Some people are saying, Well, the NFT's are all switch over to these less wasteful blockchains. Technically, absolutely possible. Incentive wise, it would be costly, and they're not motivated to do it. If you care about the environmental impact, you probably wouldn't already be in the community, right? It's sort of self-selects the people that were already willing to look the other way.
BROOKE GLADSTONE What about regulation? We know these transactions are used to launder money. We know that groups have funded white supremacy and fascism through these things. If they were using conventional banking, there would be laws against it.
ANIL DASH I mean, there are laws against individual banking, right? Physical traditional art has absolutely been used to launder money, including from the Nazis. There's a horrible history of art as an asset class for evil, right?
BROOKE GLADSTONE Mm hmm.
ANIL DASH The evidence is we actually don't prosecuted in any context. But the FBI doesn't spend a lot of time at art galleries. And so I don't have a lot of faith that that lack of motivation is going to get any less acute when it gets 10 times harder to do because technology's complicated. The thing I actually think can help in some cases in past times with, for example, again, social communities online is if the norms of the community are that certain things aren't allowed. That actually is the most effective long term preventative. There are healthy communities online that haven't been taken over by people being horrible to each other with, you know, racism or sexism or all the other awful things people do online. And because the norms of the community, like we don't do that here because there are genuine communities around NFT's, if the communities had norms of like, we're going to suss out who's using this infrastructure and to do bad things. If that energy is trying to sort of say, we're protecting our community from people exploiting it, that I think could be a long term, resilient, effective way to cut some of these harms and reduce some of these risks.
BROOKE GLADSTONE You observed at the top that a lot of these blockchains don't have room to actually put the entire art into it. You took a short cut back in 2014, and you just included the web address of an image onto NameCoin. That particular blockchain, but that's still going on, essentially, and this means that when someone buys an NFT, they're not buying the actual work, they're buying a link to it. And worse, they're buying a link that in many cases lives on a website that could fail in the next few years.
ANIL DASH I mean, how many websites that we use ten years ago are still around? Like entire websites disappeared. That's something that you know again, you have to really care about the art and the artists and the legacy of preserving a work for that to matter to you. And a lot of people don't. A lot of people like, I'm going to get in. Sell these things for ten times what I paid for them, and get out. So the idea that the artwork disappears in 10 years, who cares? Right? The problem is that same person who feels that way is in a chat server alongside somebody who's dead sincere. Is like I love this artist and I want to support them, and I hope this work is there forever, and that's what I was told by the person that put it up for sale. We have like the highest and best purpose of this technology alongside the venal, opportunistic, cynical use of this technology, and they're indistinguishable from a distance, and the criticism is not even fine grained enough to tell the difference.
BROOKE GLADSTONE I don't know if there's any way to know how many of the people in this market are sincere compared to how many are crypto enthusiasts just eager to spend their crypto-dough? There are a lot of people in this market who don't seem terribly interested in engaging with the critiques that we just discussed. They have some catchphrases. HFSP, have fun staying poor, or NGMI, not going to make it, that they throw around in response, but you still have some sympathy for those guys?
ANIL DASH I do. I do. There's an enthusiasm bordering on cult like in a lot of communities, and they have their own language. You know, those phrases like, yeah, have fun staying poor, which is like just the most cynical, awful...
BROOKE GLADSTONE ...Obnoxious.
ANIL DASH But the performative obnoxiousness of it is part of the culture.
BROOKE GLADSTONE Let's trigger the libs.
ANIL DASH Exactly! It's again, it's in gaming culture, it's in political culture. It's and all these other domains. And I think it's very hard for, well, people that are more polite to see that as like that's redefining identity for these people, especially for young men. They're showing off each other's bravado and obviously grounded often in insecurity. What I know is not going to work is critics from outside being condescending and talking about ancient history. Like things that happened in the last century. That does not work. At 23, I felt the same way.
BROOKE GLADSTONE Did you?
ANIL DASH I was not as obnoxious about it, but did I think I saw the future and others didn't? Absolutely. I don't think we can write them off because it's not going away. I mean, I think that's the most important thing is I have been fiercely critical and I pointed out these flaws and the technical flaws and the social flaws. And you know what, scolding them is not going to make it go away. And what happens when we have the people who care about the ethical, social, cultural, environmental impacts. When they go away and walk away and wash their hands of it? That happened in social media. Like, I was sick of all this thing, we're all going to walk away. Who's left is the worst. Who's left is the people that run Facebook. Right? That's the nightmare here. If you leave the future of artists on the internet to the people who are most willing to wade in the muck in the mire, that is not going to be good for the world.
BROOKE GLADSTONE Blockchain technology, theoretically, was going to help decentralize the internet, redistribute power and ownership. You know, that was your goal with the NFT is to empower artists, address some of the problems in the existing art market. Do you still hope that this technology can be used to build a fairer, better internet?
ANIL DASH I'm torn, and I really do go back and forth almost on daily basis because I will see the most despair inducing exploitation of vulnerable people, vulnerable artists, and I'm like 'throw the whole thing into the sea.' You know, it really is very hard not to feel that way. And then the next day, I'll hear from an artist who was skeptical and cynical about it said, Let me just dip my toe in and try it, even though I know there's all these warnings of red flags. And they'll be like, God, this thing paid my rent this month, and I never thought I'd get to sell something as an artist. You know, I talking to a woman who's a filmmaker, and she said she's going in eyes wide open. She knows the NFT world replicates the same sexism and misogyny and homophobia and racism as the industry that she's been in her whole life. And she says, Well, where am I going to go to sell my art and support my work? That's not going to replicate those systems? I don't have an option with that. And so if there's a chance that this can support me and maybe connect me to a community that I care about my work on the other side of it, I have to try it. And I was very empathetic to that argument.
BROOKE GLADSTONE You've mentioned you're a dad. How many kids have you got?
ANIL DASH I got a 10 year old boy.
BROOKE GLADSTONE Mm-Hmm. And you have a an eight year old NFT.
ANIL DASH I do, I do.
BROOKE GLADSTONE Thank you very much.
ANIL DASH Thank you for having me.
BROOKE GLADSTONE Anil Dash is the CEO of Glitch, a developer community whose coders collaborate to create and share millions of web apps.
That's it for this week's show. On the Media is produced by Leah Feder, Micah Loewinger, Eloise Blondiau, Rebecca Clark-Callender and Eli Cohen with help from Juwayriah Wright. Xandra Ellin writes our newsletter. Our show was edited by me and Katya. Our technical director is Jennifer Munson, our engineer this week. Adriene Lilly. Katya Rogers is our executive producer. On the Media is a production of WNYC Studios. I'm Brooke Gladstone.