From Luca Schnetzler

A year ago, I started rethinking my stance on NFTs. Amidst the market downturn, the notion of utility felt futile. The idea of assigning value from X to Y seemed destined to fail. Steeped in a mindset centered around utility, I began questioning the purpose of my endeavors. That was until I had an epiphany, NFTs are culture, nothing more and nothing less. Today, my thesis on NFTs is crystal clear: Culture and identity will ultimately prevail, while everything else will diminish in significance over time. Although identity may vary subjectively, the impact of culture is undeniably profound. This realization sparked an obsession with culture and where I think the trajectory of tokenization is headed.

Currently, the crypto industry is heavily focused on pursuing the next groundbreaking technological innovation. It feels like 98% of the industry's talent and resources are directed towards this goal. While I acknowledge the importance of addressing infrastructural challenges, I am convinced that the end state for crypto is not far off. So, while the industry looks to create solutions for even cheaper and faster transactions, I ask you: in a world where crypto achieves peak technical performance, what happens next?

I believe that the future of culture is tokenized. I envision a world where the majority of crypto tokens are culture tokens—tokens that serve as indices for people to speculate on various cultures both past and present. Today, we see inklings of this through what we know as Meme tokens or NFTs. However, I believe the potential and opportunity are greater than most realize.

First, let's address the elephant in the room: Why tokenize culture? The answer is twofold.  First, tokens create aligned incentives that galvanize community members to champion said culture ultimately driving culture further. Second, tokens democratize access to culture, allowing anyone with an internet connection to participate. The combination of aligned incentives and democratization of access makes me believe that a future where the tokenization of culture is normal, benefits the proliferation of culture more than it harms it. 

This opens up an entirely new category of tokens called Culture Tokens. Under Culture tokens are subcategories that are defined as follows:

Some crypto purists may look down on some of these trends, and I have to say I think these are -EV perspectives. While assessing the headlines over the last couple of years, everything above has driven retail demand and interest to our industry. Why? I think the answer lies in simply meeting consumers where they are. Consumers understand memes, they understand toys on shelves, and they understand veblen goods. Tokenizing culture works because people understand culture. Whether you like it or not, the average person doesn’t care about ZK Proofs, Optimistic Rollups, or Parallelized EVM. All of these things are amazing, but they are not driving headlines that are getting more people to participate.

I see the relationship between infrastructure and culture as Ying and Yang. Without the right infrastructure, culture on-chain will never thrive and without culture our industry will never grow.

For this reason, I encourage anyone looking down on culture tokens to reconsider their approach. Whether you like it or not, we need each other. 

Building for a Tokenized Culture Future:

My intention behind this article is to help inspire more crypto builders to build for culture. Though the graphic below is a scribble I did on Figma, I think the representation remains true. Everyone is zigging to the left and nobody is zagging to the right. This is a good thing, at least for the ones reading this, this means you're early.  

People clearly want culture on-chain, and they want more of it. However, while the industry focuses on building a more efficient version of the same, few builders are developing the necessary products around accelerating culture on chain. Yet, in my opinion, this is where the biggest opportunities currently lie. If everything works according to plan then there should be consumer applications on-chain whose enterprise value surpasses that of the underlying chain it lives on. Culture isn’t just IP and memes, it can also be applications or marketplaces or identity layers and so on.  In the real world things like Instagram, Snapchat, and LVMH are all examples of businesses building, creating, and pioneering culture. 

A Paradigm Shift:

A paradigm shift is happening at the intersection of finalization and culture, and this shift is not just present in crypto, it is also happening in traditional finance. Crypto moves at laser speed and that speed is giving us a glimpse of what the potential of financial markets may look like in the near future. In the 90s you had Bowie Bonds, in 2020 you had $GME, and today you have $DJT all in their own respect representing some version of culture. For $GME, it was a representation of "screw the bankers and the short sellers", for $DJT you’re speculating on Donald J Trump and in its own way, it's a social token. Unfortunately for traditional finance, this future may or may not materialize into peak form due to the significant barrier to entry. Regardless, this notion of financial assets powered by cultures and trends is not new and with the speed and access of crypto, it is only becoming more prevalent.

A Fun Idea:

Tokenizing culture can also be taken quite literally and I actually think there's a huge opportunity for someone to take a literal approach. Imagine a world where you take real-world IP, tokenize it and let it live on a chain as a beacon of fun for the community to speculate on. Here’s how it would work:

X Protocol/Launchpad is created to bring real-world IP on-chain -> the protocol lands Star Wars to launch an officially endorsed Star Wars token -> Star Wars licenses its IP to X Protocol, which launches the official $Stars token. Through a licensing agreement, Star Wars receives 15% of the token supply, with monthly unlocks. X Protocol champions this official backed $Stars token peaking the curiosity of the 100s of millions of Star Wars fans. If even 1% of Star Wars fans become crypto curious that is a huge win for our entire space. The snowball of this type of model working perfectly could open the flood gates for a whole new type of retail onboarding in crypto.

Some may question the rationale behind such a move and its benefits. The answer lies in a brand's pursuit of attention and revenue. This model offers both, safeguarding against the systemic shock that awaits brands failing to compete for attention in an AI-dominated world, as well as the opportunity to make more money off of the IP by tokenizing it (tokenized IP will most likely yield a higher upside than selling to traditional private equity / M&A).

Culminating thoughts:

To me, the biggest opportunity in crypto today is the development of the culture layer. The best entrepreneurs don’t build for themselves; they build for their users. It is clear that crypto users want more culture and they want it now. To all of the crypto entrepreneurs out there, I say it’s time to give the people what they want, the future of culture will not build itself.