Pablo Picasso once said, "Computers are useless," which was more than 50 years ago. They can only provide you with responses. He would undoubtedly be appalled by the unholy coalition of computer programmers, tech nerds, and digital artists that exists today as they band together to produce non-fungible tokens (NFTs). For filmmakers, producers, and others seeking new ways to generate money, it is a rapidly changing and possibly extremely dangerous world. However, it should be approached with prudence, investigation, and a close examination of recent events.
Sowing the seed of doubts:
From the lofty heights of a $3 trillion cryptocurrency market, it took a perfect storm of soaring inflation, interest rate hikes, and geopolitical shockwaves to dent belief and start a snowball effect: bitcoin's constant price drops, for instance, sparked more sell-offs, so confidence plummeted, which in turn led to more frantic selling. The high degree of borrowing used by cryptocurrency traders to boost the potential upside of their holdings has left them facing demands for additional funding to maintain risky bets. Buyers should exercise caution because the wild west of cryptocurrency lacks any moral hazard concerns, much less a bank of last resort.
NFTs are digital works of art and imagery that, in case you need reminding, are frequently divided into bite-sized tokens and rely on blockchain technology to establish ownership. More than $2 trillion has been lost as a result of the stunning collapse of the interest and speculation bubble that erupted around NFTs and the broader crypto currency frenzy over the previous six months. Given that by mid-2021, more than 16% of the American population had joined the crypto mania, the burst digital asset and decentralized finance (DeFi) bubble has garnered considerable attention but also caused misery for millions of investors.
While everyone consulted for this story agreed that the blockchain technology—basically, a digital ledger of transactions that is duplicated and dispersed across a large network of computer systems—is fundamentally sound, its effectiveness depends on how it is used. Blockchain and cryptocurrencies are inextricably intertwined, even though they are two very different types of technologies. Since the blockchain is a decentralized, digital system that was created specifically to facilitate the trading of digital or virtual currencies, cryptocurrency also functions through it.
The Case for a Free Financial Market:
Bill Grantham, a media lawyer and analyst, refers to supporters of free financial markets as "cybertarians," but this view is fundamentally flawed: "There is no means to judge the underlying value of these assets, so people were trusting on the veracity of what they were told. The Securities Exchange Act of 1934 and the Securities Act of 1933 are still in effect today for a good reason.
One of the many anti-crypto critics is BlackRock founder Larry Fink, who said in 2017 that "bitcoin just shows you how much demand there is for money laundering in the world." This has prompted the coining of the term "shitcoin," which implies a coin or token that doesn’t seem to have any discernible use or value or one used for more ominous purposes.
Digital asset proponents have notoriously said that "any failed concept from the dotcom bubble will succeed now," including Silicon Valley mogul Marc Andreessen, who has backed numerous crypto start-ups. The recent collapse of the bubble economy does not support Andreessen's theory, as the underlying cryptocurrency that underpinned financial structures, let alone currencies, has collapsed like dominoes, never to be seen in the digital world again.
For instance, despite their soothing nomenclature, so-called "stable currencies" in the decentralized financial sector have plummeted. Tether and USDC, two of the most well-known stablecoins, basically imitate how banks operate by accepting payments in exchange for stablecoins that may be redeemed at any time. That is, at least, the theory. Gamblers must have faith in the organization that created the currency and be certain that it will be kept secure, accessible, and not used to wager on another "investment opportunity."
Even when currencies are built to promote stability, as with the TerraUSD and Luna currencies, things can still get dicey. Since its sister coin, Luna, maintains Terra's value at $1, it should not go below that amount in principle. Investors have the option of burning Luna coins in exchange for new TerraUSD coins to bring the price back down to $1 if the Terra price rose above $1. Coins were expected to become more expensive as they became more and more difficult to find.
However, the scheme only works if Luna is actually worth something. Following its 2019 inception, its price increased for a while, in part as a result of an aggressive offer to pay 20% interest on deposits maintained in the currency, reaching a peak of $120 in April 2022. However, once the crash took hold, investors started to withdraw their money to offset losses elsewhere, and Luna collapsed. People started switching from Terra to Luna as a result, which drove down the price of Luna and started a "death spiral." Each round of redemption just saw Luna sliding further and lower. The value of the Luna coin decreased to pennies in a matter of weeks. The game was over for good.
Cryptocurrencies as the Future of Money:
In "The Future of Money: How the Digital Revolution is Transforming Currencies and Finance," author Eswar Prasad writes, "Whatever the outcome of decentralized crypto currencies, variants of crypto and blockchain technology are here to stay." According to Prasad, the problem is multifaceted but begs for proper regulation. The problem is that "when an industry cries out for regulation, it usually desires the credibility that comes with it while striving to limit scrutiny." What is the main danger that regulators need to avoid? giving the cryptocurrency sector official approval but only applying a little regulation to it.
For filmmakers who are experimenting with the market, it is a puzzling quandary. The market for celebrity-driven cryptocurrency and NFT scams has collapsed, and let's be honest about it, says Oscar-winning writer and producer James Schamus. "To paraphrase Matt Damon, 'fortune does not favor the naive,'" which is maybe the reason why the average NFT sale price fell 92% over the previous six months. Despite this, there may still be legitimate applications for some of these technologies, such as tracking royalties and residuals and maybe digital rights management. Although I wouldn't discount the potential utility of these technologies just yet, there will always be speculators, gamblers, and hustlers looking to drive up markets for special-price-for-you-certifiably-one-of-a-kind-digital-whatzyhoosies.
Exploring the landscape highlights the significant overlaps between NFTs and the realm of video games rather than immediately relating them to live-action films and television, taking Schamus's cautiously upbeat note a step further (although animation is a different matter). James K. Wight, a multimedia blogger and digital entrepreneur, claims that video games have a clearer usefulness since NFT purchases are made on an emotionally charged, first-person investment basis. "The clear message is that you purchase because it's enjoyable, contributes to a user's sense of completion, and fosters a sense of community in the digital world," he says. However, there is nothing an NFT can do that a top-notch video game can't do better.
Therein lies a portion of the issue. Producers have long been driven by prospective new finance and creative goods prospects. Producers are fundamentally sellers who are scrambling to find new and creative sources of funding, according to Brian Beckmann, CFO of Arclight Films. They run the risk of believing their own nonsense as well as other people's.
Testing the Waters:
Nevertheless, some cunning manufacturers have made it their business to test the waters and personally explore the feeding frenzy.
John Giwa Amu, a director and game developer at Red and Black, traveled from Wales to San Francisco earlier this spring to attend the Game Developers Conference. He had already had the less-than-exciting experience of trying to make his first BAFTA-winning film, "White Little Lies," into an NFT possibility, which "was a tremendous learning experience, but taught us how cruel that market is," according to him.
"Once you get past the excitement around the gold rush and the billionaire 20-somethings, you realize how young this market is, how many mistakes it has made, and how little it understands how risk and finance work." One important lesson is that while IPs in the form of digital canvases, in-game content, etc. are a tangible component of NFTs, the quality of that creative effort is just as important as the marketing strategy.
While high-calibre filmmakers have been drawn to the prospects, they have approached the booming industry with just enough care to keep their jobs. When it released Gorecats, a collection with a path to an animated series, the Emmy-winning StudioNX, a UK-Canadian animation studio, experienced a surge in demand. Using the Solana network, they launched 1,111 NFTS at a price of $100 each, and they were all sold out in less than 45 seconds.
Since that exciting beginning, the company's founder, Adam Jeffcoat, has hired a financial payout manager to deal with "the volatility and shifting values of both the Solana blockchain and the NFT market, never mind some solid financials! I believe there is enormous potential, but because of the quick ups and downs, I only want a small section of our company to be involved. According to Jeffcoat, the secret to long-term success in this industry is to "concentrate on generating IP backed by great storytelling, which is considerably more appealing to both holders and potential buyers."
There is a wealth of creative work in progress that is already reinventing what the metaverse might offer us all. Just scratch the surface of the game developers-turned Web 3.0 companies out there. The Petaverse Network is the first cross-chain platform that has produced the subsequent generation of "immortal" pets across the metaverse. It was developed by Tiny Rebel Games, an award-winning game and augmented reality (AR) developer. According to co-founder Susan Cummings, "cool things are conceivable."
"We can get a cat up and running in space and make it exciting," says the researcher, "so cats perform better as an AR experience than, say, dogs." Virtual pets can be created using Petaverse and used in games, AR, VR, wearables, and social media. According to Cummings, your pet's DNA and the dynamics of their link with you determine how they evolve—call it a reflexive animal-human dynamic.
The wasteland of virtual creatures that were once adored but were eventually forced to be abandoned was a major driving cause for Cummings and her collaborator Lee. In addition to the 24 million Nintendo DS that were purchased, adored, and then discarded as technology inexorably advanced, there are also Neopets and Tamagotchi. As a digital heirloom that you can give to your grandchildren, it appeals to us that everyone can own it, take it with them, and that it will still be relevant in 30 years.
Petaverse has established an open standard that enables other projects to connect and create new experiences alongside the virtual pets by fusing gaming, XR, and Web 3.0 and hosting the project through the Polygon Platform on the Ethereum blockchain. Cummings emphasizes that the goal is to build a welcoming, cooperative neighborhood with accessible transit. That outlook differs greatly from the winner-take-all competitiveness prevalent in Silicon Valley and Hollywood.
A Final Word:
However, until the next big funding item comes along, there is still too much volatility and uncertainty for crypto and NFTs to become widely accepted in the entertainment industry, despite the efforts of some smaller businesses to tame and employ them.
Dec 14, 2022