Sons of Zion frontman, Riapo Panapa, is a big believer in the power of NFTs.
When the pandemic hit and the band wasn’t sure when their next live show would be, Panapa saw potential in the new technology.
“I needed to think of ways to pivot for the band and ways to be able to continue to do music and create an income so we can look after our families, and NFTs just made sense to me,” he says.
Also known as non-fungible tokens, NFTs are essentially digital certificates that say you own something unique.
They've hit headlines in recent times for selling at jaw-dropping prices - for example, last year a relatively unknown American artist called Beeple sold a digital artwork as an NFT for $69 million USD.
Celebrities have also driven much attention towards the digital assets, with stars like Justin Bieber, Madonna and Jay-Z buying into high-profile NFT projects, such as Bored Ape Yacht Club and Cryptopunks.
But Alex Sims, Associate Professor of Commercial Law at the University of Auckland, explains that NFTs don’t just have to represent digital pictures. In fact, they don’t necessarily have to represent something digital at all.
“A number of countries are looking at making their land transfer system for ownership of property, which is physical, to be using NFTs. You can also have things like your identity as an NFT. There’s lots of different NFTs,” she says.
The reason why Sims thinks NFTs have transformative potential is because they exist on something called a blockchain, which is a type of technology that records and stores information in a decentralized way.
It’s this decentralized aspect of blockchain, Sims says, that makes its record-keeping abilities near impossible to edit or change.
For Sims, NFTs therefore have clear value as they’re able to prove something’s authenticity and verify who owns it, which can often be a difficult task in the digital age.
Māori creators reaping the benefits of NFTs
Photographer Richie Mills agrees that the capability of NFTs for authentication and verification of ownership is a gamechanger for artists like himself.
“if you're a photographer and you've got an Instagram account, at least once a week, someone steals a photo from you and posts it,” he says.
Mills believes that in the near future, social media users will get a copyright strike if they post photos that don’t belong to them, and that this will be policed via NFTs.
In the meantime, Mills says NFTs are helping start the conversation around digital ownership and usage rights of creative work.
He’s also started to make real money from NFTs.
Mills is an astrophotographer, which means he takes photos of the night sky with a telescope camera.
He’s recently been selling some of his astrophotography work as NFTs, and he makes a resale royalty every time one of his photos is sold to a new owner.
He also doesn’t sign over copyright or ownership to the buyer - their purchase simply means they’re able to display the work in specific online spaces.
“I can still print [the work] and sell it as a print, or put it in a calendar and still sell it. So I was like, cool, that's a no-brainer. I've gotta do this,” Mills says.
NFTs were a no-brainer for Riapo Panapa too, but for a different reason.
He saw the technology as a new way to connect more deeply with his band's fan base, so earlier this year he launched an NFT project called Eager Beaver with fellow musicians Stan Walker and Kings.
Panapa says the way it works is that fans can purchase a picture of a beaver, which basically operates as a key.
“So the people who invest in purchasing one of these pictures of a beaver, what they're really doing is accessing everything that comes with that beaver, which is access to this community and the initiatives that we are doing,” he says.
One of those initiatives was giving away $10,000 of musical equipment to two schools nominated by their NFT community.
Other benefits for beaver holders will include receiving royalties from the next Sons of Zion album, voting on future album covers, and being given exclusive access to music demos.
The dark side to NFTs
There are nevertheless some serious drawbacks to this new technology.
One issue is the volatility of the NFT market, which has tanked over the past month during the wider cryptocurrency crash.
While the fluctuation of NFT values has seen some lucky investors rake in the cash, Sims warns against people trying to make money from NFTs if they’re not in a good financial situation.
“The chances are, 99% of the time you'll end up losing money on them,” she says.
Natalie Vincent, CEO of Ngā Tāngata Microfinance, also worries about people buying NFTs that they just can’t afford.
“The storytelling that's out there from people who have invested in crypto or had NFTs and have made it big, you see them on Instagram showing their flashy lifestyle. It's appealing to people, particularly if you are struggling financially and you're looking for a way to get out of that,” she says.
Ngā Tāngata Microfinance is a non-profit organisation that works with low-income kiwis who have run into money trouble, and they’ve had clients in the past who have taken out high-interest loans to buy into cryptocurrency.
Vincent worries she’ll start to see the same thing, but with NFTs.
“If you don't have a robust sort of financial situation that can weather that storm and you actually need to take that thousand dollars that you put in, out for something that may happen in your life, and suddenly it's down to $200, it's a crisis,” she says.
Māori creatives Mills and Panapa are well aware of the risks with NFTs.
Both have been burned by disappointing investments in the past, so they’re determined to not make the same mistakes in their own NFT endeavors.
For Panapa, this means making realistic promises to Eager Beaver investors.
“I think our thing is more of a utility community kind of project, rather than, ‘off the back of this, you'll buy your next home’. That's just not the reality of what we are trying to achieve here.”