Run Time: 38:14
EP. 22: How NFTs Can ‘Break the Fourth Wall’ Between Digital and Physical Assets
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pplpleasr, a New York City-based multi-disciplinary artist, first became interested in digital art while watching the Pixar-produced film Wall-E in college.
“When I watched the credits, there were so many names in the credits, and I thought, "Oh, there's no reason why I can't be one of those names,’” she says during the most recent episode of the Insuring Cyber Podcast. “And then I literally went on Google and typed, “How do I get a job with Pixar?”
She didn’t know then that the internet would play a role in launching her career as an artist to new heights.
After working on visual effects for feature films, commercials and Blizzard game cinematics, she went viral last year for creating original animations for well-known crypto brands and was approached by Uniswap, a decentralized finance protocol used to exchange cryptocurrencies, to create a promo video for the launch of its new algorithm.
What she didn’t expect was that the video, in which a unicorn brings life to a desolate land and awakens various elements of decentralized finance in the process, would sell for more than half a million dollars as an NFT, or nonfungible token, after her friends and fans created a DAO – a decentralized autonomous organization called pleasrDAO – to purchase the NFT and support her future work.
Since then, her work regularly goes viral, and her most recent project is no exception. She designed the cover for Fortune’s August/September 2021 issue, which was sold as a limited series of NFTs.
“When I published it online, initially, I got overwhelmingly positive responses from the community. And I thought that was amazing, but it's even crazier now that the physical magazine is out, and it's literally being sold out everywhere,” she says. “To me, it was like breaking the fourth wall, seeing it carry from the digital world to the real world that I actually live in.”
Honor Palmer-Tomkinson, an account handler on the fine art and species team at specialty insurance broker Howden Group, earlier in the episode describes NFTs as digital tokens that are traded like cryptocurrency and attach to assets to prove authenticity and original ownership. She says there is a new dawn of crypto artists emerging who are working entirely behind their computers, as well as real life artists creating NFTs of their artwork, and even a merging between the two.
“The art world has seen a transformation in the NFT space,” she says. “It's definitely creating a ripple that we're going to continue to see.”
However, concerns do exist, particularly among the insurance industry regarding how exactly NFTs for things like artwork can be insured.
“There's been such a dramatic increase in value in NFTs,” Palmer-Tomkinson says. “That is why it's such an unstable asset, because nobody quite knows where the market is going to go next because the market's so young.”
She says that currently, NFTs can be insured in the same way as cryptocurrency, in which a private key is held in cold storage by a third party and standard coverage would include deliberate loss or damage to that key.
“So the purchaser would be a third party custodian who's holding the NFT on behalf of the client,” she says. “At the moment, we can't offer first party insurance because of the moral risks surrounding the volatility of NFTs.”
pplpleasr says she feels optimistic that as the industry grows and matures, some of these concerns will subside. However, she cautions that a healthy amount of research and understanding of the space goes a long way.
“Everything is speculative. NFTs are just like any other crypto asset. While you're trading, you should be careful and do your own research. And there's obviously risk involved,” she says. “Just with crypto in general, I think there are bull markets and bear markets. Right now, we're in an NFT bull market. Everyone who's playing the game should just be mindful of these cycles and just know what they're getting into.”
That said, Palmer-Tomkinson says the potential for NFTs not just in fine art, but in other areas of digital ownership, is far reaching.
“I honestly think it's just the tip of the iceberg. I think the potential for NFTs stretches far beyond what they do right now,” she says. “I think digital assets will eventually transform the way we own things in the real world and it will be really interesting to see, if I buy a house in 10 years’ time, will my proof of authenticity be in the form of an NFT rather than a contract? I think that there's huge space for growth in this field, and I think it will transcend just the art world.”
That sounds like another podcast episode for another day. If you missed part one of the Insuring Cyber Podcast’s two-part series on NFTs, be sure to check it out on insurancejournal.tv. Check back for new episodes of this podcast publishing every other Wednesday along with the Insuring Cyber newsletter, and thanks for listening.
