IS THIS THE NEXT BIG THING?

What is a Social Token?

What does it mean and how can it be used in the art business?

The crypto press has already determined that social tokens will be the next hype. But before we dive deeper into social tokens let’s clarify the basics first to make sure we are all on the same page.

In the NFT art space there are two major use cases for “tokenising” artworks:

1. For digital Art NFTs are created to make a digital artwork unique. As digital files like images or video files can be copied million times you can use NFT technology to declare one particular file or a limited number of copies as unique originals and store a record of who owns it on a shared ledger known as the blockchain.

Artists focused on physical artwork take a different approach:

2. For physical Art NFTs are created as a digital twin to a physical artwork. In this case the NFT is a digital certificate of origin and ownership and proofs authenticity of the artwork.

In both cases NFTs can be bought and sold. If so the NFT moves from the sellers wallet to the buyers wallet when the purchase price is transferred. NFTs can contain smart contracts that may give the artist, for example, a cut of any future sale of the token on the secondary market.

Again – What is a social token?

From the tech perspective a social token is an NFT as well. But it’s not tied to an artwork but to the artist himself. Buying a social token does not mean gaining ownership of a person. slavery is forbidden and a thing of the past, hopefully. Social token offer multiple possibilities to monetise interaction between artists and collectors or celebrities and their fans. For example, a social token can be a tradable voucher for a one on one meeting with your favourite rock star.

“But I will go the opposite direction. I will reward my supporters by offering them a financial share in my future success. In case my very first NFT – my geneses piece – sells better than a certain amount, I will issue a social token to the collector who bought the artwork. That social token automatically transfers a share of any NFT I drop in the future. For a lifetime.”

The concept behind is no secret. First of all I expect my artwork to be sold to a collector who just likes – hopefully loves it. But that’s just half of the story. Collectors are investing in artist. Buying a genesis piece – the very first artwork of an artist – is a hot bet on the future career of the artist. A social token that allows the collector to participate in whatever will be sold in the future increases the bet. A genesis piece sold at an unusually high price point creates attention in the collectors community which increases the likelihood of more pieces to be sold at higher prices in the future. So paying more for the genesis piece means increasing the chance of a higher revenue over time.

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