Earlier this week, the American rapper and entrepreneur Kanye West implored people to stop asking him to do a “f***ing NFT.” There was something cathartic about reading his words, written by hand in black marker on a physical sheet of paper. “My focus is on building real products in the real world,” he said.
Both the note and the caption of the photo were written in all caps, as if to convey an outburst of exasperation. The post suggested that he has been inundated with requests from agents, hucksters, companies, shills and fans to create or promote non-fungible token projects. With more and more celebrities sharing hollow endorsements for NFTs that appear to be thinly veiled paid advertisements or money-grabs, it seems likely West has been dealing with a deluge of petitions to get involved in this nascent market. His statement is particularly refreshing to read because of this context: it stands in contrast to all of the public figures promoting crypto products they seem to otherwise know or care little about.
Jill Gunter, a CoinDesk columnist, is a venture partner with Slow Ventures, where she invests in early-stage crypto and Web 3 projects. She is also a co-founder of the Open Money Initiative, a non-profit research organization working to guarantee the right to a free and open financial system.
Even those stars who are educated and coherent about crypto and do seem genuinely passionate about the promise of Web 3 – Paris Hilton, for example – still struggle to tie NFTs back to the “real world.” Her recent appearance on the “Tonight Show Starring Jimmy Fallon,” alongside her Bored Ape NFT, has gone viral over the last couple of weeks for the awkwardness and disingenuousness with which she and Jimmy fawn over how “cool” their Apes are. It was her previous appearance on the show that stood out to me, however. She provided Jimmy and the audience with a very reasonable, high-level explanation of NFTs: “It’s a non-fungible token, which is a digital contract that’s on the blockchain. So you can sell anything from art to music to experiences, physical objects.”
I cannot fault her explanation. It’s not very specific, but then again she is speaking to an audience that is as mainstream as it gets. I have provided many skeptical friends with similar descriptions over my years of working in crypto. The retort they always level at me in different variations is a fair one: “What does any of that mean in the real world?” Unfortunately, Paris, there is little utility today in anyone minting digital versions of physical objects as NFTs.
Even those of us who are not skeptics, who have hitched our livelihoods to this experimental industry, regularly speak about crypto and Web 3 in contrast to the “real world” as if to express self-awareness that we are inhabiting another planet. We talk about tokens and NFTs versus “real world assets;” we talk about DeFi applications juxtaposed against “real world finance.” We all know that we have not yet delivered real products in the real world. Kanye West is right.
One common critique of crypto applications is that they are self-referential. DeFi in particular largely functions this way: Stake your magic beans to earn yield in internet money that you can trade on margin for derivatives of yet more digital tokens. In a way, this is an incredible achievement. As an industry, we have created a separate, mostly functional financial system almost wholly unlinked from the real world.
On the other hand, that crypto is in a universe unto itself lends the whole space a fragile quality – as if it is all a collective illusion and, once the first person awakes, it could all evaporate.
Crypto has built castles in the air. They are very complex, compelling, sophisticated castles but they are, as of yet, without foundations connecting them to terra firma.
In a postscript to his NFT note, Kanye West scrawls, “Ask me later.” It is as if he is leaving the door open for us to build the foundations for those castles and to make NFTs and the rest of Web 3 matter to the real world. Maybe someday NFTs will be of interest to him and to the rest of the inhabitants of planet Earth.
How do we as an industry answer West’s implied call to action? What does it mean to make crypto matter to the real world? I believe the answer lies in building the right infrastructure to get us to mass adoption.
There are still so many flaws with the layer 1 and layer 2 technologies that support all of the early Web 3 applications that render the apps unusable for many would-be consumers and participants. Transaction fees on Ethereum frequently stretch into the hundreds of dollars. Layer 2 scaling systems face challenges around delayed withdrawals. More expandable layer 1 protocols struggle with maintaining uptime. There are limited privacy guarantees made by existing smart contract platforms. Even the most user-friendly wallets present challenges to users who are largely unfamiliar with concepts of private key custody.
There is so much work to be done just to get the platforms we are building on into a state where they can support the full range of users and use cases, including those that extend to the real world.
Part of why the use cases of crypto are limited today is because the infrastructure on which they are built continues to have limitations. Okiki Famutimi, a product builder who has contributed to companies including Circle and Aave, wrote a few years ago about the notion of “post-threshold companies”: companies that are building products for the point in time after mainstream adoption has been achieved. There are a lot of post-threshold companies in crypto, he pointed out, building products that assume eventual mainstream adoption when it is not yet even clear we will ever actually get there. These premature post-threshold companies can create a lot of hype and noise and distraction and cause skeptics to question what value these products, built on as-of-yet unfit foundations, will ever offer the real world.
For those who are less concerned about immediate mainstream utility, the nascent products of these post-threshold companies like NFTs, decentralized exchanges and decentralized autonomous organizations can offer a glimpse of the future. If the infrastructure supported better user experiences and onboarding, cheaper transactions and created reasonable privacy guarantees, we could squint and see the future of art, music, finance, governance and collective action.
Our explanations of exactly how this will all pan out may yet be a little hand-wavey, as Paris Hilton’s was on "The Tonight Show." Her description reminded me of another celebrity speaking in grand generalizations about a nascent technology. In a BBC interview from 1999, David Bowie spoke of the internet as “ an alien life form,” while his interviewer squinted skeptically. “The context and the state of content is going to be so different from anything we can imagine at the moment. Where the interplay between the user and the provider will be so in simpatico it is going to crush our ideas of what mediums are all about.” Of course, at that point it was hard for most of us to see exactly how the alien life form of the internet would ever impact our world in the ways it was promising.
Indeed, in the intervening two decades since Bowie offered this vision, the internet for many of us has become the real world that we inhabit mentally and emotionally. It is worth remembering that Kanye West, in order to spread his message about focusing on real-world products, took to Instagram to post a photo of the paper on which he wrote. I would be surprised if someone has not already screen-shotted the post and minted it as an NFT. Who is to say that someday very soon we won’t consider that just as real as the Instagram post itself?
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.