Is Crypto ‘Mary Kay for Men’? At SXSW, Blockchain and Web3 Find Fevered Support and Criticism
Dolly Parton is getting ready for her first NFT drop and a web3 concert at SXSW, where dozens of crypto-focused panels cover topics like “Breaking the Blockchain Boys Club” and “How NFTs Are Changing the World.” Top-level sponsors include Fox’s Blockchain Creative Labs, which has its logo plastered all over Austin; it sits right next to that of the world’s 10th-largest company, Volkswagen.
The blockchain devoted have reimagined SXSW as a kind of IRL coming-out party, targeting the diverse group of attendees at one of the largest in-person U.S. events in the last two years. Everyone from tech CEOs to TikTok influencers have participated in panels and descended on lavish brand activations to hear the unified message that blockchain is the future.
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Then there’s a smaller group: The naysayers who articulate a position similar to the leader of India’s central bank, which labeled crypto a Ponzi scheme. At SXSW, that movement’s leader is… actor Ben McKenzie, who took to the event’s largest stage Sunday afternoon in the latest stop in his crypto-takedown tour. It’s Ryan from “The O.C.” against a global project backed by Parton and the Murdochs.
“Numbers don’t go up forever, even in manipulated markets. These things do happen in bubbles, historically speaking,” McKenzie said in a SXSW Live Studio interview, comparing crypto marketplaces to specious investment vehicles like penny stocks and micro-cap stocks. “They burst. Bubbles don’t slowly deflate.”
Where much of the blockchain fervor at SXSW focuses on NFTs, McKenzie’s main fight is against cryptocurrency. NFTs and cryptocurrency are intrinsically linked through their shared system of decentralized transaction ledgers. You can have NFTs without crypto, but the vast majority of NFT transactions are completed with cryptocurrency on networks whose primary focus is managing crypto transactions. (Any confusion, McKenzie says, is the system’s intention.)
Some of the earliest (and current) supporters of cryptocurrency indulged a kind of cyberpunk, libertarian worldview in crypto’s stateless essence, but the growing adoption and evolution of blockchain networks invited new ideas about how the technology could be used. For artist Kevin McCoy, who created the first NFT back in 2014, it was using a contract on the Namecoin blockchain to certify ownership of a piece of digital art, rather than an amount of cryptocurrency.
“The goal of it is very much the same goal that we see now, which is allowing allowing digital art to be uniquely own-able, allowing for markets to be set up around that with a with an eye toward helping artists with provenance and helping artists with making money,” McCoy told IndieWire. “The idea of an NFT is much broader than that. It can be used for a lot of different things: membership, or identifying a community. It can be used to convey the right to be involved in distribution, the right to collect royalties.”
That second part is the focus of Fox’s Blockchain Creative Labs, which was founded last May. “You can’t just think of it as just NFTs,” said Fox Corp. chairman and CEO Lachlan Murdoch at a Morgan Stanley conference last week. “It’s really how blockchain is going to change the economics and the distribution models for people in the years ahead.”
On Saturday afternoon, the BCL House was filled with festival goers indulging in free booze, tacos, and NFTs. Dominating the space were floor-to-ceiling video walls displaying NFT artwork for sale in an online marketplace created just for SXSW. Around the corner was a series of screens where attendees lined up for the chance to sit down and listen to a rotating playlist of songs. When each song ended, visitors could add a free NFT of the track to their crypto wallets — a complex task for the uninitiated. Luckily, a friendly lab coat-clad staffer was on hand to assist in onboarding for the web3 future.
BCL CEO Scott Greenberg told IndieWire that SXSW was the perfect place to go public with his company’s efforts over the last year.
“We’re less interested in collectibles,” he said. “We’re much more interested in how do we get mainstream adoption, have mainstream audiences understand what it means to own a digital asset and what it means for digital ownership in a virtual world. And then how do we disintermediate the relationship between audiences and creators. If you’re a filmmaker at SXSW, we’re going to give you the tools for free to try it. It’s a safe place to drop an NFT, a safe place to play, low stakes.”
Day 2 ☑️ Yesterday was an incredible and immersive day on all things #Web3. This new era is all about empowering creators and @colton & @Verite shared their thoughts on just that with the #BCL team. pic.twitter.com/w4vIzCQ5nv
— Blockchain Creative Labs (@wearebcl) March 13, 2022
BCL’s partnerships at the festival include WWE, an event with Parton that will see the singer sell NFTs and stream a concert on the blockchain March 18, an open call to filmmakers to turn their movie posters into NFTs, and the opportunity for other artists to sell NFT pieces in BCL’s marketplace.
Among those who took up BCL’s offer was James Freeman-Turner, AKA musician Hēran Soun, who is selling a series of pieces he created on a California road trip. They include scanned high-contrast, nighttime photos shot on medium-format film accompanied with fragments of his short stories, poems, and song lyrics.
Freeman-Turner’s pieces are priced at a reasonable $25-$300. Compare that to something like the $250,000 Bored Ape Yacht Club NFTs, which help perpetuate the dominant narrative that NFTs are an investment vehicle. Freeman-Turner’s first piece sold minutes after it was made available, with the proceeds promptly delivered to his digital wallet.
“There’s a real opportunity for not pricing NFTs at an unheard-of amount of money and making them practical and usable,” he said. “Right now, I think NFTs are a little too focused on ‘What can I get out of this ownership on a monetary level?’ What I liked about everything that happened over this weekend with BCL, everything was priced in a way that allowed buyers to focus on the art itself.”
BCL’s marketplace resolved another barrier for buyers: You can use a credit card to buy NFTs. Typically, buyers are required to buy cryptocurrency through an exchange like Coinbase, connect the digital wallet that holds that crypto to an NFT marketplace, and conduct the transaction.
Allowing credit cards, something that other NFT brokers have begun to offer, highlight the distinction between cryptocurrency and other uses for blockchain technology. For those that view blockchain as the gateway into the next iteration of the web, it’s all about the potential for the technology to power decentralized smart contracts that could be used for everything from medical records and identification to concert tickets.
“This is just the beginning,” Greenberg said. “If this is a baseball game, we’re still in batting practice. The game hasn’t started yet. Our view is this is the future of content distribution.”
Crypto critic McKenzie takes issue with that. He questions whether the “plumbing” created to power a cryptocurrency system can be used for what seems to be noble aims — or even if blockchain is the best way to address them.
McKenzie, who holds a B.A. in economics and foreign affairs from the University of Virginia, says cryptocurrency is not a currency; it’s an unregulated security. And he questions the utility of NFTs, controversially described as nothing more than JPEGs traded within an easily manipulated marketplace. “It’s similar to a Ponzi, a multilevel marketing scheme,” McKenzie said. “I’ve heard crypto described as ‘Mary Kay for men,’ which — uh-oh! — that’s going to trigger some people. Gonna get some tweets about that.”
Draft research from Cornell professor Lin William Cong found that an average of 70 percent of cryptocurrency transactions are what’s known as “wash trading” where an investor repeatedly sells and repurchases assets to artificially inflate market volume. The practice has been illegal in U.S. stock exchanges since the Great Depression, but is unrestricted in the unregulated cryptocurrency markets.
On Sunday, McKenzie was joined on stage by Vice tech and crypto journalist Edward Ongweso as well as The New Republic journalist Jacob Silverman. McKenzie and Silverman are the coauthors of the upcoming “Easy Money,” a book that will question crypto and examine its consequences. In recent months, the pair published a number of articles in Slate and The New Republic laying out their arguments against crypto including its environmental costs and examining the celebrity-shill circuit that’s delivered legal trouble for Floyd Mayweather, DJ Khaled, and Kim Kardashian.
“If a celebrity is shilling the product — shilling being our favorite word in this industry — whether it’s shoes, or a sweater, a car, a vacation, or insurance, you understand the terms of what you’re getting,” Silverman said. “Also when you buy the item or service you’re probably not going to lose money as a result. You’re inviting people to take on risk that they don’t necessarily fully understand, through no fault of their own, because there’s no disclosure in this industry.”
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