Whenever there is a transformational technological shift, there is so much space to build, to think, to ideate, and to be a part of building a better future. I'm astounded at the level of thought and creativity in this space, not just from the artists and technologists, but from the collectors and investors as well. I was thrilled to catch up with Tom, AKA think_flexible, about ideas around the NFT space and the potential for all of us moving forward.

Tom- thank you so much for taking the time to share your thoughts with our community today. It’s been a rollercoaster year for crypto and for the artists who have entered the space, I’m always interested in hearing the collectors perspective as well. When did you first become aware of the potential for NFTs as they apply to artists and art markets?

Hey Dave, it's great to be here and thanks for having me. So I became aware of NFTs for the first time really after the 2020 DeFi Summer as capital migrated from DeFi to NFTs. Frankly, during that round of NFT boom, I didn't really realize the potential it had until my brother Matt (@y_kymin ) started to collect NFTs/ art in the late fall of 2020. Then, I began reading more and understood why NFTs are a powerful medium for artists to use.

Below: Carribean SciFi, by Raphael Lacoste

It sounds like you saw what was going on, applied your understanding of DeFi and blockchain to art, and kind of had an "aha!" moment where it clicked. If you had a paragraph to convince an open minded skeptic that NFT's are here to stay, and not the latest tech fad, how would you explain it?

The most interesting feature of NFTs in general is digital scarcity. Digital scarcity has been an idea that did not exist on internet or anything digital really, because we could all ctrl c then ctrl v to replicate digital media and files without knowing what is the 'original' vs. 'replica/ copy'. Thus, anything digital was not a collectible medium until NFTs came along. NFTs allow provable digital scarcity where we can openly verify the uniqueness and provenance of art or music that are minted into a token.

Another interesting factor is its incentive mechanism for creators. Unlike traditional art world, in the NFT space, creators get a profit share of secondary market sales, and this mechanism was made possible due to smart contract feature in Ethereum ($ETH). About 10% profit share of secondary market sales is the current industry standard, and I would argue that this is the biggest reason why NFTs actually took off this time around.

This system creates a positive feedback loop where creators are incentivized to keep building their brand, focus on their craft, and think more carefully about everything that they have created (even ones that they already sold to collectors). As an artist gets better at what one does, value of all works will rise and result in bigger secondary market sales, then which brings more financial benefits to the artist and also collectors who supported them. This is a powerful structure that will bring more creatives over time and also make it harder for them to leave the system.

My background is in investing, and I want to quote Charlie Munger, Vice Chairman of Berkshire Hathaway that he built with Warren Buffett, "Well, I think I’ve been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it. And never a year passes but I get some surprise that pushes my limit a little farther.”

Below: Everything, by 3LAU

I agree with that explanation wholeheartedly, especially the part about positive feedback loops. Social media has those same mechanics but stripped of the value generated- the platform absorbs all the value generated by the feedback loops of the community behaviors. I started ALLSHIPS to stand against the pitfalls of Web 2, so I'm glad to see how Web 3 is bringing solutions to these issues.

One common, layman's explanation of NFT's is that they are a "digital certificate of authenticy." I'm not saying that is wrong, but I do think it misses the bigger picture. Do you have any thoughts about NFT's as a utility, and how this approach might unlock new ways for creatives to interact and have a value exchange with their community?

Yes, this is really the uncharted territory and a lot of experimentation is taking place right now. Like you said, art/ music NFTs can be more than just creations by artists. For example, it can become a ticket to access exhibitions and live concerts by creators, or even act as a collateral to borrow money through DeFi ecosystem. NFTs are non-fungible tokens, and as the name says, it's fundamentally a token.

These interesting applications and utility are unlocked due the concept of tokenization. NFTs are tokenizing art, music, and other creations, and when something of a value becomes a token that can be moved around easily P2P and composable, it becomes really powerful. We are just at the beginning of what a valuable token is able to do and be used as.

Thinking about creatives and their communities, I think we are going to see a lot more fun and exciting attempts to use NFTs to create value for both groups. Artists could distribute their social tokens based on NFT collectors who bought their work, and start a DAO (decentralized autonomous organization). Then, these DAOs would require one to have x amount of social tokens to enter and also crowdfund a project creatives are planning and need support for. Then in return, those DAO members who funded the effort get a profit share from the project.

But part of the profit could be directed to fund non-profit organizations or causes that group would want to support, if there is an interest for such thing. There are really infinite ways on what can and could be done. We are just scratching the surface of what tokenization enables for creators and communities around them. My bet is tokens will become a way to economically and socially incentivize and organize people.

Below, left: Two Chairs by Peter Tarka. Right: Sunday Afternoon by Peter Tarka

Above: Botanic Garden by Trevor Jones

I'm thrilled about all the potential I see for artists to use this technology to renegotiate their relationship with the internet. We all signed deals of convenience at the outset of the internet, trading our distribution rights and our data for the ability to connect to global communities. That layer was needed, but doesn't mean we cant evolve past it. Technology moves exponentially, and we can move with it. It's an exciting time to be involved with all this.

Let's narrow the scope a bit. I'd love to hear about your collection- what attracts you to artists that you've collected? Who are the people you are interested in, and is it an economic bet, an aesthetic attraction to the work, or a balance of both?

I sometimes do things then later sit back and think about why I did certain things. I see an artwork, then my initial reaction is more on visual or more physical aesthetic attraction than anything else. Then, I talk to the creators about their intentions, concepts, and philosophy on why they do what they do. So, you start from aesthetics and end up with the story of creators. Different collectors have different intentions and goals, but for me, I realized that what stuck with me the most was creators' background and their narrative on art and life. So, I think I am buying the story as much as the art itself.

Aesthetics matter but not as much as I initially react to. I have collected pieces where I didn't really really get the art, but love the story that the artist has, so I just want their work. It became more about the person, the artist, rather than the art.

Below: Machine Hallucinations - Mars- E, A, and B by Refik Anadol

Lastly- what advice would you have for an artist entering the space?

Patience and being early are a great combination for success, just like how the entire crypto space unfolded over the years. Study and understand what NFTs are. Be part of larger NFT community and engage with various participants. Be part of it for the tech, not money. I bet whoever bought $BTC or $ETH for financial gain opted out when it 5-10x'ed in early years. Early crypto adopters who are still around are here because they were in it for the tech, not money. And that's how you 100x+ not 10x.

Below: INFRA8846 625nm by GMUNK

Wonderful advice. Truly, these answers are dense with lessons and meaning and I can’t thank you enough for taking time to share them with our audience. They are extremely helpful to me and I'm sure others will feel the same.

To the reader, you can connect with Tom via his Twitter at @think_flexible. You can view his Collections on SuperRare, Foundation, Nifty Gateway, and Kanosei Ventures as well. Thanks for reading, and let's keep building this exciting world together.

Below: GOAT by Beeple