Why the NFT market needs the “Crypto Winter”
Amidst the ongoing ice cold breeze of a looming “crypto winter”, the JPG NFT index, representing a diverse range of NFT projects scrambling to find their non-existent down jackets, has dropped over 75% in the past 3 months. A result of short-sighted greed and an unstoppable avalanche that’s been long overdue. NFTs will change the world for the better. But they will need to solve real problems and represent real value, I believe.
Get rich without work and without contribution to society?
Last year, like many others, I have heard about miraculous stories from soldiers of fortune having purchased some NFTs of JPGs at the right time: The story goes that they would have decided to never work anymore because these JPGs made them millionaires.
Good for them. But is this what we humans should strive for? Getting rich without work and without any contribution to society? Many think so, I don’t.
JPG-NFTs do not contain comprehensible value
Like many other bubbles before, also this one needed to burst sooner or later. Fortunately, it was sooner, because a phenomenon like this one brings out the worst of human nature: Greed.
Hundreds of thousands of gold-diggers followed the hype after the Beeple-auction, but most of them were quickly deceived: No one would buy their pixels at a higher price they paid, so they just burned money.
Was this a fair market correction? Divine justice? Capitalistic justice? Probably all of it: The majority of the famous NFTs were just JPGs that were offered on a multitude of emerging platforms and did not represent any value, except the hope to resell it to someone who would be more foolish to buy it at a higher price. A Ponzi scheme. A house of cards determined to crumble.
JPG-NFTs do not solve any real problems
The concept of securing IP rights and ownership rights in the blockchain is revolutionary, without question. But securing JPGs as NFTs does not solve any problem of any business or any society.
It’s great to be able to say that you own a Bored Ape, but what can you do with it? Display it in your living room? Everybody can do that after taking a screenshot on Nifty Gateway or OpenSea.
Was this the revolution we were waiting for? Definitely not.
NFTs can represent real value
Security NFTs for instance can contain real value: e.g. revenue participation rights in music rights, ownership rights in real estate. There are many more meaningful applications for Security NFTs – containing comprehensible value – that no one has ever thought of.
Of course, Security NFTs are strongly regulated by authorities, and many regulatory authorities do not yet know how to cope with disruptive technologies of this kind. This creates uncertainty, but these challenges will be solved quickly.
Imagine owning a share of royalties from a world hit and participating in streams and downloads for the term of copyright (70 years in most European countries). This is real value that NFTs can contain. And the future has already begun: On globalrockstar.com it’s reality.
NFTs can solve real problems – e.g. intellectual property
One of the biggest, extremely time-consuming and expensive issues of the music business is establishing the full chain of title of recordings or works from the past. Contracts on paper get lost, destroyed by fire or water, contractual partners disappear or merge with other companies and legacy archives are not properly digitized… Problems that we have to face every day when trying to purchase legacy recordings or publishing rights from partners that cannot prove that they really own what they want to sell. In many cases, it is almost impossible to reconstruct who owned what, when and where.
And here come NFTs: They solve this major challenge of the traditional music business. Today, it is possible to secure this data, immutable and perfectly traceable in the blockchain, so that it is clear forever who owns what, when and where, even when rights are transferred from one to another. At Global Rockstar we have been doing this already for the hundreds of recordings that we have released so far.
Secondly, NFTs make fractionalized ownership possible. Imagine you’re a music producer or artist with a hit recording but you don’t have the money to market it. You can go to the traditional “banks” of the industry, the major labels, and give away 80-90% of your royalties in exchange. Or you can sell 40% of your royalties to hundreds of fans who believe in your hit song and finance the marketing of your track. They would own a portion of the royalties as Music NFTs, you would get the budget needed to make your recording a hit. Dreams of the future? No, it’s reality on globalrockstar.com.
I believe a 100% in the disruptive power of blockchain and NFTs, but I am convinced at the same time that only NFTs will survive that represent comprehensible value and solve real problems.
I believe that many industries will profit from this great new technology and change the world for the better.
Winter is coming and with Security Music NFTs we are prepared, enjoying our first hot chocolate to the tunes of “Last Christmas”, what about you?
About the author:
Christof Straub is the CEO and founder of NFT company, music label and music publisher Global Rockstar. He is a multi-platinum-awarded music producer and songwriter (Papermoon, ZOË) and a serial entrepreneur in the online- & music-business.
In 2008, Christof launched his first startup Teenage Rockstar, an online video-platform for musically talented teenagers. Subsequently Teenage Rockstar produced the TV-show “Teenage Rockstar Summer camp” for the German TV-channel Super RTL in cooperation with Disney and the makers of Camp Rock. In 2014, Christof founded Global Rockstar, which first started out as “the world’s largest online music contest”. 10,000 artists from more than 160 countries worldwide were part of the contest and Global Rockstar reached international prominence.
Today, Global Rockstar is a digital record label that runs on globalrockstar.com an online investing platform, enabling fans to become shareholders of new hit songs. And just like that, Christof Straub created the artist friendly record label, bringing the music business into the new generation and supporting artists worldwide.