Art For Money’s Sake – Forbes

Money Is Fungible. Non-Fungible Things Are Not Money. Maybe.

I don’t know much about art, but I’ve always had a bit of a soft spot for the American artist James Stephen George Boggs.

Mr. Boggs is sadly no longer with us, taken to meet his maker at the age of 62 back in 2017. But he had a small but important role to play in the history and future of money, and given the excitement around cryptocurrency, non-fungible tokens (NFTs) and the future of art and money in the metaverse, I think now is a good time to reflect on his part in our fintech story and what the relationship between art and money really is!

Mr. Boggs entered public consciousness for his drawings of banknotes. He began doing this in 1984 when he drew a picture of a dollar bill and used it to pay in a restaurant. It was accepted at par, and a new chapter in the story of money was written.

Tokens And Transactions

Here’s how it all worked, as set out in his obituary in The Economist: Boggs would go somewhere and buy some good or service and offer to pay with a drawing of a banknote. If it was accepted, he would write the time and place on the back of the banknote, collect his change and the receipt and complete the transaction.

He would then sell the receipt to collectors. These collectors would use the receipt to find and obtain the banknote: together the receipt, the change and the banknote he had drawn were like a token on a blockchain. They formed a proof of the banknote’s value, confirmed by the transaction details as recorded. The banknote by itself was undeniably art. But the tuple of the banknote, receipt and change were something more than art. 

I am curious about this because of the NFT mania sweeping the matrix right now. Why? Well, Steve Kaczyński and Scott Duke Kominers have a very good piece about NFTs in the Harvard Business Review in which they explain that markets can’t operate without clear property rights: Before someone can buy a good, it has to be clear who has the right to sell it, and once a buyer comes along, there must be a mechanism to transfer ownership from the seller to the buyer. NFTs solve this problem by giving providing the mechanism to establish and transfer ownership in a decentralised manner.

This is actually a pretty radical step in the history of stuff and here’s a quick explanation as to why this is the case (from Andreessen Horowitz). It begins by noting that there are two types of tokens: fungible (e.g., interchangeable) and NFTs (e.g., unique). They fill different niches.

Money is fungible, so fungible tokens will be used for digital currencies (this is one of the reasons why Bitcoin, whatever it is, isn’t money) whereas the non-fungible ones will be used to create a wide range of what a16z call “internet-native” business models centred on collectibles, rewards, achievements and, as a16z note, these deliver a sense of identity, status and belonging. And despite the fact that the current NFT market appears to be based on people selling pictures of chimpanzees with sunglasses on to themselves for millions of dollars, there are great many people (eg, me) who think that NFTs are a very serious business indeed.

One reason is because, as Kaczynski and Kominers point out, smart contracts and programmability means that they can deliver utility in both digital spaces and the physical world and this is what has long interested me about them.

Tickets and Transfers

A good example of this utility is event ticketing. Some years ago I worked on project for a blockchain provider. They had teams looking at few different use cases, most of which never went anywhere, but one of the use cases that had substance was ticketing. Event tickets are unique and should not be clone-able or counterfeitable. They should belong to one and only owner, And they should be able to be transferred between owners. NFTs are the perfect way to implement them (and, indeed, I even attended a concert in which a pilot token ticket system was trialled).

(It thought it rather interesting that Ethereum inventor Vitalik Buterin used this precise example recently to highlight his ideas about designing better markets to achieve fairness, or “community sentiment” or, even better, “fun”.)

If event ticketing seems a little prosaic, I think there are much more interesting tokenisation ideas out there. For example, there’s the case of Alex Masmej, the 23-year old who tokenised himself. He created the $ALEX token that would receive 15% of his income for the next three years. Token owners would be able to cash them in for Alex-specific fun. He’ll retweet you for 10,000 $ALEX. For only 20,000 $ALEX you can have a conversation with him. If you want an introduction to someone in his network, it’s a whopping $30,000 $ALEX.

($DAVE won’t trade at such a discount, I’m telling you right now.)

Rex Woodbury makes a very important point in his brilliant piece on Masmej in The Atlantic. Talking about the shift in the generational perspectives on finance he says that if we expand “everyone is an investor” to “everyone is an owner” then we see what he calls “ripple effects” in the record-breaking 4.4 million businesses started in 2020, or in the 68 million Americans who freelance. As he says, what if Taylor Swift had issued a token of herself before “Kanye interrupted her onstage at the VMAs”.

It’s a shame that Boggs didn’t live to see the NFT shenanigans of today. I’ve been looking through some of the NFT horoscopes around at the moment and they are universally bullish. Morgan Stanley

MS
, for example, say that the market could reach a $240 billion by 2030 with luxury-branded NFTs accounting for $56 billion of that. Wow.

A Godfather

Boggs went on drawing banknotes to pay for stuff for many years. He had a golden rule, though. He would not exchange his bills for anything other than their “face value” despite the fact that they resold for multiples of their face value. One of his bills sold for more than $400,000 dollars, and that was back when $400,000 was a lot of money.

(In England, he was famously arrested and hauled before a judge to answer charges of forgery, but the jury loved his work and found him not guilty of all charges, presumably because no sane person would actually mistake a Boggs drawing of a fiver for one of the Old Lady’s originals.)

What especially fascinates me is his battle with the US Secret Service! In America, the Secret Service are charged with defending the integrity of the currency and so, naturally, they were not too happy with him. Boggs had to hire lawyers and he paid them with his drawings of bills too, leading to what Jim Holt called the “long comic project” of a legal battle between protagonists both able to fund their own challenges by literally printing their own money.

Why am I telling you about Boggs? Well, dollar bills are fungible and therefore money. Bitcoins are not fungible and therefore not money. The dollar bills that Boggs drew were not fungible and therefore not money either. They could, however, perform a money-like function in certain circumstances. This helps us all to understand more about both fungible and non-fungible tokens and the future of money in the metaverse. For this great service to the crypto-community I think he deserves to be remembered as a godfather to NFTs.

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