Tag: NFTs

Web3: returning ethics to networked reality

Posted on | by Bas Grasmayer

This week I’ll be speaking about ethics & web3 at an event hosted by JUMP, an accelerator for the European music market. While I’ll make sure to dive into topics like energy use, economic inclusion and the tyranny of structurelessness, the invitation also got me thinking about how the web3 provides more ethical frameworks for our networked future.

Networked reality

First, back to fundamentals. We live in a networked reality. This is different from the channel reality of mass media before the internet. Messages and information traveled through channels, linearly or bi-directionally, through media but also distribution channels in the case of physical information carriers (e.g. CDs). It wasn’t piracy that was the real shock to the music industry: it was the transition from channel reality to network reality.

Networked reality implies data can travel freely through networks. Memes are an important part of the culture that has emerged from these networks. The remix is the internet’s language.

This networked reality initially played out in a rather decentralized way across loosely connected communities running their own software (e.g. vBulletin or phpBB forums). Network also means network effects and social platforms soon started leveraging their user activity to attract more users — slowly walling off data that had been accessible without an account through APIs or public pages. This created an extractive economy in which the value created by people funnels upwards to the platform owners. Eventually, the platform economy established a near-monopoly over the internet’s social layer.

This established certain platforms as de facto public infrastructure. Think about it this way: when you step outside your front door in real life, chances are you step out onto public infrastructure, free to use, paid for by taxes, and governed by democratically elected bodies. When you step outside your front door virtually, you move immediately into private infrastructure, paid for by ads and your data, and governed by non-democratic hierarchies. For many people, it’s unthinkable to cut ties with friends and family and abandon WhatsApp, Facebook, Instagram, Telegram, Line, WeChat, Twitter, etc. It would feel to them like the virtual equivalent of moving away into the forest and becoming a hermit.

Networked reality has become a platform reality. Economically almost more akin to the channel reality of mass media than the distributed nature of the early web. One could espouse the merits of all the free-to-use tools, but the reality is that their dynamics are extractive. As the adage goes: if you’re not paying for the product, you are the product. Entire books could be written (and indeed have) about how we got here. I want to focus this piece on how web3 offers a more ethical way forward.

Your book and article recommendations on this topic are welcome in the comments.

Web3: returning ethics to networked reality

Web3 means a return to the network. Data is stored on blockchains, which are operated by the network of its users. This means that the ownership of the blockchain is distributed across its users. Scale that out far enough and the concept of measuring an individual’s level of ownership becomes abstract to the point that one could argue that the data on the blockchain is ownerless. This level of decentralization allows for the emergence of individual agency over the data they have custody over.

What makes the NFTs and tokens in your cryptowallet ‘yours’? Do you own them? Well… not really, the ownership is distributed across the blockchain. But you have custody over this data – you are uniquely in control, since you hold the keys to what happens to this data. This is why people warn about blockchains that are not sufficiently decentralized: you may have custody over your data, but a conglomerate of network operators could band together to seize ownership of it.

The reality of having a level of custody over your data to a degree that practically feels like ownership and that data being public and transparent creates a new reality to build in. New platforms can come along and tap into all the data that already exists. They don’t have to ask anyone for permission. Many blockchains, like Ethereum, are designed to be ‘permissionless’. As people build up their ‘on-chain’ profiles, they’ll place more importance on services that allow for interoperability for everything they’ve already collected. One example is the NFTs people spend money on: they value this data and platforms like Twitter & Instagram are mimicking web3 services by allowing folks to bring & display their NFTs inside the services.

This seems novel, but it’s been a de facto default for web3 services that are already years in the making. Snapshot, a governance tool for web3 organizations, allows anyone to connect their wallet, show that they have custody over certain tokens, and then allows them to participate in the respective communities’ votes. When the owner of popular NFT marketplace Hic Et Nunc took the platform down, the community scrambled to rebuild in record time. No important data was lost, because it was distributed on the network.

This creates a security mechanism: since the data is public and users hold the custody over it (as opposed to private & platform-owned), platforms that run afoul of their users’ best interests may see the community ‘fork’. That means they take their data & bring it elsewhere. The lack of interoperability has created a lock-in effect on users that is often leveraged to protect revenue and growth numbers. For example, if you leave a music streaming service, you lose access to all your playlists. If you leave a messaging app, you lose access to all your group chats & chat history. This is not the case with open standards like email, which you can access from multiple apps and services and even completely migrate to new service providers.

Web3 doesn’t lock-in like this (and if a ‘web3’ platform or blockchain does have this effect then it’s not ‘web3’ and you should think twice before spending your time or money there). Instead web3 services try to create long-term alignment with the users they cater to, since people can leave any time. This alignment takes the form of opening up participation in governance, as well as giving the users custody of the tools they use through tokens which can be used for governance, but often also come to represent the perceived value of a service (akin to shares, but without dividends).

Are the days of extractive platform economics behind us? Definitely not and I’d wager it will be a part of the internet’s economy for as long as we see the same extractive dynamics in other parts of our economies. But we do have the toolset to build things in fairer ways, almost like publicly governed and funded infrastructure – governed by the networks of people that make use of it.

What’s cooking in Music DAOs? MusicFund, Dreams Never Die, Water & Music, FWB Gatekeeper, Polly, XYZ & Club BPM

Posted on | by Bas Grasmayer

The Web3 is about the “fundamental reorganisation of the internet towards ownership, data portability & being able to ascribe value to our digital assets.” This quote, by Zoe Scaman who’s also behind the New Creator Manifesto, perfectly describes what has so many people so excited to work with DAOs, NFTs and tokens.

At this point in time, it takes quite a lot of onboarding to make the web3 click for most people. Until it clicks, a lot of what’s happening understandably looks like a grift. Or, to be more accurate, it’s hard to distinguish the grifts from the genuine attempts to reorganise the internet towards something less extractive. For some people, the moment it clicks is when they start using crypto wallets to login to services and take their decentralized username along for the ride, which is why I’ve recorded a primer to get folks set up to do exactly that.

What may also help make things click is hearing about relevant examples of this reorganisation of the internet. Currently, there are probably a dozen or two experiments every month that may contribute to the reorganising of music’s digital value chain in a way that benefits creators, fans and their surrounding communities more directly. Here are some of the ones I’ve come across recently.

MusicFund

The MusicFund is a community for discovering, funding and curating music. People can join by minting one of a total of 10,000 generative NFTs. The funds raised are used to create grants for artists and to support the community. Currently, these grants are distributed by allocating 1 ETH to a batch of three curated artists, which is then split based on how the community votes, with the top contender taking 0.6, and the runner-ups 0.25 and 0.15 ETH (at time of writing, 1 ETH is about $4300 USD). In order to vote, one must log in with their wallet which must hold a MusicFund NFT. Its latest line-up is curated by Before The Data, successor to music blog Hillydilly, which is also running a DAO of its own.

Disclosure: I was airdropped a MusicFund NFT.

Dreams Never Die Records DAO

Dreams Never Die is a label by the same crew as Before The Data & Hillydilly. It aims to help artists at their earlier stages. Now, by organising itself as a DAO, it intends to “become an incubator for brand-new artists and aspiring music business talent alike, built around an incentivized and aligned community that participates in discovering, developing, distributing, and promoting the roster.”

It’s in its earliest stage, having only just done its first town hall discussion on Discord and hasn’t raised funding yet. If you’re new, this is a great stage to get involved or just go along for the ride and see how the organisation evolves by idling in their Discord.

Water & Music

If you’re not familiar with the phenomenal publication and community Cherie Hu has set up, and I occasionally contribute to, you should check out Water & Music and consider subscribing. They’re now being accelerated by Seed Club, which specializes in tokenized communities, in order to develop a ‘new collaborative research model’ which I assume will see token distribution based on community contributions. Its first collaborative research report covers spatial audio and just before Halloween the community kicked off a large collaboration to document music & web3.

Again, early stage, so it’s a good time to get involved.

FWB & Web3 Ticketing

Blockchain-based ticketing isn’t new (GUTS Tickets comes to mind), but this initiative is notable because it originates from a DAO. The Friends With Benefits DAO is a social community of creatives and builders. When, post-pandemic, it was possible to start meeting IRL again, the DAO started throwing token-gated events.

Token-gating is a common practice in DAOs, it’s used in the above example from MusicFund to restrict voting to members only and is also commonly used to close off certain Discord channels to the community. FWB wanted to be able to token gate live events and developed its own tool for it called Gatekeeper.

They’re making the app available to organisers and other DAOs to experiment with it.

I think examples like this are exciting, because anyone can build something on top of anyone’s token. If I want to organise a music conference in Berlin and I want to give free attendance to people who have earned a lot of tokens by contributing to FWB or Water & Music, I can set that up (of course, I recommend being diplomatic about it). No central body owns the community or the relations between community members: the token is held by the participants of the network. It’s an empowering type of decentralization.

Disclosure: I hold FWB tokens.

Polly

One of the most creative technologists & musicians I see experimenting in the web3 right now is Troels Abrahamsen, who I know from Songcamp. He runs a number of projects, which you can read about in this thread, but I want to highlight a specific one called Polly, a tool (or smart contract) that is just entering development. It’s “a proof of concept label backend for releasing simple semi-on-chain singles as collectibles.

XYZ

Another musician I know from Songcamp is Colt, who has just announced a new DAO called XYZ which aims to “continuously and sustainably release original, high-quality music onto web3 and web2 channels, building expertise in music distribution in the crypto era.”

The project just raised 4.5 ETH ($20k at time of writing) in funds by selling NFTs & dropping its own $WAV token to the community, which will be used for governance.

“In the future, participants will earn $WAV for participating in the production and sale of music NFT releases. Each release is an event that brings more token holders into the DAO.”

Club BPM’s BPM Bot

To round things up, I wanted to highlight BPM Bot. When YouTube started shutting down music bots, the Songcamp community wanted a way to keep playing music on Discord, so they raised funds for the development of a bot that plays music from Catalog NFTs. To me that’s exciting, because it brings more visibility to these songs, thus increasing the value of being the owner of their NFT. It’s web3 communities linking and utilizing open data and interoperability to build tools to create value and utility together. It’s currently used on 47 Discord servers.

Disclosure: I participated in the BPM crowdfund and hold some tokens.

This list is not meant to be exhaustive. I think it’s currently possible to set up a daily newsletter to document everything that’s happening in music x web3 (I’ll consider serious sponsorship / bankroll offers, DM me). A great daily read about DAOs in general is ForeFront‘s #ff-daily channel on Discord.

I hope this communicates the energy, excitement and creativity in the space. I also hope it shows that people who are working on projects that, traditionally, would be competing are now figuring out ways to make their projects interoperable, because everyone stands to win from that.

Regardless of tokens, NFTs and cryptocurrency, these are amazing, vibrant and supportive communities of people who want to create new things together in order to support musicians. You can bring your skills to the table without knowing how any of this web3 stuff works. That’s how you start learning and that’s how you eventually start seeing the value of communities owning the value they generate.

Artificial scarcity isn’t bad and it’s not just a jpeg (on NFTs)

Posted on | by Bas Grasmayer

This piece addresses two common questions and critiques about NFTs:

  • “It’s just a jpeg everyone can see, so anyone paying for it is [delusional / getting scammed / etc].”
  • “The internet’s supposed to be about abundance – why are we creating unnecessary artificial scarcity and financializing everything?”

Given music’s history with ubiquity, including the economic effects of the sudden shift from paid to free post-piracy, I think these are two excellent critiques to explore the value of NFTs in general and for music specifically.

Participation

One of my own, biggest critiques of what happened to music in the 20th century is that music’s default shifted from communal to individual, from participative to consumerist, from folk to personalized. This happened through the proliferation of the recording and record players to every house, then every room of the house and eventually everyone’s pocket until even the music played from streaming services would be atomized to personalized playlists that fit an individual’s taste exactly.

This had great economic consequences for the recording industry, which eventually dwarfed other parts of the music industry like publishers. It also created a framework through which corporations own and govern the majority of contemporary culture. If you think about folk songs as songs that an entire population knows, or just subsets thereof, then pop music has essentially replaced folk. Folk music was communally owned and iterative. Pop music is, typically, corporate-owned and there will be 1 official version: everything else is ‘derivative’, less authentic, less ‘real’, than the ‘original’. In that sense, Seven Nation Army could be considered a folk song, especially in countries where it’s a common chant in football (‘soccer’ 🇺🇸) stadiums.

Don’t get me wrong: I think many of these aspects brought great attributes to music too, but it’s important to consider which other attributes, like the ones mentioned above, got deemphasised and moved into the background of our default music experience.

Back to artificial scarcity and abundance.

The time we live in is amazing. We have so much of humanity’s knowledge and cultural expression at our fingertips. We have simple, digital tools at our disposal that allow us to express ourselves through any modern type of media: image, sound, video, augmented reality (think TikTok, Snapchat, and Instagram when it’s not down). After being locked out of participative culture because of decades of a creator / consumer divide, we may soon see a billion music creators. So why be so excited about something that introduces scarcity?

Open scarcity

The exciting thing about NFTs is that you can let everyone access the media, yet assign the ownership of the NFT that represents the media to one person. This is not that dissimilar from video games: your friend may have unlocked a certain skin that is purely cosmetic and does not affect gameplay. You can enjoy this skin while you play with your friend: even if they’re the ones who paid for it.

NFTs can be used in similar dynamics. Sometimes they’re used as vehicles for crowdfunding. They can bring media (or culture) into existence that wouldn’t exist otherwise. One patron, one NFT. And a jpeg or mp3 for millions to enjoy.

MP3s, for a long time, held a real price of $0. Most people would download them and wouldn’t pay for it. Streaming, unfortunately for many artists, hasn’t helped them to attain a significant income. This may be due to a number of factors, but the fact is that for a long time music has been a game with just one mode to play it. If you don’t fit that mode well, it’s going to be hard and the factors are often outside of musicians’ control. The major exception I can think of is the period before recorded music revenues bounced back to pre-piracy days, which kind of forced people to get creative. Besides contemporary streaming giants, two of the more popular crowdfunding platforms were born in this period: Kickstarter (2009) and Patreon (2013).

Graph: IFPI Global Music Report 2021

If we use the phrase ‘NFT’ to mean works of art (music, visual, both) then NFTs create an amazing situation where content no longer needs to be locked behind a paywall on a platform like Patreon. Instead, the proliferation of the media associated with the NFT, for example a song, will increase the value of the NFT. This also impacts the perceived value of future NFT drops.

Ownership is exclusive, but the media is abundant. It’s open scarcity.

But why pay if it’s free anyway?

There are many motivations why people pay for NFTs. Some people are purely speculating, but I don’t think that’s the important part of the story. Some are collectors. A web2 example I can think of is Bandcamp: for some releases you can get the free download, but if you pay $0.50 it also shows up in your collection. I love building my collection on Bandcamp, so I’ll pay for the free jpeg and mp3 to be there.

Most importantly, NFTs are decentralized social media. They are objects that exist in a social context. This social context is powered by the blockchain on which the NFTs sit, plus any social media an NFT holder might use. In this context, possessing an NFT holds meaning to the owner, because it can signify social value, taste, distinction, membership, or identity, just like people’s clothing or virtual skins in video games. All of that is portable to any social context they move to.

It’s that social aspect that gives these objects value and in many cases the social value would be greatly diminished it the object was not freely accessible for all to see.

Financializing all the things…

Finally, a conclusion I’ve drawn for myself. I sympathise a lot with the critique that the web3 is financializing everything. Should all these things have a price tag or should the price tag be secondary? Certainly, in this wave of the web3, the price tag has often been the story, but I don’t think it’s the whole story (although to some writers it is).

The real story is that value can be tracked and it can be made transparent. People who create value can participate in it. All these interactions we have with each other online, all this culture we’re accessing: it’s already financialized. The companies that host our conversations, our art, our expression, they have shareholders, they sell ads. The difference with the web3 is that 1) we don’t know what interactions are worth, and 2) we don’t participate in the value they create.

That’s different now.

From here we have options. We can choose to express things in tokens or cryptocurrency. We can choose not to. We can choose to distribute equally to all participants or reward those who contribute more. We can choose governance models where it’s one person, one vote, or where people can vote based on their stake (e.g. number of tokens held). We can choose the game we play – this has not happened since that 2009 to 2013 period that spawned so many of the current status quo.

These systems are in our hands now. There’s no one-size fits all platform. Instead we’re stringing the tools together to create brand new configurations to design communities the way we see fit. Different subcultures will emerge in the space. They already have. For example, Zora is a radically different NFT marketplace (and more) from Crypto.com. Just compare their positioning: “THEY THOUGHT THEY COULD OWN US” versus “The World’s Fastest Growing Crypto App”.

Auctioned digital cultural objects, as NFTs, have an important role to play in online culture in the next ten years. Music piracy paved the way for streaming. Streaming paved the way for microgenres on SoundCloud to playlist edits on Spotify to the meme-like behaviour of music on TikTok.

Now a web3 layer is going to start providing a new context. Let’s add social context to those mp3s and jpegs.

Iterative music culture, generative AI and the Web3

Posted on | by Bas Grasmayer | 1 Comment on Iterative music culture, generative AI and the Web3

A recent project called Tunes used AI to generate 5,000 unique NFTs. They’re songs, or rather, shells of songs – missing artwork, audio and an artist. That’s intentional. They serve as prompts for people to iterate on, tapping into a recent trend in the NFT space popularized by another project called Loot. Let’s dive in.

An example of one of the Tunes NFTs

Loot

At the end of August an NFT project called Loot dropped. People could claim Loot NFTs for free by minting – only paying for the gas cost. Like NFT avatar projects, people did not know what they would get exactly after minting. Unlike other NFT projects, Loot was stripped from everything except text.

After minting, you’d get a list of gear. Text in an image. That’s all.

People loved it, because it felt like an invitation to imagine what you could build from this starting point. Quickly, an ecosystem emerged around the project.

Adventure Gold created a token to set a standard for projects building on Loot in the future. Role creates characters which can equip the Loot. Realms attempts to map out a world for Loot to exist in. And there are many other projects.

Mirror, the writing platform this article was first published on, ran a similar project called Heroes which would create randomized pen names and identities: text-only.

It’s different from many other NFTs, because instead of selling you something that is finished, you get the building blocks. Since everything’s on a blockchain with smart contracts, everyone can plug in and start building and expanding the project.

What if this idea was applied to music?

Tunes

Eight of the Tunes listed on OpenSea

Tunes started with a similar premise. 5,000 possible songs to mint for free, but without audio, cover art, or an artist. Building blocks.

A bot called Artunist was set up on the project’s Discord to generate artwork. People can submit the ID of the NFT they minted and then get artwork generated for it. The results are impressive.

Cover art generated for Tunes by Artunist bot

The project has since expanded to include ‘Songs for Tunes’ which combines the generative artwork with artists and the music they made, with some being sold as NFTs for 1ETH ($3000~ at time of writing) like this beat by oshi or this song generated by the AI band (Twitter).

New games, new economies

The reason why I’m highlighting these projects is to show that there are new games to play, completely new avenues to explore. From the outside, the crypto space mostly gets attention for financial aspects while the cultural aspects don’t get picked up properly. When they do, it’s almost always in a financialized context… If an artist drops a new release on Spotify, we don’t say “Artist X is releases album on streaming service that raised over $2.1B in 18 rounds” yet that’s exactly what’s happening in the web3.

The actual exciting part is not really the money. It’s that anyone who perseveres can spin up a new project that can tap into any other project connected to the same blockchain. In that sense blockchains with smart contracts like Ethereum are global computers for us all to utilize. The web3 is iterative and music culture in the space is starting to embody that principle.

The first music artists who will never bother with the contemporary streaming landscape are likely already here, experimenting in the web3 and trying out other modes of collaboration, community-building, and are starting to make a living by doing so.

And to put it in Thanakron Tandavas’ words: that’s fucking cool.

Image by @tandavas on Twitter

NFT Avatars and Onboarding Subcultures to the Web3

Posted on | by Bas Grasmayer

You may have heard of CryptoPunks and Bored Apes. They’re NFT series of 10,000 unique and randomly generated images of characters. They’re also 2 of the most well-known examples of ‘NFT avatars’ – a trend which has exploded in the crypto space of 2021 and is set to permeate subcultures once they move into the web3.

Here’s how, and why.

PFPs & NFT Avatars

NFT avatar projects are casually referred to as PFPs: ProFile Pictures, since that’s a common use case for them. They most often have up to 10,000 template characters that are ‘minted’ by people wanting to own one. Minting costs money (cryptocurrency) and in the process of minting randomized traits are applied, ranging from extremely rare to common. These may be variables like skin colour, headwear, haircuts, shirts, background colours and anything else you may think of that’s appropriate to the project. Many projects will have 10 traits with 10 variables per trait.

Once minted, the character is created and will remain unchanged, so before you mint, you usually only know what the style of the project is, but not what your NFT character will end up looking like. Once all NFTs from a series have been minted, the value of some of the PFPs may increase, since people may try to purchase ones that specifically appeal to them (like Jay-Z’s CryptoPunk).

Being early

The creative web3 space is still relatively small. Many of the more successful projects specifically cater to the crypto community and its aesthetics. As interest has peaked, so have the number of PFP projects that now flood the space. Many struggle to get all their NFTs minted, often resulting in minted NFTs being sold for a price lower than the minting cost, which further slows down the minting process.

Yet we’re early. Many types of aesthetics that are popular in subcultures, for example as album artwork, in music videos, or as tattoos, don’t necessarily resonate well with those already onboarded to the web3. While some of the aesthetics emerging from the web3 space will go on to become cornerstones of emerging subcultures, a more diverse variety of aesthetics will become popular in the web3 as more people get onboarded.

A PFP project making slow progress on minting seems bad, but if it finds ways to onboard the subculture in which its aesthetics are rooted, it can succeed over time and enjoy a potentially more meaningful success than it could by shilling to speculating crypto bros (f/m/non-binary).

Onboarding subcultures

The social dynamics of what’s happening right now are not unique. The clearest memory I have of subcultures shifting to a new type of internet is from around 2009 when artists started switching out the MySpace Music players on their profiles for SoundCloud embeds. SoundCloud’s player was clearly superior. While MySpace limited you to a maximum number of tracks per profile, SoundCloud allowed you to upload 4 tracks of any length per month for free in those days. The benefits were obvious and thus once a few musicians in a genre embedded the SoundCloud player on their MySpace profile, you’d see it spread like wildfire through their subgenre.

The type of people who were the first to switch out their player, the innovators, are now onboarding to the web3. Many of them are already experimenting with NFTs and DAOs. PFPs allow them to signal the web3 to others in their cultural space, just like how the SoundCloud player signalled a shift from the age of downloads to the age of streaming. PFPs are not enough though, since their utility is not as obvious compared to an embeddable player that was easily twice as good as what preceded it.

For subcultures to onboard to the web3, there are two main hurdles to overcome:

  • Proof of stake (PoS). The energy use associated with Proof of Work blockchains like Bitcoin and Ethereum has made many people unwilling to touch any type of crypto. So, I expect a few factors in the next year will drive more people to the web3: 1) Ethereum switching to PoS; 2) maturing ecosystems around PoS blockchains such as Tezos and Solana; 3) more accessible layer 2 rollups for more diverse use cases.
  • Usability. It currently takes about 30-60 minutes to onboard someone to the web3 and buy their first NFT, like an ENS domain (see my primer below). They have to open a wallet, verify their identity on an exchange, buy crypto, wait for transactions to clear, etc. It’s hard to figure things out. It’s easy to make expensive mistakes. Many people who are already onboarded forget how hard it is: try onboarding a friend who’s completely new to it. Sit next to them. Walk them through all the steps.

Subcultures and PFPs

A year from now, things will likely be a lot easier for newcomers. Besides work being done on the previous two bullet points, tech giants like PayPal, Square / Cash App, and likely Facebook / Instagram entering the space will help decrease the number of hurdles (at the cost of decentralization).

It will increase the viability of sounds and images that are specific only to certain subcultures and decrease the necessity to make plays that cater to the wider web3 community. So if you’ve been hesitating to start a PFP project or a DAO, because you don’t think the people are onboard for it yet: start small and do it anyway. Consider a lower number than 10,000, and don’t rush, don’t shill too hard. Your audience will get here eventually and you’ll be the CryptoPunk equivalent of your domain. The OG PFP NFTs of your subculture.

I don’t know about you, but I’m so ready for crypto goth, crypto gabber, and actual crypto punk. See you soon.

Why your crypto startup looks like a scam

Posted on | by Bas Grasmayer

The Web 3 is still rough around the edges, but the growth of value has been immense. Fertile ground for scams. This piece aims to achieve two things:

  1. How to avoid potential scams, and;
  2. How to avoid your company looking like a scam.

This is based on years of watching the crypto space, from ICO pump & dumps to the NFTs & DAOs of today, so I’m not talking about any company in particular. However, should you have the feeling what I say applies to your own, then following the advice laid out here can improve your public perception.

No way to check transactions ‘on-chain’

NFTs took off in a way other digital goods didn’t, because they’re verifiable and you can actually own them in your own wallet. When a platform, for example an NFT marketplace, doesn’t make it possible to track this info (for example via Etherscan), you lose all the major benefits of NFTs. There’s no transparency and there’s no guarantee that the NFT will live beyond the lifespan of the platform in case of bankruptcy or an actual scam. This is really important, because projects will fail. Nearly half of all 2017 ICOs had failed by mid-2018.

No roadmap, whitepaper, explanation

Transparency is key. It’s early days. Things are clunky, they might break, and there are scammers around. The crypto space addresses this with loads of transparency through whitepapers and wikis that explain exactly how things work, what they plan to do in the future, and even the smart contracts that power it all. I personally wouldn’t spend money anywhere where this is missing. It’s such a basic thing.

As an example, here’s the Audius whitepaper (PDF).

No clear skin in the game

The crypto space is young, but it’s easy to build a network. When that network is missing, it suggests being new to the space, not understanding it well, or perhaps not having the intention to. What can compensate for it is a network in another domain, like music, sports or art, so that their reputation can be checked.

No team page on the website

This is not a must, but when all else is missing I want to know who are staking their reputation. I want to find these people on Twitter, Discord, LinkedIn and see who they’re connected to. Basically: who’s handling the money I spend?

Fake social media followers

It’s not that hard to figure out when post likes & follower counts just don’t add up. There are also tools to figure out what % of an account’s followers are bots. To me this often feels like someone trying to buy legitimacy instead of earn it. Scammers tend to move fast, because they need to pull the rug before people bail out.

Err on the side of caution

There are plenty of platforms that do things well. Don’t let FOMO get the better of you. Steer clear of platforms that tick the above boxes and give them time to sort things out. Help your friends do the same. It’s estimated that 80% of 2017’s ICOs were scams with $9 million being lost to them daily (2019). Lots of people trying out the promises of Web 3 got burned immediately and the whole space became known for it.

Let’s not let that happen again.