Fungible Chimaera Anyone? It’s Really Cheap

by Thomas O’Dwyer

Nyan cat
Nyan Cat. Click here for the oddly mesmerising experience, without spending $587,000.

When you think you’ve heard all the nonsense or hype about the digital noise that is drowning out real life around us, along comes someone who spends $69 million to buy a piece of digital miasma. “A fool and his money are soon parted.” That’s a lot of money or a lot of foolishness, or both. Miasma is a noxious atmosphere once thought to rise from swamps or putrid matter and cause disease. It’s not too strong a word for what oozes from the Internet swamp of lies, hate, hype and fraud that seems to be responsible for an alarming array of new social, economic, and mental afflictions. Why would anyone pay such a price for some digital art file (a collection of ones and zeros?) Was it April 1? Even more strange, one of the art world’s most renowned dealers, Christie’s, engineered the sale. Everyday: The First 5,000 Days is a collage of 5,000 small random images put together by Beeple, a graphic artist from Wisconsin. It exists only as an image file which one assumes could be infinitely copied and shared – because it’s digital. There are millions of copies of Mona Lisa online but nobody would think of trying to sell one for the price of Leonardo’s original.

But wait, you eager digital merchants, there’s more, much more. In February, an endlessly looping digital cartoon cat chanting “nyananyana” sold for $587,000. Yes, compared to the Everyday image, that was cheap, a bargain. So what’s going on? Trying to explain any new digital fad leads a curious enquirer to the edge of a rabbit warren of vague definitions and unfamiliar words. These digital art pieces, like Everyday and the Nyan cat cartoon, are known as non-fungible tokens. They are unique because they are generated on a blockchain and bought and sold on Ethereum. You see where we’re going with this or, more likely, you don’t, so let’s back up a bit.

It’s 30 years since Tim Berners-Lee, a British scientist, published the first-ever website to a world that had no idea what had just hit it. Berners-Lee was born in London in 1955, the same year as Steve Jobs and Bill Gates. While working at CERN, Switzerland, in the 1980s, Berners-Lee was frustrated trying to keep track of the work of the organisation’s thousands of researchers worldwide, primarily via emails. He proposed an information management system that would use hypertext to link documents on different computer networks. Hypertext is coded text that allows one to get a document or digital content by clicking on a word or phrase — a hyperlink. And so WWW was born — the WorldWideWeb. On August 6, 1991, Berners-Lee published the first-ever web page. It described the WorldWideWeb project and how to use it. The terms Internet and WorldWideWeb are often misused without distinction. The WorldWideWeb is a global collection of documents and other digital files connected by links and with addresses called URLs. The Internet is the hardware, the global system of interconnected computers and servers that stores and moves this content.

The global web arrived in time to stretch its tentacles outside its native academic and research institutions and into the homes of ordinary folks where millions of personal computers were arriving in the early 1990s. Two years after Berners-Lee said “Hello World” on the first web page, his WorldWideWeb had become global and unstoppable. There is a cultural marker for its universal acceptance. On July 5, 1993, The New Yorker published a cartoon drawn by Peter Steiner. A large dog sits at a desk with his paw on a computer keyboard, telling a young dog sitting on the floor, “On the Internet, nobody knows you’re a dog.” It was an “Aha!” moment, endlessly reproduced and modified to become one of the earliest Internet viral memes. (Professor Richard Dawkins called memes “ideas that spread from brain to brain” — an Internet meme is deliberately altered by human creativity, unlike biological genes which evolve by Darwinian mutations).

"On the Internet, nobody knows you're a dog."
“On the Internet, nobody knows you’re a dog.” Peter Steiner’s 1993 New Yorker cartoon that first defined the public Internet.

Along with the web came the hype — infinite knowledge, infinite power to the people, unlimited information, culture and education for everybody, and all free. “Information wants to be free.” But it soon became apparent that information didn’t mind turning a few tricks for a few quick bucks either. On the Internet, nobody knows you’re a Nigerian prince who has a problem moving the millions of dollars his recently deceased father left him, and would you please help by transferring it to your bank account. The beauty of the high-minded cultural Internet started to fade as the ugliness of human nature began to shine through it. Compare the image of a blonde Russian bride-for-sale online hiding the middle-aged Serbian mechanic pretending to be her.

Of course, it was naive to think that the Internet could be anything other than a reflection of the people who use and abuse it — humans could never construct a viable Utopia, so how could they enable a utopian Internet? Yes, millions of us use the web for learning and research, for reading quality material, watching good movies, and listening to serious music. Millions of young people use it for fun, for silliness, for finding friends and lovers, for dancing and creating. They and we were all here before the Internet, doing the same things somewhere else. Then, we knew about the rough patches in humanity — greed, violence, nastiness, evil, prejudice, stupidity. We probably did not realise or we chose not to see the extent of the horror, which the Internet has revealed.

In a recent book of essays, The Disconnect: A Personal Journey Through the Internet, Irish author and technology journalist Róisín Kiberd suggests that the world of digital technology has brought us a very mediocre hell. “Loneliness is characteristic of the experience of living with the Internet today,” she writes and chillingly suggests that growing up intimately engaged with the WorldWideWeb from childhood (she’s in her thirties) almost wrecked her mental health. “The years in which I wrote [these essays] were characterised by loneliness and by very much living inside my head in an unhealthy way, which I think the Internet, social media, can encourage,” she writes. One of the studies she cites suggested that loneliness isn’t about how many friends you may have. It’s about measuring yourself against other people and how many friends they have.

“What is social media, but a mechanism for constantly comparing ourselves with other people? … The minute we feed data into [dating sites] Bumble or Tinder, we’re trafficking in humanity, and that’s no way to conduct your life or build a meaningful connection with another person.”

Kiberd gloomily predicts that a global mental-health catastrophe may follow the Covid-19 pandemic. The lockdowns have forced many people to live and socialise in sterile digital worlds and face “the cancellation of the future.” Living in the present has been a theme of the popular mindfulness movement but, argues Kibard, “we are now living in the present most alarmingly, week by week, day-to-day, and so we can’t anticipate anything.” The fact we’re being encouraged to depend so much on technology for our social lives “is going to warp society, and the only solution I can offer is not only to agitate for more humane technology but also to know ourselves.”

The phrase “warping of society” sticks uneasily in the mind when glancing over the Internet ecosphere. Conspiracies, deliberate fake news, hard pornography, addictive gambling, violent videos, hatred, racism, misogyny, fraud and scams — yes, like the poor, they have always been with us, but they have become unnaturally amplified and normalised online. That is a warping of natural social norms. Social media promise to create connections and then end up encouraging mob rule. Facial recognition software helps police to identify criminals but allows governments to keep tabs on all their citizens. “Warping” is a concept that also seems related to physically non-existent cartoon cats and digital photos that sell for hundreds of thousands or even millions of dollars.

Internet memes can be as funny as cats playing pianos, and Internet sales can be as crazy as fools parting from their money, but so long as it’s legal and everyone is a consenting adult, who cares? But does everything on earth have to become digital and to hell with the consequences? There are people online who gleefully predict the digitisation of themselves or their descendants in some future immortal world of people preserved as ones and zeros on a server cloud. All we need to do is solve that pesky mystery of what exactly is consciousness and then digitalise that. We are already on the virtually unknown terrain of digitalising some abstract concepts of value and money.

A banknote was once a piece of paper, a note you could take to a bank, and the banker would be obliged to pay you in gold or silver the amount promised on the note. Because the system was so trustworthy, the notes themselves acquired the intrinsic value of the metals that backed them. A worthless square of printed paper was worth 50 dollars or pounds because everyone agreed it was. Now paper and coin are themselves in retreat, and the money that finances your life, while still managed by governments and central banks, can be a string of digits on your phone. Crypto currencies are a new leap into the dark, and even those who say they believe in them find it hard to explain them to the rest of us. A crypto currency does not exist in physical form like a banknote, and a central authority does not issue it.

These are the first two stumbling blocks for ordinary citizens trying to understand the concept. The third is words like “blockchain” and the rest of the alien vocabulary of the enterprise. An old-school currency like the dollar is minted by a single issuer and is subject to central control by a government and national banks. A crypto currency wants to be decentralised, but how is the public supposed to trust its value? So far, they mostly don’t. Bitcoin was the first decentralised crypto currency, released in 2009. For several years its price fluctuated wildly in the hundreds-of-dollars per coin range. In early 2017 it moved into the $1,000 field, weaving its way to $13,000 by the end of the year. Today one Bitcoin is quoted at around $60,000, yet many people who have invested in it have lost large sums of money among its spectacular price crashes along the way.

The whole technology of crypto currencies is too complicated (and boring) to address here. But the key point is that all their transactions are encoded on a type of ledger, owned by no one authority but distributed among millions of computers and known as a blockchain. The concept of coinage validated by a secure blockchain is only just gaining credibility among some financial institutions. Still, the idea of value trapped in blockchains is beginning to run away with itself, and crypto sceptics are holding their breath while waiting for the huge crash they are sure will come.

Re-enter the ubiquitous Internet cats. CryptoKitties is a blockchain game issued in 2017 that allows players to buy, collect, breed and sell virtual cats. It was the first attempt to use blockchains for recreation instead of currency, although it was based on the technology of Bitcoin’s main crypto-currency rival, Etherium. Each CryptoKitty is unique in attributes, owned only by its user, and is validated in the blockchain ledger. Its value can rise or fall based on the market. It is similar to a virtual coin but is called a token. Inevitably, more “unique” tokens have appeared, such as photos, videos, audio and other types of digital files. The concept originated in video games where players pay to trade virtual weapons, armour and uniforms.

One last piece of jargon: these are called non-fungible tokens (NFTs) because each one is unique and is certified as a digital asset on the ledger database. (A fungible asset can be swapped for an identical one, like one $20 bill for another. You cannot exchange an original painting for a copy of itself, no matter how good; the two items are non-fungible.)  So, Christie’s sale of Beeple’s Everyday: The First 5,000 Days and the earlier sale of the Nyan Cat cartoon for such astounding sums of money rocked the art world, the financial world and indeed any other world remotely connected to these non-fungible digital ephemera. The buyers and sellers may well bristle at that word ephemera — something that lasts for a short time. But they can’t prove that non-fungible digital tokens “worth” millions of dollars are not either ephemera or a chimaera — something that exists only in the imagination and impossible in reality. These tokens in themselves may not be scams or digital bubbles, but watch out for the inevitable scams and bubbles they drag behind them.

What is to stop a creator from making a new token, or many, from the same piece of art? Each would be unique, but the presence of several identical “originals” could only lower the value of them all. Perhaps someone quietly released a token of the Nyan cat some weeks before the one that made the headlines? First is first, so which one is the valuable item? Those are just two questions about the workings of this weird world, and there are many more emerging. The financial website Benzinga recently noted that “a blank sheet of paper can be used to create a legal contract and it can also be used to fake a legal contract. The piece of paper is not to be blamed — the malicious users are. In the same way, a non-fungible token is a blank canvas waiting to be given a purpose.”

For the moment then, my non-fungible real cat isn’t going anywhere — least of all, digital.