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NET Society is unraveling the latest in digital art, crypto, AI, and tech. Join us for fresh insights and bold perspectives as we tap into wild, thought-provoking conversations. By: Derek Edwards (glitch marfa / collab+currency), Chris Furlong (starholder, LAO + Flamingo DAO), and Aaaron Wright & Priyanka Desai (Tribute Labs)
How about that 100 k Bitcoin? It was kinda nice to see this week. How you guys all doing?
Chris:Only one of them hit 100 k. What about the rest?
Aaron:I I'm waiting for Ripple to hit a 100 k.
Pri:Literally. I feel like that's a real milestone. The the fact that my normie friends texted me about it, that's the first time in, like, a couple years that I've had I've had people not in the space acknowledge it. So I actually didn't really realize that 100 k was I mean, I did realize it, but I guess even for mainstream, 100 k was, like, a pretty pretty big, milestone.
Aaron:Yeah. It feels like it we're kinda crossing into, like, a new inflection point, and that was the beginning of it. Right? Bitcoin's back in the news. Like, you're seeing kind of more advancement towards the installation of digital assets, like, in the US with the naming of is it like a David Sachs to kind of advise on AI, crypto, and this appears to be, like, the intersection of AI and crypto.
Aaron:It just feels like we're entering into kinda, like, the web 2 era of web 3.
Pri:Yeah. I saw that David Sachs news. I don't know what what that actually means. I mean, I don't know if we wanna, like, talk about that, but I it's interesting to me that he's basically gonna like, the real web 3 is both AI and crypto just changing the way we all engage digitally. And so it's interesting to me that he's basically the czar for both of those milestone technologies.
Derek:I'll I'll echo that comment, Priy, because I think it's it's it to me, it's like the this there's symbolism there, and we can kind of read tea leaves. But just to have a title that reflects that those two things, those two pieces of technology, crypto assets and artificial intelligence, are require like, require kind of thoughtful leadership over this next administration is a is a it's a signal that, like, these 2 are, you know, the most important things, or one of 2 of the most important areas of of focus for for growth and for moving the country into a into a a direction that avails itself of of real, you know, significant technology shifts. So I I'm I'm optimistic that regardless of the performance that it the signal there is actually interesting for congresspeople, for legislators, for regulators, for, builders, for folks to kinda see a beacon of symbolism there that they can kinda orient around, which, you know, these things are they have the ability to affect meaningful change, in short short amounts of time. So I'm I'm pretty excited about it.
Aaron:Yeah. To me, it's not that singular. I think that's a great point, Derek. To for me, it's not that singular, event, Like, having one one person there, and it's not just crossing a dollar threshold. It's it's more like you can no longer say that this industry doesn't matter, and you're starting to see skeptics noting that they're wrong.
Aaron:I I think even it was mentioned by Jerome Powell this week. Right? That where he was musing a bit more about Bitcoin. And I just think it just marks kind of, like, the next evolution of the installation of this global financial and media system across the planet. I think we're we're we're kind of move moving beyond the skeptical phase into, like, the installation phase.
Aaron:And that's gonna be a lot of work, and it's probably gonna be, like, a 5 to 10 to 20 year slog till it fully materializes, but it's gonna be one heck of a ride.
Pri:I love the Carlotta Perez reference, the installation phase. We are it does feel like we're actually entering that, though.
Aaron:Yeah. And I and and I know, Chris, we've talked about this kinda separately in 2, but, like, one question I had just leading or during the bear market was, are we kind of moving into, like, the the post.com Internet bust phase of crypto, which was web 2, where you kind of had more steady, sustainable, long term growth as, like, some of the the business model questions kinda cleared themselves up as some of the regulatory questions began to clear themselves up in the early 2000. It kinda feels like a similar setup to me. I'm sure it's not a perfect analogy, but I think folks that did make it through, there may be a lot of green on the other or green grass growing on the side of the pasture from here on out.
Chris:Yeah. No. There there are parallels here. I mean, I I worked through that phase in the Internet. You did as well, Aaron.
Chris:And there was, you know, after the dotcom crash, it it really became about survival for a while. And there was a lot of work that needed to be done to clean up the balance sheets to restructure these companies. And at the same time, there's a lot of questioning of what are we even doing with this. And then finally, the the technology got a little stale for a bit. It kinda reached its limit.
Chris:And then, you know, starting around 2004, we got the, the LAMP stack and, AJAX as kind of a a pair of, like, real key enablers to to moving forward. And, you know, that's when web 2 kicked in. But I don't think we really saw it, you know, sort of hit a dominance point until, you know, the the mobile app revolution, you know, starting 6, 7 years later. Now, of course, we had a global financial crisis in between. But these things, yes, once they get going, the the length of time, you know, that they can start to capitalize and install, you know, what's available from the technology stack into products and create value, that can run for a really long time.
Aaron:Yeah. Like, to me, like, the stable coin stuff, which I know we've talked about, it feels a lot like ecommerce to me. It's just gonna, like, in the background until it becomes pervasive. Right? And I think consumer crypto feels like more the the, like, social media, like, mobile era where it's probably a great time to start looking at it.
Aaron:I know, Derek, you spend a lot of time looking at that. And probably will increasingly become, like, an area where we see things that we didn't expect, like, kind of emerge out of it. That's kind of in part what I'm here for. And then I think the z k stuff is a little bit like cloud. Right?
Aaron:Like, this is how we take what we had in web 1, which is just, like, these really janky servers that were being stored in individual locations and scaled it up globally. Right? We scaled up the Internet. And I feel like the z k area is probably the kind of rough cloud equivalent to what's happening here. And then NFTs are just hella fun.
Derek:They really, really are. So I love this conversation. We should unpack some of these, and especially NFT stuff, because I think been a big week for NFTs, and it would be nice to kind of circle back on some of the stuff we've been kicking the tires on over the last month. But something preset, that I I do think is kind of important, which is just and and I know, we've kind of diluted this a bit with with kind of the a piece. It's just a spoke in the wheel, and and, you know, there are are larger forces that are not specific to a singular event that are more meaningful.
Derek:But I do think that the Bitcoin crossing a 100 k milestone is actually as we think about the option value that can get get created with z k and with AI and with gaming and NFTs and all this stuff that we're touching on here, I do think that's predicated on the vibes of what's happening here as an asset class, like, returning back to a normalcy or into a into a, you know, a sentiment shift that that people mainstream America are comfortable with. And I'd say the Bitcoin hitting a 100 k is in interesting for two reasons. 1, it's because, like, the the technology is still here. It's, you know, it's it continues to grow. The number continues to go up as commodity money store value asset for, you know, for digital environments.
Derek:We have nation states that are now starting to speak to acquiring it, as part of, like, a a larger reserve strategy. You know, we have corporations that are buying it up daily and and talking about it publicly. We have the chairman of the Federal Reserve who is speaking to its value props as a a competitor to gold on national television. And and I I think these are important things that the the the general public need to hear to get us all that option value that Chris and Aaron and and everyone here are excited about and chatting about. I'll I'll say one last point on this, which is because I I think it is actually quite significant for for Powell to to come out and kind of speak to how he views Bitcoin as digital gold is a huge, huge market validation for everything.
Derek:I think, you know, largely, folks have been pricing into to to Bitcoin and, over the last 15 years. And I'll also say it has the second order of fact of dragging up the price of Bitcoin, like, in perpetuity. Now whether it happens this cycle or not, you know, the market capitalization of gold today is, like, 17,000,000,000,000, and Bitcoin is, close to 2,000,000,000,000. And that's like a 8 to 9 x delta that the market, either psychologically or subconsciously, will try to close as time goes on. And it's it's like a magnet.
Derek:Right? Like, if you've got physical gold over here and digital gold here at a time where more and more people are spending their lives in front of screens and engaging with digital stuff, and you've got now this trust minimized ledger that holds digital gold and digital commodity money. You know, people are gonna wanna see that that delta close. And as the price of Bitcoin goes up, continues, and as more people come into the space based on and predicated on that fact, all of the rest of the stuff we're excited about is is going to see, you know, massive, massive, interest as, like, the second and third order effects of of people coming into the space and availing themselves to owning digital stuff. Anyway, it feels like this was a big week, not because of, like, these singular, markers that were hit, but it also feels like there's a a mass psychology rewiring that's starting to happen, which I'm really I think I'm I'm excited about.
Derek:I don't know how others feel, but but I'm I'm optimistic.
Aaron:I'm optimistic too, and I love that Derek Sailor. You did a great job there, like, laying out the the vision. The one the one question I I I kinda have on the total like, what's the like, how big can this get? I have, like, a sneaking suspicion, and it always kinda, like, kicks around the back of my mind. But we've seen, like, as products or services or, I guess, now commodities come online, the market size for them is much, much bigger.
Aaron:So the big question I have and one that I don't know the answer to, but I'm I feel like in many ways, gold or even like a state currency could be like a floor for where this is going.
Derek:I I totally agree.
Aaron:Yeah. And even if that's like like an unclear answer and like a 5 to 10% probability, I just think we've seen networked media, like, in the web 2 space become much, much bigger than any, you know, individualized, like, pre Internet media platform.
Derek:I'll say one quick point on that, Aaron, and then I wanna hear from Pri and Chris because, but I do think that, like, the PhDs of tomorrow are gonna be writing about the network premium that exists when you bring things on chain. And I think they've started to do it, and it's a much much more fuzzy when you're not when you're creating a new class of objects, like digital content on chain and digital objects that can be owned on chain. But I do think that you're right. I think the the to me, the the market cap of gold feels more like a floor knowing that you're not getting all of these supercharged benefits of networked stuff and interoperability and composability and true kind of ownership properties that can be viewed on chain, alongside with it.
Aaron:Because it's not just networked art and media. It's networked commodities. Right? It's it's networked gold. Right?
Aaron:There's, like, a lot to the extent that Bitcoin's a good analogy for that. That always felt overly simplistic to me, but I think it's a really interesting open question. Yeah. Chris, Pree, what do you guys think?
Chris:Well, I I I gotta be fussy for a second and, just get this off my chest. The term like, I know you guys are going in in huge, huge directions here. I gotta bring it down to, the level of the word for just a moment. Czar. Czar is, like, the cringest title we've ever assigned to, the White House.
Derek:It's a little boomer. It's a little boomer.
Aaron:It's I find it very aggressive too. Like, I don't know.
Chris:I Yeah.
Pri:It's very I mean, it yeah. It's very, like, just old Russia revolution energy, which I'm like, what are we doing here, guys?
Aaron:Yeah. Shouldn't it be, like, liaison or something? What do you think it should be, Chris? So we're not just, like, screaming at the clouds here.
Chris:Yeah. My my rage for the terms are, burn so bright. Attache. I don't know. That that's not quite, important enough, but name a great American czar.
Chris:And, like, besides Volcker who was already chair of the Fed. Like, name a drug czar. Name an auto czar. Name a climate czar.
Pri:I just Merriam Webster'd synonyms for czar.
Aaron:What do we get?
Pri:And I got magnate, tycoon, king, prince, captain, Baron, Mogul, and superstar. I personally am a fan of superstar.
Aaron:Superstar is good branding. The thing I don't like about it is, like, I don't want American kings or czars. Like, it it should be like a conversation and, like, discourse. Maybe that's what is striking you wrong, Chris.
Chris:Yeah. You know, like, this should be more along the lines of, like, a provincial governor in Rome or a satrap in the, the Persian Persian empire days. Right? Like, they had, wide portfolios. They effectively ran an entire region.
Chris:They could wage wars if they wanted. Like, the only things that really kept them in line was they ultimately had to not piss off the emperor and had to act in, like, aligned ways with with their, you know, overlord. Other than that, they had a pretty wide purview to to go to town.
Aaron:Maybe stew steward? Superstar steward?
Pri:Officer? Like, just something kinda basic. No one's gonna care.
Chris:The admiral of AI in crypto. Guiding the ship. Sleek commander.
Pri:The crypto hell, my lord.
Aaron:Sounds horrible.
Pri:Yeah. I guess the one thing I would just note on the Bitcoin conversation, which is interesting, is seeing, you know, some very respectable outlets out there, you know, having a little bit of a mea culpa moment. Like, even I think, like, the Feet, which I I, like, I personally love the Feet, but I I they published a basic basically, like, a little quick op ed. It was a little clickbaity, but the whole thing there was basically, like, yeah. We're sorry for not recommend like, saying that you shouldn't buy this and that, you know, it's not an asset class to pay attention to.
Pri:So you're seeing a little bit I mean, again, maybe it's clickbait, but that that media cynicism around crypto also feels like it's changing. Granted, is that because we're entering all time high, you know, 100 k territory? Because I feel like that always happens in the media where, like, they all of a sudden love crypto when number go up. But, it was interesting to to see that you have, like, individuals. Who's, like, the Citadel guy again?
Pri:I'm, like, blanking on his name, you know, saying he kind of
Aaron:Ken Griffin. Yeah. He said something similar.
Pri:Yeah. So it's we're feeling a little bit of regret around that. But, you know, this is the area of tech overload, so here we are.
Aaron:But I think that's the at the end of kind of the maturation of whatever we wanna call this, I'm if we wanna yell at phrases that we don't like, I don't particularly love web 3 either. But at the end of whatever this tech cycle is, I do think it also spells the end of whatever tech overlords there are. I will say, though, you know, like, and we didn't talk about this before, like, what's the endpoint of the installation of Bitcoin? It becomes derisked. Right?
Aaron:And it becomes more of like a steady and true asset. I think as Bitcoin and and ether and other networked commodities continue to mature, They just increasingly become derisked, and they become more and more trustworthy. So I wonder if we're just seeing the end of that. I know this has come up a lot in the DAOs and from some folks on the the Tribute team, but they've just noted, you know, if you're in your twenties, like, you've you're almost have only known a world that has Bitcoin. Right?
Aaron:And Bitcoin seems like a safer and safer asset than some of the boom and bust, cycles that you have in traditional finance. And it's like a a safer place to kind of park your hard earned capital, whatever that is.
Derek:Yeah. There's this idea, and I've I've written about before in the past when kind of, like, trying to quantify psychology, but, it's called the Linde effect or Linde's law, and it's it's a theory that, it's usually applied to kind of, like, store value objects that future life expectancy of a non perishable object is directly proportional to its age. And the TLDR is, like, if it's proven to be a reliable store value over a long period of time, it's likely to continue to do so over a similar time frame in the future. For for things that are fixed supply, that are publicly owned, that are exhibiting these store value like qualities, it's a it's a it's a the thing you're touching on here is a really important psychological concept, which is, like, trust gets built and imbued to that network, as time goes on. And and deeper trust and longer trust will start to get priced in as a result of that length.
Derek:It's why I have conviction on things like Bitcoin to continue to persist and grow and same with Ethereum as a platform for decentralized technology. But it also applies to things like punks and squiggles and autoglyphs and and other types of artwork that are exhibiting store value like properties. And so, I mean, we we've seen this concept play out with gold and land and art and collectibles, over many decades, and there's no reason to expect it will be any different for for this asset class and the categories of assets within this asset class.
Aaron:Alright. We've gushed enough of that Bitcoin. Should we gush about NFTs?
Derek:Send it to a send it to a 1,000,000. Send it to a 1,000,000.
Pri:That's the next big milestone, by the way. People are like, oh, maybe 250. I'm like, no, dude. It's a 1,000,000.
Aaron:You mean CryptoPunks. Right, Derek?
Derek:I I mean CryptoPunks. I mean squiggles, dude.
Pri:Oh, God. Okay. Well, before we kinda dive in because I think there's, like, so much to talk about, I feel like we're all super excited. Just kinda wanna introduce the show, you know, 30 minutes in. Classic.
Pri:Yeah. I mean, obviously, guys like NetSociety, we're on episode 9 here exploring the world of digital art, crypto, AI, and tech, bringing deep insights, fresh perspectives, and hitting on themes that we've explored in some of the DAOs, but just like conversations on Twitter and elsewhere, and we just kinda muse on them. And so, you know, just as a quick disclaimer, we're all here in our personal capacities and not that of our employer. So with that said, should we get into gear when it comes to art? Kick off that conversation because it's been quite a week since we last chatted.
Derek:Yeah. Chris has been tracking this so closely. I mean, it may it might be best to just have him kick off with a with a little bit of a market rundown.
Chris:You know, if you're an amateur meteorologist of culture who spends a lot of their time in the basement and just wants to see which way the winds are blowing across network digital assets, this is exciting times. It's like the start of hurricane season. And so, yeah, there's a lot of things going in, a great number of directions. And, I mean, it's been fun as heck to watch. I think we talked about it last week just, you know, being surprised at the breadth of how many of these assets are moving.
Chris:And, you know, we're continuing to see that that this isn't a concentrated area. This isn't just the blue chips or, you know, it's not just PFTs. This is an across the board return. And, you know, some of that I do think is, just structural. Right?
Chris:It's, as we start seeing write ups in Bitcoin and ETH, we we know that that starts pushing people further and further out on the risk curve. But at the same time, I think this is a bit surprising because, you know, NFTs are coming out of a bear cycle. They they've only had one true bull. And, you know, I I do think there was questions about would we see another bull run-in NFTs, especially when, you know, there were competing products out there, you know, that kinda touch, you know, the sort of, like, intersection of, like, networking, finance, belief, you know, via meme coins or, you know, now we're seeing with, some of these agentic AI chat bots. But, you know, the answer seems to be a resounding yes.
Chris:And so it's been fun watching watching the world kick off again. We're back, baby.
Pri:We are so back.
Chris:I think we should take a moment and contemplate what it means that, you know, there's 8,000,000,000 people in the world, and there's only 83,157
Pri:chunks.
Aaron:I like the chunks. I I for some reason, when it opened up, I know it opened up like an hour or so late. I couldn't I was getting some error on the platform, but I thought that that was a fun new project. What do you think about the fact that it's on base, Chris? Does that weigh into your decision making there?
Chris:No. I mean, I'm into chunks for fun. I think I grabbed 9 of them, and then I didn't have any other ETH in that wallet on base. And, you know, but, like, 9's a plenty good number. And I I do think there there were a few minority takes out there that were disappointed that so many chunks were minted because, you know, I think they were thinking of it from an older school, you know, oh, we're going for scarcity here, and I just wanna be early.
Chris:And the fewer there are, the better off there are from my prospects. But that's not really the point to them. Right? Like, you know, it's more about what can you do with smart contracts, what can you do with mixing and matching traits, And, you know, how can you have, you know, this this digital representation that you can customize, you know, making use of all all the wonderful tools and tricks that solidity, you know, gives the devs to build that out. I also you know, Aaron, I I too I popped in around 8.
Chris:I saw it wasn't ready. I went off, did some other things, came back around 9, still hadn't deployed. I think it eventually went live at, like, 10:20. And, you know, that actually felt good. It felt like you were back in the olden days of, oh, yeah.
Chris:Right? Like, this is what happened last time around. None none of these things.
Derek:The same thing. I felt the same thing. It felt like early art blocks. It felt like things were breaking left and right, and there was, like, people were excited to participate and things costs were were so cheap. And it was just, like, there was a purity about the whole thing that felt rewarding for me in in many ways.
Derek:Like, you don't really get to see that type of and, like, I'll give you an example, Chris. Like, the fact that you didn't sit at your computer for 3 hours because you knew that this would be accessible and cheap and inexpensive even though, like, there was a collective interest in the project. I think that that is hard to engineer for, and it only happens when you kinda, like, lay the puzzle pieces in the correct format to kinda come together. And, anyway, I I I totally agree with that sentiment, and I applaud, I applaud Marka in backseats, for driving this ship because it's been really fun to follow. I think, you know, they also the design decisions are awesome.
Derek:It's it's, yes, it's on base, but it's also on chain, and it's it was cheap to mint. It was 0.01 ETH. The scarcity model that they're going for is not through the characters themselves, which we have found can be limiting to growing communities. Right? PFP projects typically cap out at 10,000 or 15,000.
Derek:They're pushing this idea of of kind of, like, inclusion to its closer to the end state where I believe it belongs, which is, you know, 80, 90, a 100000 folks. And I think the scarcity model can be layered on top of that through the wearables, which is already starting to play out. There's some, like, rare shirts and rare accessories and rare staffs and hats and stuff that are now starting to go at a premium in the marketplace. I love that they created a marketplace and bundled it with the actual drop itself. It's very much like a move larva would have done.
Derek:And in terms of, you know, deploying on base, these are the trade offs that I think make sense for this new reality. Coinbase is almost $100,000,000,000 market cap company. It's one of the fastest growing crypto companies in the world. And I think most folks are excited about the prospects of this thing. And the plan, I think, is to drive a lot of traffic to the base chain, and support for that will kind of, like, come around as a result of those resources.
Derek:And and so, yes, you're not minting on, like, the sacred space of Ethereum L1 block space, which I think all of us would agree we want our hyper scarce commodity art objects to live because these things are, you know, quite valuable. But I think engineering for a slightly different audience and segment makes sense on base, and I think they it seems like they're doing all the right decisions to kinda grow this thing. But we'll see. We'll see. I I'm curious to hear what what, if that if that resonates with you guys and if you're seeing any anti signal here.
Aaron:I'm rooting for it. I mean and I I think the one thing that you guys didn't mention is the site was, like, slick. It looked, like, professional, and you could you could see kind of the, like, love and care that, Backseeds put into it, and I thought that was great. It kinda reminded me of, like, a weird mashup of nouns and larvalapse, but with, like, a professional grade veneer on it. Not saying that they those folks didn't do that.
Aaron:It just looked, like, slick and modern, which I really like too.
Chris:And since we're, we're talking fresh drops and throwbacks to 2,001 vibes, the other other drop I was really looking forward to this week, by Poof and DXRG, it had to delay its launch. I I believe it's coming out, like, in an hour. So when we get off recording the pod, I'm I'm looking forward to giving that a whirl. But, I think he got a little worried about his his AI cluster and had to beef it up a bit. And so we'll see how that one goes as well.
Chris:But the, you know, we went from nothing to do to, you know, I don't know, being Pavlovian, trained and reminded about how fun it is to wait for for these things sometimes and then hopefully getting the payoff.
Pri:Yeah. Totally. I'm pumped for that. Do you know what I'm, like, kind of having triggering moments of is being on call, being on a Zoom the night it was like a Saturday night at 8 PM for other side, like, in the the depths of just, like, whatever COVID it was. And I just I don't know.
Pri:Actually, it was post COVID, but I just remember being, like, I I, like, actually don't know if I can I can't do these time drops anymore? I I I hate it. So I just I just got, like, actually a little bit triggered by that moment. It was such a nightmare, that one.
Aaron:I I don't think we're there yet, Prick. I mean, this is just like a pedestrian drop of I know. Cute characters with trace.
Pri:But I I just got PTSD because I was on a call for, like, 3 hours trying to get that job done. And I was just like, I can't do this. Anyhoo, not to to bring down with my, like, total negative energy here, but there are a couple other jobs that I feel like that I'm pretty excited about as well. And then also, it's kind of fun to just see, like, the the old, like, kinda classics get get a little bit of love too. Even like a r AI art is is catching a little bit of a bit, and it was there's always an open question as to, like, you know, what specific artists or the types of work and the new artists that have emerged over the last couple years experimenting with AI tech and and the tech itself transforming so rapidly.
Pri:Like, what does that mean for the actual art form? It's been interesting to see the collector base online kind of, gravitate towards some of those artists because it was unclear to me whether or not that would be the case. I don't know about you guys, but I think that's been kind of fun to watch.
Chris:Yeah. It's, I I think we need to rewind the tape back a little bit here before we go super deep into the AI stuff just as a a setup here. Right? Like, there's there's a lot of ways you can look at these markets, these creative projects, you know, these cultural objects. And, you know, I think we just talked about just, you know, the sheer joy of things with chunks.
Chris:But, you know, we are also people who find ourselves very wired into what does an emerging network economy mean and what are the rules as we start working through that. And, you know, some of that I think is from my point of view, I like to study systems. And I you know, to me, this is a very interesting set of systems to to look at. But then we we also do have, like, some fiduciary duty, you know, as members of FlamingoDAO, other entities. And so, you know, we often talk in markets a lot.
Chris:On our Flamingo call this week, you know, Derek and I both kinda you know, we're talking about where punks are gonna go. What's the the floor value of punks? And we both landed on, like, $500,000 as a peak floor to kinda base our own thinking and the forecasting around. And so why don't we start there where, you know, the, quote, unquote, blue chip side of the world, especially in gen art, works as a set of, like, ordered relations and and ranking in hierarchies between each other. In order for that to function, you do need to have, like, a, you know, sort of like an Apex collection that everything else can determine their value from.
Chris:And so, you know, punts happens to be it on that side of the house. Derek, we took a little bit of heat for saying 500,000. Some of some of the bulls in the in the world were not thrilled with that, but it's also where the the forecasting or the thinking starts to get really wobbly. And so you got some thoughts around this?
Derek:Yeah. It's a I mean, so the this is all very fuzzy stuff. I do think the one benefit of evaluating things like Bitcoin and CryptoPunks and ChromieScogles and Autoglyphs is that's different than than plat than underwriting platform growth, which is typically, like, what a venture investor does, is that these are fixed supply assets, and they they are very pure expressions of markets. Like, there's a supply side. There's a demand side.
Derek:There's a fixed supply asset. And if there are more buyers than sellers, the number goes up. Right? It's just, it's very, like, very elegant and and very pure expression of of, like, these these mechanics. You know, there's also we've talked about this a lot in in Flamingo and and a number of collectors who have been collecting this stuff for years have been chatting about some of these dynamics.
Derek:But there's also kind of, like, relative comps across how these things trade against one another. I don't wanna go into exact percentages, but there are historical, you know, trend lines that, and and and, kind of ratios that, you know, autoglyphs trade against punks and punks trade against squiggles. And the market markets just, like, you know, psychologically love to kind of, like, revert back to these these ratios. And so, you know, growth in one of those 3, it's typically punks. It's the deepest market.
Derek:It's the most bids, and asks. And, you know, that that market is drives a lot of the price. They they tend to kind of revert back to those ratios as time goes on, tracking everything up as, like, these fixed supply, commodity, crypto art, store value objects. Okay. So that's kind of like the foundational way we view that type of market structure, and I love grouping those 3 assets together because you can see clear correlation between those 3 when you look at just any chart.
Derek:Now the question you're asking is, like, well, how do you value where we're going? And, you know, I I think the these are ETH denominated objects. So I I think certainly one way to do it is to just think about where ETH is going, and, ETH is a platform and ETH is a money and how we can price these things. You know, it's it's clear to me that the market for high end store value art, and let's just put punk squiggles and and glyphs in there, they they continue to kind of, like, be priced and denominated in ETH, as time goes on. Obviously, there's these short term periods where they get denominated in dollars or people claim that they're getting denominated in dollars, but but the market and typically, which is driven by sellers, they they they think about outperforming ETH when they hold a CryptoPunk, and I expect that to to continue to ramp up as time goes on.
Derek:So thinking about, US dollar price of punks, you know, over this year or next year or in 10 years or 15 years, I think one way to think about it is just to think about where ETH is going. Now I think the next way to think about it is think about, you know, art as an asset class and as a mechanism to store value. And there's something like 250,000 ultra high net worth individuals on planet Earth. If memory serves, you know, that constitutes something like 30 to $50,000,000 in in total net assets. It's it's not crazy to think that owning a CryptoPunk as a diversified store of value mechanism is something like a job to be done in the future.
Derek:And if that is to happen, then kind of like all bets are off on crypto art broadly as a as, like, we price them and as people kind of get less artistic exposure, more financial exposure to the asset class, which is inevitable when you have an asset that's mark to market on a global ledger. I'm not, you know, saying whether that's a good thing or a bad thing. I'm just saying it's a thing that will likely happen as it has with with traditional art. At which point, you know, it's underwriting that type of kind of inflection or that type of growth is really difficult to do. It becomes easier as it starts to get as it starts to happen and we start to see those behaviors, as we start to see every museum start owning 1 punk in their permanent collection.
Derek:You know, every high net worth investor or every ultra high net worth investor want 1 punk or 2 punks as per per your collection. There's just not that many of these things to go around. And given their importance and their networking and their lendiness, I expect that to happen to some degree for punks and autogos and squiggles here in the future. So my base case for this stuff is, at least on a cycle by cycle basis, is just to think about where where is ETH going. You know, can we look at historical data around how, you know, Punks and Squiggles and Autoglyphs in terms of their ETH denomination and their USD denomination have have kind of been valued in the past?
Derek:Can we kinda draw out a line or or correlate that to the future? But in the medium to long run, I think kind of all bets are off. And, like, that's where things can get really crazy. So, anyway, it's very hand wavy, and it's more art than science for sure. But those are just some of the things I think about before investigating a question like that.
Aaron:That was a great rundown. I mean, for me, I also just think this stuff is more fun. And if you believe in this, like, vision that the end game for crypto is more media focused, these artifacts are just gonna become more and more cherished. It's kinda like a threshold vision type question. Like, will the endpoint of of all this be media focused or financial focused?
Aaron:I'm gonna be on the media focused side of that equation.
Chris:Spoken like a true Brooklyn hipster, but I hear you. I I I think these things can go in all sorts of directions. To me, the one that I believe that people discount more so because it requires a little more creativity and a little bit of a stretch of of the imagination is the media side of things. And, you know, trying to contemplate that does put people in uncomfortable situations that, you know, they're not not fully wanting to engage in or maybe wanna take a wait and see attitude. Whereas, you know, other people wanna just jump into that risk, you know, and and base themselves on belief.
Chris:And then, you know, there's there's people caught in the middle who kinda try to make informed decisions as best they can. And that's, you know, I think, a good way to return to the AI art conversation because, you know, Derek made a a really clear case around, I think, the degenerative art and the on chain art, and that those objects exist within conversation amongst themselves. And that conversation has has happened already. It's a little more mature. Whereas in AI art, you know, the category has been around for a while, but it also really didn't, you know, start coming of age in terms of both its capabilities and recognition and understanding until we were later, you know, in the NFT bowl last time, and then a lot of it happened in a bear market.
Chris:And so the market itself hasn't had a conversation or an opportunity to form consensus. And so I think all bets are off in terms of, you know, really understanding how big that market can get and what does become sort of the the stack rank in terms of AIR. And then there's, you know, I mean, there's so much within this. There's also how how are these things apples and oranges. Right?
Chris:Like, you to compare GenR and AIR, yeah, sure. There's a lot of overlaps and intersections, but there are ways in which they're fundamentally different as well. And so you just can't clearly map how one behave to how the next one will.
Aaron:Yeah. I tend to agree with that, Chris. It's kinda hard to know. It's still a little bit early. I guess that's another way to phrase what you were saying, just to know how that kinda subcategory materializes and matures.
Aaron:I feel like it may make sense a little bit to kinda wait and see see what the endpoint of that process is if I'm hearing you correctly.
Chris:Yeah. I mean, this is an area where, to some degree, you need to let the people who are really deep into this do the work and and show the way. You know, I I think we're a step removed from that bleeding edge, whereas in, you know, other places we might be on that edge. But, you know, one one thing around AI art coming on chain is the fact that it wasn't on chain. And so we have a lot of these questions to deal with around providence, meaning what is the inherent value of taking an early AI art project and then, you know, tokenizing it.
Chris:Right? Because that's much different than, you know, punks, glyphs, gen art, in which the chain itself gave birth to them. And and so that's one one aspect of this that, you know, I do think we spent, you know, a couple of years kinda chattering about. And, you know, at this point, it does feel like that conversation is is kinda reached a point where people are like, look. It's fine.
Chris:It doesn't bother us. We're willing to buy these things. It's not to say that the book is closed on that. Right? Especially if we start seeing more and more older AI works migrate their way on chain.
Chris:But that was a big, you know, sort of thing was, like, how do we navigate this translation from the origin of the work to, you know, its new homes?
Pri:Do you think that a lot of this specific kind of category or subcategory of artwork is gonna just be hyper artists and aesthetic driven as opposed to the genre itself? Like, I could see I could imagine and and I also think I mean, which we've touched on on prior podcast is, like, the agent starting to create AI work, I think, is gonna be probably something, you know, compelling. We've already seen it with Boto, but a little bit more widespread. Like, maybe that's when this category that that specific subcategory of, like, AgenTic created AI artwork becomes a little bit more appealing to people. But I do wonder if it's gonna just be driven more about, like, artist and persona and, you know, what exactly they're doing with the tools as opposed to just the category itself kind of completely taking off some like, which is a little bit slightly nuanced difference to generative art, in my view, which I think the entire category became, like, just appreciated by more people.
Pri:I don't know if it, like, we're gonna see that category excitement as much as as opposed to just the work itself and the artists themselves playing with it.
Chris:Yeah. I mean, there's an aesthetic consideration. Then there's the, you know, technical I don't know. How do you wanna put this one? Right?
Chris:Like, there's just the okay. What were the technical constraints? What were the innovations? Like, you know, what did the person designing the system have to go through in order to generate this object? Right?
Chris:And we see that with align draw. People who believe strongly in align draw, they're not doing it because the image approximates its text description in a very, very fuzzy low res way. They're doing it because this was the genesis, right, of text to image. And so the aesthetics and the outputs don't matter as much as what it enabled.
Pri:Yeah. But I guess what I'm trying to say is, like, do you think people will care about that process as much, or just there's gonna be some artists who just nail the aesthetic and have a persona and energy and, you know, the process itself or the work that they went through to produce that specific AI work is going to matter? Like, I I feel like in this case, maybe not. I
Aaron:think
Chris:there's room for all of these things. You know, this isn't a, you know, a dogmatic in order for AI art to be successful that has to check these boxes. Right? Like, the networks are permissionless. People have their own taste, and what they choose to emphasize on as collectors is their own, you know, their own personal opinion.
Chris:And so we're gonna get all of these things. You know, to me, it's more around when you when you start really nailing into aesthetics or, like, personality or the intersection between aesthetics and personality. Right? Like, how much of this becomes, you know, every day. Right?
Chris:How much of this, you know, the same way, like, branding really leveled up, you know, over the last 25 years or so, and now we take it for granted. Yeah. You know, how much of this sort of fades into the background, and it's just this is a new normal versus, I don't know, you know, like, a above and beyond artistry or above and beyond form of expression that really breaks through. There's room for both there as well, but I kinda feel more like, you know, this will a lot of this will just seep into the background over time.
Pri:Yeah. It's a fair point. And I guess my point probably does align with, like, other types of work. It's not just generally like, this idea of brand and and what have you is probably applicable across, like, other art forms anyway and other artists. So it's not necessarily different in this category, I guess, to your point as well.
Chris:We do know that lost Ravi's do sit at the, you know, the top of the pecking order there. The the lore behind it, you know, the the artist, you know, what Videodrome did early on, what they continue to do in their practice, the fact that they've, you know, issued, the NFT world, you know, it does kinda cement lost Robbie's there. I also think, you know, gen Bato and their genesis period is pretty important as well. And so, you know, you might be able to say, hey. That's 1 1 and 2 in this world.
Chris:I don't know. Like, where if you guys were to try to assemble, you know, the this list of things, where else does your mind go after that?
Aaron:I mean, for me, it's more like who's the Dimitri? Who's the who's the Tyler Hobbs? Like, who's the William Apon? Like, who's gonna be the breakout artist, let's say. And I just don't know if there's gonna be breakout artist yet or creator and whether or not they'll their body of work will have the kind of fortitude and collective weight to kinda push into the mainstream.
Aaron:And and that's part of my challenge on the AI art side, Chris. It's just like I I've seen some early glimmers of that. I think we saw some early glimmers with, like, nice aunties and a handful of other creators, but it doesn't seem to have the same public response that generative art had or some of the on chain bits. I can't tell if that's because, like, lurking behind the whole AI growth, adoption, and dissemination, there's, like, a little bit of skepticism, anger, like, resentment that sits behind it. And I I don't think people react the same way to seeing, like, AI created media as they do, you know, human created media.
Aaron:There there's something like some deep psychology that's happening around there.
Pri:It's actually kind of an underrated point as far as, like, maybe that's the kind of core discrepancy that we're having with the category in general is just that, like, tension, between that kinda new media and human like, machine created media and human generated media. I feel like maybe that's that's also part of the reason it's, like, difficult to pinpoint exactly the category. It's just a little bit of, you know, the distance there. You kind of see it across Hollywood today. Like, a a big part of the strike also had to do with just machine AI generated media, and and that was, like, from the most, like, creative elite circles that exist.
Pri:So if it's coming there, I mean, it's obviously gonna bleed a little bit into the art world and how we perceive art of it too.
Derek:I'll I'll add one thought here, which is the AI collecting the AI stuff has been difficult, I think, to Chris's point. Like, it's there's a lot of innovation happening over the last 10, 12 years around synthetic intelligence and AI. There's a lot of different approaches to how to use AI in in making work that could be work like natural language prompting for some sort of, like, LLM payload, or it could mean creating, like, a visual output and a flat 2 d or a 3 d object. I think as a result, it's like you when you've when you've got this marriage of of blockchains, which allow for for collecting and ownership and pricing and markets pricing things and AI and this technology that's being used in in lots of different ways. You know, AI largely predated, an exploration of AI largely predated a lot of, like, mass market, excitement around contracting environments, with blockchains.
Derek:And so it's almost like we're catching up now to some of the innovation that predated blockchains with AI. And so, you know, you've got stuff like the Align Draw 2015 that couldn't have been minted on Ethereum back then. So now 10 years later, it's now starting to you know, they're they're trying to bring some of that, that original innovation to blockchains, which I think is, you know, cool from a collectability perspective. But it certainly wasn't like the original art work or the intent of the artist when they were exploring and creating a line draw that this would end up as a collector's item on a blockchain. I think there's merits to it.
Derek:It's just like different than, like, you know, Tyler Hobbs writing the Fedenz algorithm, putting it on the Ethereum blockchain, and then, you know, letting Ethereum entropy dictate the outputs, which is, like, it's it's work that was made for the purpose of of of that that algorithm. And so I guess maybe one way to think about it or at least one way I think about it is is around systems. And I really think, like, the answer to for me, it's not for everybody. For collecting AI is is collecting systems. And it's like this idea of human and robot working together and seeing these pieces to create something that allows an artist to express themselves, but then also allows for emergent creativity from, like, this AI system to exist and get collected.
Derek:It's one of the reason I think there's, like, this collab this shared collaboration, I think, between those two things that's interesting for me for collecting crypto AI art. And I think, you know, it's one of the reasons why I think all of us early on were excited about Bato. It actually felt like that that was like what you were collecting was really like this system, and it expressed itself through these emergent assets that would end up on SuperRare. But the system ownership over that system was reflected in this, like, ERC 20 token, the BOTTO token. And I I I there's no winner or loser around crypto AI art.
Derek:Like, I love collecting brain drops and Clara Silver and Gene Kogan and Sofia Crespo and a number of, like, the and, you know, I love lost Robbie's for what they stand for. But I but I think where I'm drawn is, like, AI and crypto as a system and that system getting explored in in part collectively owned, whether it's outputs or or the system itself. I think that to me is, like, the most interesting surface area I've seen.
Aaron:Yeah. That I think that's a a really good point. I also wonder if it's a bit because it feels like another, like, kind of platformification of art and media when you look at all these AI systems. Like, they're all generated by big companies who are kind of playing in the big companies' playground and generating it. And I know that there's some exceptions like Pindar and Claire that have done work to, like, train their own LMM, and maybe that makes it more interesting.
Aaron:But it just feels like constraining in a way that generative art didn't feel that way. It felt like it was a new, more mature expression of creative output. And I wonder if that's lurking behind some of the questions related to AI r two. It's a tricky it's a tricky problem, but just something feels like a little bit off around it, at least to me.
Chris:It's a complexity thing, Aaron. I think we've put we've identified a lot of areas where this is complex. It's emergent. It requires consensus. And a lot of people form their consensus through market behavior, and the markets haven't really had a chance to have that conversation.
Chris:And so I think there's a lot of different ways you can look at this. Right? Like, some of it is through a lens of we haven't pulled back the veil yet. Some of it's through a lens of, well, this thing came from a lot of different sources, and it simply isn't as clean as gen art. And therefore, you know what?
Chris:It's easier for me to just kinda think think about gen art or compare and contrast and, you know, like, we are, like, sort of pattern matching and, you know, comparison machines. And so, you know, that's another aspect of it. You know, I I was in a a bit of a Twitter thread the other day with, back and forth with, DelRonde, who who made a lot of really good points around how hard it is to build up the domain knowledge, how some of the best work exists as one of ones or that, you know, gen art sets itself up so sets itself up very well for blockbuster drops that can attract a lot of attention, can form a lot of, you know, easy easy and quick consensus that then can translate into market functions. Whereas a lot of the best AI work, right, like, it requires sleuthing. It requires love.
Chris:Like, you gotta go through catalogs. You gotta keep, you know, digging deeper and deeper. Or, you know, even bottle, right, which we we kinda hold up as its flagship. It's in its work's not done. We don't know how to judge it.
Chris:And it releases instead of in these, you know, big big, network drops that everyone can, you know, throw, you know, point one ETH at and grab a small piece of. It it goes through these, you know, one of 1 auction models. And so, yeah, it's just it's a a higher degree of complexity. It's more work to understand. But I also think because that conversation and that process is still in formation that we're gonna see a a lot more sort of interesting behavior in this NFT bull market versus gen art in which, you know, maybe we're just really trying to figure out what the ceiling of appreciation is versus over an AI where, like, it still has a lot of, like, formative work to do.
Chris:So I'll leave it there.
Pri:You know, it's kinda interesting. It just occurred to me is, like, part of what was so interesting just it is continues to be interesting is this idea of network art, obviously, and and, you know, having this neat social aspect of networked art. What is interesting about AI art when you're thinking about community is this idea and community and network and, you know, having that social element, is that AI art is so malleable that it actually makes the network potentially able to be the creator, which I think is kind of cool. Like, you could imagine a world where I mean, Baro teases this out a little bit with having, like, community curation of artwork, but you could have a specific networked community of people develop prompts together or develop art sets together for, you know, some amount of and and sell that. Like, it makes just artists or creator collectives a lot easier for them and create output very rapidly, and I think we'll probably I I would imagine we'll see some experimentation around that.
Pri:That that actually sounds kind of compelling to have, like, network art the network creator class, which is a little bit different than I think, you know, what we saw with the outputs just being networked themselves.
Chris:For sure, Priya. I think that is a direction we're going in. My book club this month has me reading drunk, how we sip, danced, and stumbled our way to civilization by Edward Slingerland. And I'm at a part right now. It's basically he's trying to figure out from an evolutionary perspective, like getting drunk, getting high.
Chris:These things shouldn't really be net benefits. They they hurt us. But at the same time, they keep enduring. And so there has to be some benefit to it. But what is that?
Chris:And he starts, like, digging into okay. Comparing us to to other primates. Right? Like, just if you're taking an evolutionary perspective, you wanna find your cousins. And the difference he's getting at, like, the point I'm at at the book right now is, like, humans possess these 3 c's, creativity, culture, and the communal work.
Chris:And, you know, as I'm reading this, I'm like, my god. This is just so bullish for networked objects, network interactions. Because he really makes this point that if we're left on our own without our cultural package, and by cultural package, I mean, you know, our tool building skills, like, the whole gamut. Right? If you just dropped, like, us and a chimp and 20 other species into an alien environment on our own, we're not gonna do that great.
Chris:Like, we need both, like, our inherited knowledge and our ability to work together to to really excel as a species, and that's what set sets us apart. And so if you start looking at that, you know, from this perspective of what are we gonna do with AI, like, it really you know, especially in these network environments, it it really starts sending your mind flying.
Pri:I I totally agree. That's a really nice way of putting it as far as, like, what it's it's a nice dichotomy, the conversation around AI and, you know, it being a little bit intimidating to humans. I mean, at the end of the day, we we kind of dictate it. So being able to do that through community network, you know, digitally flat organization or whatever, you know, whatever the community looks like, I think is a really compelling way to reconcile, like, the human element with the AI output. In a way, it'll feel more human if you're sharing it with a group of people and a group of people with a culture around it to to the other c there too, Chris.
Aaron:Yeah. I I kinda like and I think we're seeing some glimmers of this with the AI agent type experiments that we're seeing. I don't know if you guys caught that this week, but there was a couple. There was, like, one that was kind of this interactive real time lives live feed where people could interact with something online, and then it it, use an LM to kinda auto generate, like, a never ending video, I mean or stream. They were kind of frame framing it as, like, a sitcom.
Aaron:I was joking with somebody. It was more of, like, a shitcom. Like, it was horrible. I feel like something around that is is probably more interesting. A little bit more to your point, Derek, from before around why Boto is interesting in that vein and feels like a little bit more human in some way.
Aaron:Like, it's using just like a a little bit more narrowly as like a tool. I don't know. Like, after this conversation, I just, like, kind of walk away with, I'm much, much more excited about, like, programmable NFTs than, like, AI art at this point. Like, it just feels, like, much more native. Like, there's a built in audience.
Aaron:It's, like, more cool and innovative and interesting. It's, like, stuff you couldn't do before, not just, like, you know, remixes of stuff maybe we have done before that's, like, stuck in a large data lake underneath an LM or or, you know, whatever systems underpinning the journey or some of the other image generation models. I just just I always walk walk away from these conversations just thinking about, like, other categories in crypto and NFTs.
Chris:Well, we're all in on the network, and we're all in on the NFT as a file format for translating or acting as a network adapter between creativity, culture, and community into these network environments. So why don't we call it there? I think this was a fantastic convo, guys.
Pri:Loved it. Thanks, all. Bye.