Wed, Jun 29, 2022

How digital currencies will change the entertainment industry forever:

  • 02/15/2022 - by Alexandru Liciu

If someone were to tell you five years ago that a digital token could change the way we communicate through art, you would've told them they probably don't know what they are talking about, that digital things were for the youngsters who had no real appreciation whatsoever for the depth of true art and that true artists are the ones who go to the museum to get inspired and still rewind cassette tapes with pencils. Yet here we are – we all knew something was coming, we just didn't know what, how and when.

If someone were to tell you five years ago that a digital token could change the way we communicate through art, you would’ve told them they probably don’t know what they are talking about, that digital things were for the youngsters who had no real appreciation whatsoever for the depth of true art and that true artists are the ones who go to the museum to get inspired and still rewind cassette tapes with pencils. Yet here we are – we all knew something was coming, we just didn’t know what, how and when.

One thing is certain: the entertainment industry is slowly becoming overly saturated with more content than you could ever digest in a lifetime and whoever is not backed by a strong financial support and a good marketing campaign, is doomed to disappear in a sea of endless content. To put things into perspective, YouTube and Spotify have a combined library of over 410 million music tracks (at the moment of writing). Those numbers are enough to keep you entertained for roughly 780 years! If you are at the beginning of your career as a musician, good luck swimming.

But the problem with easy access at the tips of your fingers is precisely that. It is far too easy to get access to whatever you want nowadays. Movies? Music? Podcasts? You got it! It is all right there for you to grab in an instant, at any hour of the day, 24 hours a day, 365 days a year. And it never stops. More and more content floods the platforms every single hour. 

Do you remember the days when you absolutely needed to get that album from the corner music store behind the block? What if they didn’t have it or if it was sold out? The hype would turn to disappointment faster than Jason Derulo releasing singles on Tik Tok. The point is, maybe you were right. Maybe we have stopped appreciating pretty much anything that used to give us joy by collecting and experiencing them hundreds of times. God knows how mad we were when CDs used to get so scratched it seemed like we were listening to them in reverse. 

So, what does all this have to do with digital currencies, I hear you say? Well, buckle up.

First of all, what is a digital currency, otherwise known as “crypto”? If you can understand the concept of gold as an asset then you are halfway there. A digital currency is much like gold, with its own market value and accessibility, it can be bought and sold on various different exchanges, only that it lives in the digital realm where thousands of decentralized computers all over the world regulate all transactions and validate them securely. This is called the blockchain.

Digital currencies, such as Bitcoin, Ethereum and many others, behave much like a paper currency, but instead it is not regulated by a centralized bank. The real advantage is that not only a digital currency is finite, therefore immune to inflation, unlike the American Dollar, but by being decentralized it also means that no one person or institution gets to decide its value by how much is printed and injected into the economy, but rather the opposite: its value is protected by its decentralization of power. 

While it all may seem complicated to understand in the beginning there are good news: all the information about every digital coin in circulation is written in detail in their own document which proves their functionality and economic fundamentals called White Paper. Moreover, every coin's data, such as market capital or trading volume, is accessible to anyone with a stable internet connection and a mobile phone. Everything is transparent and accessible to everyone, whether you are rich or poor, black or white, Christian or atheist, crypto does not have any barriers, and for good reasons.

This does not mean digital currencies do not have their own flaws. Nothing in the world can be perfect, and certain things can indeed go wrong even in the safest digital space with all security measurements and cryptographic protection in place, but that is a topic that we’ll come back to later on.  

So now, you ask, how can these two realities coexist in a complementary and advantageous way? How will digital currencies change the entertainment industry forever? 

Here is where NFTs (Non-Fungible Tokens) come into place: a form of digital unique collectable content, based on the blockchain and mass adopted amongst the tech geeks, which will help artists bring back something truly special for the new generation.

Let’s start from the name “non-fungible,” which means it cannot be duplicated, much like physical art but encrypted in the digital world and verifiable via the blockchain ledger. And yes, it can be copied, but no matter how good a copy is, it will never be as good as the original. So, is it like unique pokemon cards then? Well, somewhat. It can be anything from a picture of your pet to the album of Kings of Leon. Wait… Kings of Leon released an NFT album? Yes. And it generated almost 2 million dollars in revenue and that is nothing compared to a single pixelated picture of a character called CryptoPunk #7523 (yes, it even has a number in its name) which was bought for $11.75 million. NFTs have generated alone more than $40 billion in 2021 and it was elected the “Word of the Year” in Collin’s Dictionary. 

Now you understand it is desirable, but why? One could fail to understand why a digital piece of intangible content is worth so much to a collector. Well maybe you forgot that, while you kept on rewinding cassette tapes, YouTube, Bitcoin and OnlyFans made young people more money in five years than you could ever make in three lifetimes. The newest and coolest thing on the internet is a must have for the new generation, especially when it can earn you flex credit. And while you call them hipsters, they laugh at your ’99 Toyota Camry from their two stories mansions . . . but stay with me on this, all of it is for the best. 

The digital world clocks worked their mechanisms and brought some of that hidden wealth back into people’s pockets and we are still figuring out what to do with it, but it was about time and it goes much deeper than that.

You see, bringing back collectability and the desire to own something unique is just the first piece out of a larger puzzle. The NFTs can have multiple other functions. An NFT can be programmed so that it can give to the creator/artist royalties every time the token is sold or exchanged; it can be used to offer discounts to the owners themselves or even act as a free pass concert ticket just like top tier Kings of Leon’s golden tickets, the same system that I intend to adopt for my rock project Urban Dream. 

Digital tokens will disrupt the modern industries as we know them. If you think that NFTs, operating on a fast and secure blockchain, can be used to distribute and get royalties for your hard work as an artist while offering amazing rewards to its user and being used at the same time as social media status symbols… yes. You can easily see how this can turn things around on an epic scale.  

Of course, there are also downsides to this new reality. For example, one thing everyone is concerned about is security. How will we make sure that artists will get their royalties, that NFTs cryptographic copyright is protected and digital wallets are not hacked? The answer to this question is not simple as we are in the early adoption stage, despite the already billions of dollars invested in it, hacker attacks still occur, even if most of them are because people don’t protect their passwords well. What about scams and fraud? Most definitely yes, but it is important to remember that, as with most things in their early stages, protection methods and protocols to reduce risk will improve over time. Let’s not forget people still get scammed on Ebay. 

Another thing crypto is accused of is that all this computer power, which is needed to keep the blockchain alive and safe from anyone trying to game the system, consumes lots of resources contributing to the climate issues, but developers are hard at work on a new method called “proof-of-stake” which will make use of less power overall in order to obtain the same consensus and security on the blockchain. 

It is obvious that many things are still in development, and choosing to focus on the downsides rather than the upsides is counter productive for an otherwise continuously growing industry. Sooner rather than later we will witness an explosion of mass adoption. Many compare it to the dot com era and that it is in fact inevitable.   

But when did this digital revolution start to plant solid roots into our economy? When Laszlo Hanyecz spent ten thousand Bitcoin, worth today over $400 million, on pizza on the 22nd of May 2010? I bet he hasn’t eaten a more expensive pizza ever since; but no, that is definitely the underground era of cryptocurrency after the creation of Bitcoin in 2008 by an unknown group of people named Satoshi Nakamoto. The 2008 market crisis surely was the first fuel to this rocket ship.

What I personally think is that slowly and under everyone’s eyes things built up to the year 2020 and strangely enough a bat was enough to pop the bubble of our economy. The rest is history. Need I remind you that people were stashing toilet paper in their basement like it was going to be used as post-apocalyptic currency? Well, while Covid-19 brought our economy to its knees and stripped it of its Gucci clothes and pink glasses, it also opened everyone’s eyes on how fragile and exposed our system was and still is. Most people found themselves temporarily free-floating in a new universe which had nothing good in store for them. Locked inside their homes, many had nothing but time on their hands, time which they used to find a way to liberate themselves of the shackles which held them prisoners for such a long time. That’s when we realized that thousands of activities could be operated online and crypto, in that period, had evolved just enough to be a valid option of payment and asset to store value to many, including myself. 

A prosperous economy was a dream long gone to the ones whom have seen their own future crumble right before their eyes. How can you blame them for choosing not to trust their economy anymore when fake dreams have been fed to them incessantly their whole lives? A change in scenery was long due. 

The NFTs were just as necessary to complete the circle of future decentralization. Coupled with the solid structure of the blockchain and digital currencies, they are not just evolution. They are the revolution – a necessary revolution that is here to stay.

In closure, I will leave you with this one quote from Henry Ford:

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

Alexandru Liciu

Design Engineer&Professional Musician