The Problem of Authenticity in NFT Art

What you need to know today in crypto and beyond

March 9, 2021

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Top Shelf

Today's must-reads

BITCOIN BESTS: Goldman Sachs's latest "U.S. Weekly Kickstart" report shows bitcoin blowing just about every other asset class out of the water. As of March 4, bitcoin's year-to-date return, at about 70%, was roughly double that for the next-closest competitor, the energy sector, at about 35%. The cryptocurrency's lead over stocks, bonds, gold, tech stocks and the euro has also widened – especially during a recent stock selloff (the Standard & Poor's 500 Index's year-to-date return is roughly zero).

SHAPING THE SEC: Congress will establish a working group to clarify digital asset regulation in the U.S., allowing industry experts a chance to shape how the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) look at these novel assets. Currently, jurisdiction – i.e., when an asset is a security and subject to the SEC, not the CFTC – is set on a case by case basis. Reps. Patrick McHenry (R-N.C.) and Stephen Lynch (D-Mass.) introduced the legislation on Tuesday.

PARTING WAYS: Ripple Labs said it and MoneyGram have decided to wind down their partnership agreement, put in place in February. For years, Ripple had paid MoneyGram to use the XRP token in international settlement, netting the remittance giant $61.5 million in "market development fees."

– Daniel Kuhn

Sound Bite

Overheard on CoinDesk TV

Eating … bitcoin?

Bitwise Chief Investment Officer Matt Hougan thinks decentralized finance (DeFi) is the latest software innovation eating the world … including bitcoin, he said on CoinDesk TV this morning.

The firm recently launched a DeFi index fund to give broad exposure to the fast-moving subsector. Like bitcoin, DeFi applications and tokens are looking to decentralize and disrupt the existing financial picture.

Though Hougan thinks this litany of applications and protocols could have an advantage over bitcoin. Namely, DeFi's major use cases are simple to explain. Each app could be reduced to a tagline, like "disrupting the NYSE, or disrupting Jane Street or disrupting lending or insurance programs," Hougan said.

"[DeFi] is much more intuitive than bitcoin, which can mean different things to different people, and has seen its narrative evolve so often over the years," he told the "First Mover" hosts.

That's not to say Hougan is anti-bitcoin. Far from it.

"This idea that there are huge chunks of the financial economy that have grown fat, where people have been taking excess profits, can be disrupted by software," he said, was a revolution begun by Satoshi.

Catch the full interview here.

– D.K.

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Introducing "The Hash," news analysis on CoinDesk TV

From the world leader in crypto news and events, the all-new CoinDesk TV covers the rapidly evolving world of digital finance and its role in the global economy.

We cut through the hyperbole and confusion to explain what's happening in this fast-changing industry and why it matters to investors, companies and governments.

On "The Hash," a daily panel show, CoinDesk journalists Zack Seward, Benjamin Powers and Will Foxley choose five of the day's big stories to hash out and analyze. With a personality-driven, fast-paced, entertaining format, it presents themes ranging from serious to fun.

Watch "The Hash" daily on YouTube or CoinDesk.com.

Off-Chain Signals

What others are writing....

New York Times looks at bitcoin's climate footprint, says Bill Gates is not happy. "Bitcoin uses more electricity per transaction than any other method known to mankind," Gates told NYT's Andrew Ross Sorkin.

ARK Invest's Cathie Wood sees bitcoin becoming a portfolio mainstay, remains bullish on Tesla.

- D.K.

The Takeaway

Putting the news in perspective

The problem of authenticity in NFT art

Foundation, a relatively new Ethereum-based non-fungible token (NFT) marketplace, is carving out a space for old school internet creatives to finally monetize their work. Beginning with the sale of a tokenized version of "Nyan Cat," created by artist Chris Torres, though a ubiquitous feature online, Foundation has opened the floodgates to the "meme economy," to use Torres' expression.

In recent weeks, other creators associated with bygone memes have looked to capitalize on their work. While this is an exciting new area for the "ownership economy" made possible through cryptographic tools, it leaves questions about authorship, authenticity and who could claim sole rights – and profits – over images that had previously belonged to the world.

Last week, for instance, the conceptual and controversial artist Ryder Ripps listed the "template" for the DEAL WITH IT meme, a pair of pixelated black shades typically worn by a laid-back dog. The image has no known origins, according to KnowYourMeme, an unofficial documenter of internet ephemera, but has long been associated with Ripps.

Ripps was one of the co-founders of dumpFM, a defunct image repository and chatroom that was upstream from much internet culture in the early 2010s. That's where DEAL WITH IT, first came to life, Ripps claims. (Verge gives a longer accounting of meme's shaky origins.)

"How can anything be proved? i made a site called dumpfm that was popular and created the original meme template for it," Ripps said in a Twitter direct message.

Someone was willing to pay 15 ETH, or about $27,000, for the token, which apparently comes with "the full rights to this image & meme and the Photoshop template used to create it," according to the Foundation listing. This is a right anyone had before, judging by the number of Deal With It memes in circulation.

Foundation separates itself from other NFT platforms as an exclusive and curated site. Founded in late-2020, the site has seen volumes in excess of $27 million worth of ETH. Similar to Clubhouse, artists that want on must be invited.

"This work does require a context. It's not just the blockchain. You can't just upload an image to a blockchain and have it have value. There has to be the context of the creator," CEO of Foundation Kayvon Tehranian said in an interview. "That's why we have a curatorial staff on team who actually interacts with artists."

On some works, like Ripps' DEAL WITH IT and Torres' Nyan Cat, the site provides "Proof of Authenticity." It's a little sticker that appears below the item description, meaning that Foundation's in-house curators can attest to the provenance of the work or that the artist is who they claim to be: in this case, a bona fide memer.

Asked for specifics about how the authentication process works, the answer left room for doubt. Foundation isn't searching the Internet Archive for proof that a person created a meme, but it is relying on personal attestations from the author. In other words, they're using reputation to establish reputation.

"Its my word, not Foundation, i'm claiming ownership, i know i created that meme template and like any other claim," Ripps said. "How do u prove u own a house? how do u prove u ate dinner last night? its a stupid question."

Ripps' long claimed role in the meme's history isn't really in dispute, ("there are people who u can corroborate information," he said). Even if he had nothing to do with it, he's been claiming ownership over the idea for long enough that it ought to be worth something.

In the past there may not have been a reason to lie about something as stupid as a meme, though there's real money at stake now. In 2015, Ripps said he didn't care if he received credit for a meme, even if it "made other people LOTS of money."

Now: "If there's an economy for people owning parts of internet history, I'd like to make some money and sell my part.. Lord knows I never recouped the 1000$s in server costs I've spent and never made money or the thousands of hours," Ripps said. [Note, this quote has been lightly edited for clarity.]

There are dozens, perhaps hundreds of people who could claim ownership of DEAL WITH IT. Though, in this instance, Ripps got there first.

Tehranian said other creators are free to create their own versions, and perhaps two or more provenances could exist side by side. In fact, if he is to be believed, everything will become an NFT in the not-too-distant future, and be "attributed to its rightful owner."

– D.K.

What are bitcoin and ether's value propositions for investors?

A new report by CoinDesk Research explains how the two most popular cryptocurrencies by market capitalization behave in the market, how their infrastructure differs, and what on-chain metrics say about them.

Download "Bitcoin + Ether: An Investor's Perspective" from the CoinDesk Research Hub.

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