Investment Mania: From Crypto Art to Trading Cards – The New York Times

michael barbaro
From the New York Times, I ’ thousand Michael Barbaro. This is “ The Daily. ”
[music]
today, It started with a painting posted on the internet and ended in an excessive cryptocurrency bidding war .
[archived recording]
now to the latest course that ’ mho sweeping the internet, the rocket prices for digital art sold as NFTs. NFT, and that stands for nonfungible nominal.

michael barbaro
My colleague Sabrina Tavernise speaks with columnist Kevin Roose about digital currencies newest frontier, his unexpected function in it, and why it actually matters. It ’ sulfur Tuesday, April 13 .
sabrina tavernise
so Kevin, I realized how small I understood about your world when I saw this headline of yours in the paper. And I ’ megabyte going to read it to you right now. So it says, why did person pay $ 560,000 for a picture of my column ? so tell me about that .
kevin roose
well, actually, that is a small outdated because the substitution rates have fluctuated since I published that column. so person actually paid $ 725,000 for a photograph of my column .
sabrina tavernise
indeed you ’ re saying you sold something that everybody can read on-line, basically for release, for hundreds of thousands of real dollars ?
kevin roose
Yeah, I mean, I would like to think that all my columns are worth at least $ 725,000. But that might have been an anomaly. But that is the world of NFTs for you .
sabrina tavernise
so Kevin, where does the story of NFTs begin ?
kevin roose
So the report of NFTs actually starts with the narrative of cryptocurrencies and, in particular, with Bitcoin, which began all the way back in 2008. During the fiscal crisis, there was a mortgage meltdown. The Federal Reserve was bailing out banks and printing all this money, trying to stabilize the economy. And in the middle of all this, this mysterious paper appeared on a cryptanalysis electronic mail listserv. And it was written by person calling themselves Satoshi Nakamoto. And it proposed this raw form of digital money called Bitcoin. And the technology that sort of powered Bitcoin, the infrastructure that allows Bitcoin to work become known as the blockchain .
sabrina tavernise
so explain both of those to me. How during that work ?
kevin roose
OK, you know how money, regular money, is controlled by a central bank. The Federal Reserve manages the United States dollar. And the Federal Reserve basically has barren reign to do whatever it wants with the dollar. It can decide how many dollars there should be, like whether we should print more money or not, based on how much they think the dollar should be worth. So it ’ s this very centralize organization where the politics, politicians and institutions have a lot of control over money, this thing that affects all of us. So what Satoshi Nakamoto proposed was a wholly decentralize system. And in this system, there are a finite total of units. There will only ever be 21 million bitcoins, and no more can ever be created. so everyone knows precisely how many there are, how many there will be. And people can just buy them with unconstipated money and spend them anywhere that accepts Bitcoin. And alternatively of the supply and the value of bitcoins being controlled by a cardinal bank or a government, Bitcoin is controlled by a objet d’art of software called a blockchain. And at a very childlike level, a blockchain is a network of computers all over the world, thousands of them. And they keep track of every Bitcoin transaction always made. then every time a Bitcoin is bought or sold, that transaction gets recorded in this shared global database, kind of like a Google spreadsheet or something. And anyone with an internet connection can go back and see every transfer that ’ s ever been made to this database in a identical public, and crystalline, and permanent way. So no one person or mental hospital controls this thing. It ’ south precisely this permission-less, distributed computer network that people who are into Bitcoin think is actually more trustworthy than banks that can be manipulated by politicians and governments .
sabrina tavernise
Got it. So this is ultimately about trust and transparency coming off the distrust people developed after the 2008 fiscal crisis. And that felt like institutions were manipulating things behind the scenes. Whereas here, there ’ s no charming behind the curtain, no shadowy figures, no politicians, as you say doing, the rig. It ’ south equitable a bunch together of computers that no one controls .
kevin roose
Yeah. It ’ s basically taking this giant fiscal organization that is based on human decisions, and political considerations, and ball-shaped economies and it ’ s good replacing it all with calculator code .
sabrina tavernise
OK, then Kevin, Nakamoto creates this whole new system of buying and betray and tracking those sales. But so then what happens ? What do people do with it ?
kevin roose
Yeah. So this newspaper appears on this obscure cryptanalytic listserv. And then Satoshi Nakamoto, whoever he, or she, or they are, disappears. And people sort of lease this idea of Bitcoin and they run it. early on on this is sort of an experimental weird community of people who are truly into this new form of money. And they ’ re fair playing around with it. I mean, they ’ re testing out the technology. And Bitcoin, at the time, is worth basically nothing. I mean, each Bitcoin is worth a bantam fraction of a cent. So they ’ ra doing things like buying pizza .
man
When I say Bitcoin, you say what ?
man 2
Pizza .
kevin roose
sol there was this programer in Florida who sort of excellently bought two pizza from Papa John ’ s for 10,000 Bitcoin, which, at the time, was worth about $ 25 .
man 2
I just told people I wanted a pizza and I want to pay with Bitcoin. I didn ’ thyroxine want a give card. I didn ’ t want some eldritch substitute. I want to give you Bitcoin and you give me pizza .
kevin roose
People start developing new ways to spend Bitcoin. People are sending it to each other alternatively of sending a Venmo requital or a PayPal requital. Some people are buying clothes with it. Some websites start accepting it as a imprint of payment. It becomes this viral phenomenon that people are very stimulate about .
man 3
now it ’ randomness starting to actually gain some traction .
kevin roose
And as it gets more attention and people get more arouse about it, The price of Bitcoin keeps rising .
[archived recording]
Bitcoins are booming .
kevin roose
It reaches $ 5,000 a Bitcoin and then $ 10,000 a Bitcoin. And now it ’ s up well past $ 50,000 a Bitcoin .
[archived recording]
Cash is no longer king .
sabrina tavernise
And the reason why the price of Bitcoin keeps going up and improving is because there are a finite number of bitcoins, so people are will to pay more and more to acquire the limited number of them .
kevin roose
precisely. And so as that ’ mho happening, people are starting to create other different cryptocurrencies. Some of them are identical good, like Ethereum is a new one that pops up. But there are besides jest coins. And people call them shit-coins sometimes. There ’ mho a Dogecoin, which is like address to this meme. There ’ randomness a Dentacoin, cryptocurrency for dentists. There ’ s Potcoin, which is the cryptocurrency for cannabis enthusiasts. There ’ randomness even Bitcoen, which is the jewish crypto-token. So all of these start springing up. Most of them are deserving absolutely nothing. But then there ’ s this hushed bowel movement build, of people who are using blockchains as a base technology to build lots of other things, things like tracking the rights to photography on-line. therefore like if you ’ re a photographer and you want to get credit and get paid, when your photos are used, you could attach that information to a blockchain, where it would be permanently and publicly available for people to see. Like, this photograph belongs to Sabrina. This one belongs to Kevin. And when these photos get used, they get paid this much .
sabrina tavernise
That ’ s truly interest. That seems huge, actually .
kevin roose
Yeah, it becomes a way to track the possession and the ownership history of lots of different kinds of digital goods. And thus one big moment for cryptocurrency comes when this other blockchain, Ethereum, allows you to create one of a kind goods, goods that can ’ metric ton be exchanged for other goods. If you have a Bitcoin, it doesn ’ t very matter whether you have one Bitcoin or another Bitcoin. It ’ s all Bitcoin. But what Ethereum allows people to do is to say this is a one-of-a-kind asset. And it can ’ metric ton be exchanged for any other asset. It is unique .
sabrina tavernise
So it ’ s like a deed to a house or something ?
kevin roose
It ’ s like a act to a firm or a certificate of authenticity that you might get if you buy a rare antique or something. Ethereum allows you to kind of state this thing is mine and there ’ s only one of them. And I can track its ownership forever. And anyone can go on the internet and see that I own this thing. And this becomes known as the nonfungible keepsake, or NFT .
sabrina tavernise
Nonfungible ?
kevin roose
sol fungible just means you can exchange one of it for any other one of it. So dollars are fungible because I can trade you $ 1 and I have the same spend might with your dollar as I had with my dollar. Something like an artwork is nonfungible because there ’ s only one of them. So if I have a Renaissance paint, I ’ m not going to trade you for a bill poster of that painting because mine is the original. It ’ s more valuable. And why would I give you my painting ?
sabrina tavernise
correctly .
kevin roose
And so basically, people are discovering this ability to create equitable one of something on the internet. Before this, things that were on the internet were just infinitely copyable. If you had a sung or a photograph, you could copy and paste that any numeral of times. And every copy would be precisely the same and wholly identical from every other replicate. But what the Ethereum blockchain allows people to do is to stamp these digital objects with kind of a certificate of authenticity to say this is the original of this item. And you can ’ triiodothyronine transcript or fake the digital signature that is sort of attached to that token .
sabrina tavernise
Can I ask a actually unintelligent question at this point ?
kevin roose
certain .
sabrina tavernise
Is the NFT the thing or is the NFT the digital stamp of authenticity of the thing ?
kevin roose
great question. It is a token that represents a thing. When you have an NFT of an double or a video clip, the NFT is not the image or the television clip itself. It ’ s the certificate of authenticity that attaches to that thing and links to it .
sabrina tavernise
OK, I think I understand. With NFTs, you can hush make a copy. But this allows us to know which one is the master, which one precisely. And we can assign value to that original and see the whole story of buying and selling that original token .
kevin roose
precisely. It ’ s a way to keep cut of possession and where something came from .
sabrina tavernise
OK, so Kevin, there are these things, nonfungible tokens, or NFTs. What do people do with them ?
kevin roose
so for a while people are just screen of thinking about the theoretical possibility of NFTs. And then in about 2017, people actually start creating them. So the first NFTs are kind of these crypto art projects. There ’ randomness this thing called crypto punks, which is this dress of cartoon characters that people started treating as digital action figures. And other people would take memes, like popular graphics, and turn them into NFTs and sell the NFTs, this thing that represented, like, this is the one true version of this meme. And then last year, they very exploded.

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You ’ ve got songs, music television, memes, even tweets of Lindsay Lohan ’ s face all becoming NFTs .
kevin roose
People started buying NFTs of sports videos .
[archived recording]
: Our next node is the first NFL musician to get involved in the NFT madden, launching a newfangled line of single digital deal cards this dawn. And I am proud to be launching the Rob Gronkowski Championship Series NFT collection. Tom Brady announced he ’ s launching an NFT party called —
kevin roose
A clip of LeBron James dunking became an NFT and was sold for more than $ 200,000. Jack Dorsey, the CEO of Twitter, sold his inaugural always tweet as an NFT for $ 2.9 million .
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I don ’ metric ton know about you, but this sounds nuts. Where do you hang the NFT in the living room, you know what I mean ? Like, over the mantel ?
kevin roose
And earlier this year, the biggest NFT sale ever happened. Christie ’ mho, the auction house, auctioned off a collection of digital art by this digital artist named Beeple for $ 69 million. And that was sort of —
sabrina tavernise
$ 69 million ?
kevin roose
Correct .
[archived recording]
That ’ s more than most Picasso ’ sulfur, Monet ’ s or Warhol ’ second. The beauty ’ mho in the eye of the NFT perceiver here, Carl .
kevin roose
And all of a sudden it ’ s like, wow, this is a real market. People are truly volition to pay for these tokens, these digital certificates of authenticity. And there ’ s a draw of money to be made here. So I thought to myself, why should LeBron James and Jack Dorsey have all the fun ? Why can ’ thyroxine I make and sell my own NFT ?
sabrina tavernise
so Kevin, you see this world of NFTs kind of going crazy, gaining grip. And you, Kevin Roose, a New York Times journalist, decide to sell an NFT yourself. So what do you do ? What ’ s the first thing you do ?
kevin roose
so I decided that I would write a column explaining NFTs. And that I would turn that column into an NFT and sell it. And whatever I made would go to the Neediest Cases Fund, which is the New York Times ’ s charity. So I wrote the column. And then I had a graphic created of the column. And I took that graphic, the picture of my column. And I then did what ’ sulfur called minting an NFT. I actually created the NFT and put it on the blockchain. And then it was ready to be sold .
sabrina tavernise
And what happens once you get the NFT on the blockchain ? I mean, is there like, I don ’ thyroxine know, confetti or balloons or something that appear on your screen ? Like, what does it look like ?
kevin roose
Yeah, Jack Dorsey shows up at your house and gives you a base broad of cash. No, it basically equitable says this thing lives on the blockchain immediately. It is here. And once you have the NFT, then you have to actually set up the auction to sell it. So the auction is not run by humans. They ’ ra run by software. You have some choices to make. So one thing you can do when you ’ ra sell it left is to set a royalty, basically saying that if person buys it for $ 100 and then resells it for $ 200 to person else, the artist, the person who primitively uploaded that, can get a assign of that sale forever. And that ’ s sort of built into the code of the auction .
sabrina tavernise
So that would basically allow you to continue to make money each clock time the thing is sold, right ?
kevin roose
Yes. And that ’ s part of what makes NFTs actually attractive to artists. Because if you ’ rhenium selling physical paintings, you sell it to person, they resell it to person else for a lot more money, and you don ’ deoxythymidine monophosphate get a cut of that as the artist. But with NFTs, you can build it into the code that every time it ’ randomness resold, everlastingly, the artist, the original person who uploaded the file, can get paid a fraction of that .
sabrina tavernise
correct. It ’ s a in truth big dispute .
kevin roose
You can besides set a minimum acceptable monetary value, so like, what is the lowest measure of money I would be bequeath to sell my NFT for ? And I was feeling pretty affirmative. I thought possibly person out there, some New York Times subscriber, will have some Etherum burning a fix in their digital wallet and they ’ ll decide my column is deserving half an Ether, about $ 850. then I set the minimal monetary value and I listed the auction and simultaneously published my fib about the auction. And so then it was just on the blockchain up for sale .
sabrina tavernise
OK, so what happens ?
kevin roose
so immediately, my colleagues start joking about the fact that no one ’ s going to bid on my dumb NFT. There ’ mho a Slack thread with some of my colleagues where they ’ ra screen of betting on how much it ’ second going to sell for. The consensus is that it ’ s not going to go for much. So I list it in the dawn. And at foremost, there are just a match of bids. person bids the minimum, $ 850. And then there ’ s $ 1,000, then $ 1,200. And I ’ m going, OK, we ’ rhenium going to make some money here. And before I went to bed that night, I checked again. And the top bid had risen to more than $ 30,000, which was like judgment blow to me. I was like this picture, this NFT, is immediately worth more than basically anything else I own .
sabrina tavernise
Crazy .
kevin roose
And I ’ meter think, this is harebrained. This is going to make a great report. Can you believe it, $ 30,000 for a picture of my column ? then I wake up the following morning and the chaos starts. So the auction is supposed to concluding for 24 hours. And in the last, I would say, hour of that, a wish war breaks out. It started going astir, and up and up. It went to $ 98,000, then $ 143,000, then $ 277,000 .
sabrina tavernise
Wow .
kevin roose
And I was merely watching my computer screen and freshen, and barely agog. I was like, is this real ? Like, am I being pranked here ? so in the final examination minutes of this auction, it went from 100 Ether, which was about $ 160,000, all the room up to the final sale price, which was 350 Ether, which, at the clock, was about $ 560,000, but is now about $ 725,000 .
sabrina tavernise
Kevin, it is crazy. I mean, no discourtesy, but your column, in my mind, it is not worth the price of a nice house. I mean, it ’ s a dear column. But you know, house, column, house, column .
kevin roose
No, I mean, I broadly have adequate self-esteem. And even I was like, there is nothing I ’ ve ever written is worth this much money .
sabrina tavernise
But besides, Kevin, particularly when I can read it for free on-line .
kevin roose
Yes, I mean, that was the thing that was sol crazy is like, you could go on nytimes.com and read this entire thing for detached. And I fair stared at my monitor fair laughing uncontrollably, just wholly in daze about what had happened .
sabrina tavernise
so Kevin, who bought this ? And more importantly, why did person buy your column for the price of a dainty family, a in truth nice house ?
kevin roose
I ’ d like to think they good have good taste. But more realistically, the achiever of the auction — I don ’ deoxythymidine monophosphate know for sure who it is — but their username was 3F Music. And they appear to be a music production caller based in Dubai. And they are a outstanding NFT collector. And indeed I did reach out to 3F Music. I besides reached out to a number of other people who bid on the auction. And I asked them why. And for some of them, specially the early bidders who are bidding relatively small amounts of money, they thought of this as equitable a playfulness transaction that might get them some publicity. So I should say, in addition to the NFT of this column, I besides said that I would write a follow-up column about the auction and feature the achiever. And so I think for some of them, it was like, this is a price I ’ molarity willing to pay to get into The New York Times. But then, at a certain decimal point, I would say like around $ 10,000 or so, I started to hear other explanations. And some of them were basically saying this was a notional investment. So they were bidding on this NFT because it was the first NFT created by The New York Times. And you know, there ’ s screen of like a status attached to the first of something. And so they thought if NFTs become a huge industry, then owning the foremost one from The New York Times, I might be able to resell that for more money subsequently on. I besides talked to some people who said that this was basically like an ideological statement for them. I talked to one musician who actually bid on my NFT who said that he had grown up in the era of Napster when songs were foremost able to be copied and distributed on the internet for rid. And plagiarism became a huge trouble, and that blockchain technology. And NFTs had changed that by basically allowing digital goods to have scarcity, which is what gives forcible goods their value. So this musician said, basically, that collecting NFTs was less about owning the actual NFT, but more about kind of signaling optimism and impression in this newly ownership model .
sabrina tavernise
right. then you have the speculators, you have people who are trying to invest, but you besides have people who care about art and intellectual property who are trying to make a instruction, which I think is pretty interest. But besides, I mean, $ 500,000 is fair so much money. So was there some deeper reason for this buy, do you think, I mean, not only your column, but these other brainsick high prices for classify of apparently cheap things ?
kevin roose
It ’ s a great question. And there are a fortune of possible answers. You know, wealth inequality is obviously separate of the equation, the fact that there are people with this a lot disposable income. And one of the artists I talked to who bid on the auction actually said, you know, this international relations and security network ’ t actually that foreign in the offline populace. rich people spend huge sums of money on things of dubious prize all the prison term. They fly off to art fairs. They spend millions of dollars on sculptures and pieces of art for their walls. Or possibly they don ’ t tied have the art on their walls, possibly it ’ s good they ’ rhenium trade pieces of art that live in a warehouse somewhere. And so wholly they truly have is the cognition that they own a thing .
sabrina tavernise
right. It ’ s like a fresh Birkin bag or owning a Warhol .
kevin roose
precisely. And I think that for some people who are investing tons of money in an NFTs, we can ’ deoxythymidine monophosphate underestimate the role that just emotion and status and boast rights play in all of this .
sabrina tavernise
OK, that kind of brings us all the direction back to the very beginning, Kevin, because the point you fair made about NFTs and how they operate, it ’ sulfur kind of alike to how we ’ ve constantly valued things. indeed I ’ thousand inquisitive, if you go back to the conversation about the blockchain, we were thinking about what Nakamoto was trying to solve for. He wanted to basically change the fiscal organization and how it works. But did he succeed ? Or has he barely created some different system in which we operate basically in the same manner, with the same kind of human emotion motivations ? Did he just create a thing to covet or did he actually do something truly new ?
kevin roose
so I think there are screen of two ways to look at something like NFTs. On one grade, I think, yes, as you said, it ’ south just taking something that existed offline, this concept of scarcity, of having one of something and having that quality of scarcity be the thing that gives an aim its respect. And you ’ re translating that onto the internet, where it very hadn ’ triiodothyronine existed before. indeed even if NFts are just a room of kind of replicating the scarcity that objects can have in the offline populace, that ’ s an incredibly valuable thing. But I think there ’ s this other change happening, this generational transformation that ’ s happening as more of our lives move onto the internet. I mean, we spend so a lot prison term in the offline world screen of curating our surroundings, putting artwork on our walls, figuring out what car to drive, what sign of the zodiac to buy, what neighborhood to live in, expressing ourselves through the pulmonary tuberculosis of barely goods and construction identities around the physical objects that we own. And now, with NFTs, that aspect of life, kind of figuring out what to buy to signal who we are and what we value, that can besides be on-line. possibly the matter that gives you condition and identity is not a forcible aim, possibly it ’ s a token on the blockchain .
sabrina tavernise
Thanks so much, Kevin .
kevin roose
Thank you for having me .
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michael barbaro
here ’ s what else you need to know nowadays. [ ARCHIVAL RECORDING ] This appears to me, from what I viewed and the officer ’ mho reaction and distress immediately after, that this was an accidental discharge that resulted in the tragic death of Mr. Wright. As cry and protest grew over the shoot of Daunte Wright, an unarmed black valet killed during an meet with police officers in a suburb of Minneapolis, local officials said that the officer who shot Wright appeared to have done therefore by accident. After stopping Wright for a traffic trespass, police in the city of Brooklyn Center discovered there was a guarantee for his halt. According to police, Wright stepped back into his cable car, triggering a conflict with officers. A video of that meet, recorded by the policeman ’ s consistency camera, shows that she repeatedly yelled taser before discharging her gun and immediately expressed surprise after shooting Wright. [ ARCHIVAL RECORDING ] As I watch the video recording and listen to the policeman ’ second commands, it is my impression that the officeholder had the purpose to deploy their taser, but alternatively shot Mr. Wright with a single bullet train. The dart occurred less than 10 miles from the court where erstwhile Minneapolis police officer Derek Chauvin is on trial for the murder of George Floyd. And on Monday, the Biden administration urged the governor of Michigan, Gretchen Whitmer, to lock down her state to slow what has become the nation ’ second worst outbreak of COVID-19 infections. But Whitmer remains insubordinate and rather called for a rush in vaccinations in Michigan .
gretchen whitmer
When you have an acute accent situation, an extraordinary number of cases like we have in Michigan, the answer is not necessarily to give vaccine in fact, we know —

michael barbaro
That hypnotism was rejected by the head of the Centers for Disease Control and Prevention, Rochelle Walensky. ROCHELLE WALENSKY The answer to that is to truly close things down. To go second to our basics, to go back to where we were last jump, end summer, and to shut things down, to flatten on the curvature, to decrease contact with one another, to test to the extent that we — today ’ mho episode was produced by Stella Tan, Rachelle Bonja and Neena Pathak, It was edited by Paige Cowett and Rachel Quester, and engineered by Chris Wood. That ’ s it for The Daily. I ’ meter Michael Barbaro. See you tomorrow .

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