37. Art on The Bitcoin Standard

Podcast Sponsors

In this seminar we are joined by Stephen Chow, founder of Chow Art Fund, whose mission is to embrace the bitcoin standard in order to sponsor living artists to create masterpieces, and @FractalEncrypt, an artist who has produced a magnificent bitcoin full node sculpture.
We discuss my book, The Bitcoin Standard, and how its discussion of time preference was influential in their artistic journeys; how they see art evolving in a bitcoin world; and the problem with “art on blockchain” nonsense.
We conclude with a discussion of my favorite artist, classical Egyptian music’s legendary diva, Umm Kulthum, and how she was the inspiration for my thoughts on time preference.

Podcast Transcript


Saifedean Ammous:

Hello and welcome to The Bitcoin Standard podcast seminar. In today’s seminar, we are going to be discussing art on The Bitcoin Standard. Our two guests are Stephen Chow – the founder of the Chow Art Fund whose mission is to embrace the bitcoin standard in order to sponsor living artists creating masterpieces, and we also have FractalEncrypt which is a pseudonym of an artist who has produced some astonishing bitcoin art which he’s going to be telling us about and whose inspiration for some of it was my book The Bitcoin Standard. 

Both Stephen and FractalEncrypt have mentioned to me that my book was inspirational. I thought this would be a great occasion to discuss this with them because it is a fascinating topic – I have mentioned it in The Bitcoin Standard. The approach to art under a hard monetary system versus under an easy monetary system. In my book I discuss how art, under the gold standard, was funded with hard money by people with a low time preference. People built art to last and to leave an impression whereas today, we see that art can take much less time to finish and is not built to last. 

We still see a very active art market with a lot of money being spent on it. We are going to be discussing all these issues, art in general, how bitcoin can fix this and how Bitcoin has been an inspiration to both of our guests approaching this topic. Stephen and Fractal, welcome!



Thanks for having me!



Yes, thank you so much, really excited to be here.



Basically, I am just in a process of researching what is out there in the world. I started from nothing and having no idea of what living artists were up to. This was mainly through researching Instagram. The Art Fund is a very open-ended 50-year project where I would just fund in whatever method is necessary to get these masterpieces created. This could be by acquiring the art or sponsoring a commission that has no instructions. Hopefully, the idea is to get a lot of the pieces placed into museums by the sheer quality of their work which is impressing curators in museums by the merits of the work themselves. 


Saifedean Ammous:

How long have you been doing this?



With living artists, I was starting this in 2016, before I have heard about bitcoin. I have been collecting art since 2012 from a secondary market – eBay and auction houses. 


Saifedean Ammous:

I see. How did bitcoin change what you were doing with art?



The time horizon increased exponentially, as well as how much ambition I had towards these kinds of projects. The ambition level increased by 10,000x it feels like. The opportunity is so large with how many people are in the world today. The harder I work towards this project, the more that I can do. There is no ceiling to what I can do with embracing bitcoin to fund these projects.


Saifedean Ammous:

Well, why?



Well, it is very hard to explain the precise reason, but I do think that the funding of new artistic masterpieces is one of the most important things that could be done for the culture today. It is not necessarily the art that I am seeing being promoted by anyone else. It is like a contrarian view of what constitutes great art in the world today, trying to find very obscure artists that represent my tastes for what great art means. 


Saifedean Ammous:

Yes, I meant why in terms of, why did bitcoin change your time horizon in this regard?



I suppose I was already embracing these low-time preference qualities and bitcoin increased it even more so. Even in 2016, I was already planning years and years ahead of what I was trying to do. Bitcoin fit right into what I was trying to do in the near and far future.


Saifedean Ammous:

So, what you do is, you put money in bitcoin and watch it appreciate and then use that money to finance artists?



The Bitcoin part of it is much more long-term in that the money that I am using for funding projects is coming from fiat just by working my normal job. The bitcoin is kind of hiding in storage for the much longer term, until I have a better idea of what I can be doing through the research.


Saifedean Ammous:

I see. We do not usually hear about individuals sponsoring art much. We hear more about individuals buying it or about government agencies doing the sponsoring. This is not very common these days, right?



I do see this kind of patronage but not necessarily for the kinds of art that I am sponsoring. From my perspective there is a 99% weight on contemporary and modernists artworks. There are patrons like this, but they are not supporting the kind of artists that would help contribute long-lasting masterpieces to the world. 


Saifedean Ammous:

Why don’t you think something like that can come from contemporary and modern art, or can it?



The way I am looking at it currently, there are all these incentives in contemporary and modern art to make political or ideological statements. They do not really align with what my idea is art that has a very long-lasting impact. At the moment, what really strikes me as really powerful are artworks that are being created from a strong cultural or even religious background. They’re drawing from traditions that have thousands of years of history, ancient history even. Along with these ancient mediums that they’re using and the traditional practices that go along with the artworks.


Saifedean Ammous:

I make it you’re a fan of more classical styles of art, right?



More classical, but I do have to say I am becoming less and less of renaissance art. I’m leaning more towards Byzantine as the years go by.


Saifedean Ammous:

You just keep stretching backwards in time the more you look into it, is that accurate?



Exactly, yes! Every year it’s another two or three thousand years.


Saifedean Ammous:

That’s good. I’m interested to see where that takes you! It’s interesting how we see this, in fact, you could argue that people find cave drawings 40,000 years ago. It’s interesting to think what kind of art was being produced 40,000 years ago. Maybe we weren’t just barbaric cavemen, maybe those cavemen were able to produce more interesting things. Let’s move on to FractalEncrypt. Fractal, tell us about your art, what are you doing? Tell us about your bitcoin piece first.



Alright, absolutely, I can even share my screen. I have some images here which might give the viewers and listeners something to check out. I am an artist and I’ve been working many different mediums over the years. One of the mediums that I’ve been working in recently is Laser Cut but I’ve done all kinds of art across all kinds of mediums. I’ve done t-shirts, jewelry, pencil drawings, pretty much anything. 

For many years I thought digital art was kind of cheating and not real art. Now, to even do anything in the laser, I need to speak a digital language. My life has become a lot more digitized, pretty much since the advent of bitcoin, I started getting into the digital arts spectrum. That was something for me that did turn a corner.


Saifedean Ammous:

Nice. What are we looking at? For the listeners on the podcast, where can they see this, could you mention the best link to view it?



The easiest place to view it is going to be at the auction site which is scarce.city.  It’s a bitcoin only auction that was created by a grassroots group of bitcoiners and artists. I have a little page on there that has a piece from the auction, it has the videos and images that any of the podcast listeners can check out. It should be an easy web address to remember. 


Saifedean Ammous:

The web address is just scarce.city



Yes, just scarce.city. So, this piece was something that I conceptualized when I was at the bitcoin 2019 conference in July of 2019. Somebody there had mentioned the clock and calendar nature of bitcoin and it really lit fireworks in my mind. I saw the Mayan calendar schema where they use both a calendar that tells time and tells a story within the graphical glyphs that are presented. You can encode information within the art. I saw it all come together at that point. It took seven months to take me from an idea to an actual design and then another month since I had the design to cut all the wood and put it all together to have a piece of art to display.


Saifedean Ammous:

So, this is your full node sculpture, right?



Yes! This is meant to be a working bitcoin full node and block explorer. Ideally, I’d like to make a plug into the bitcoin core software where you can actually use it as a graphical interface to look up transactions or use it as a block explorer. It totally can work. I’ve done some animations that show how it works, that part of it is hard to explain but the idea of the design was to make something that is a working calendar and clock based completely on the Bitcoin code. There’s nothing for me in this necessarily, it’s all satoshi. 


Saifedean Ammous:

It’s extremely intricate work where you got an enormous amount of wooden intricate pieces linked together. Using bitcoin magic, you’re able to use this giant piece of wood as a block explorer. It’s functional as well, right?



Absolutely! It’s meant to be completely functional in the sense that you should be able to track the course of bitcoin over time. This is from an article I wrote in Bitcoin Magazine, your viewers can go online and look this up – it may be valuable to them as a resource because it gets into more detail. We have a tracking of time over 132 years. I have a map that breaks down each ring. In ring 2, it’s the time bitcoin was created in 2009 for 132 years all the way to 2140 when the last bitcoin will be mined. That way, you can track time going all the way around the calendar. 

You can also go in like a clock. For example, right now we’re in 2021, as you go down, we’re right around block 630,000. Our block reward right now is 6,25 Bitcoin per block. We’re getting 900 Bitcoin per day. There’s some math in there as well. You could just follow this all the way down as if it was a clock hand. It’s made both as a circular calendar and a clockwork calendar. It tracks everything from the year all the way down to the minute. 

These little lines represent the ten-minute block time. The fact that they’re wavy arcs present the Poisson distribution over time. It’s not every ten minutes but ten minutes is perfect harmony system time. Time bends in that way. 

This is ring 2 here, It’s the wheel of time that takes you 132 years, it’s green. I was describing that if you go over to year 2021 and go down in a clockwise manner, you’ll hit that block 630,000 and the current block reward which is 6,25 Bitcoin per block. You can see the move from 12,5 over to 6,25 that just happened at this halving. That’s the idea here.


Saifedean Ammous:

It is a really beautiful piece of work. How are you producing these or selling them, tell us more about that aspect of things? 



Okay, so this is produced entirely by hard work. I just sit in my little art lab and just work for every spare minute that I have on the design part of it – which took about seven months to do. Once I had the design work done, it looks like this, where you have a black and white map of each piece. then I have to cut each individual piece of wood. 

For each piece that you see here, I’ve cut each piece three or four times. If there’s any imperfection or anything that I don’t like, maybe the color of the wood doesn’t match with the other colors – it gets thrown out. It’s quite the process to go in and actually create something like this. It’s very personal in the sense that you have to put the time and the work in. It’s unforgeable and costly.


Saifedean Ammous:

Yes, definitely. There’s definitely proof of work in there.



I do want to mention what ring 1 is. As you have asked about the working functions of it, this outer ring tracks the node stats at the time of a block. Every time you get a new block found, this ring 1 would update in my working version. It would give you the current block hash, what your hash rate is, what the current difficulty is, the block height, block timestamp and the blockchain size. This stuff updates every two minutes as new blocks are found. Sorry, I know I cut you off, go ahead.


Saifedean Ammous:

How does the wood update?



The wood doesn’t update. I’d like to make this as a functional graphical interface that plugs into core. The way that the wood updates, right now we did a hackathon project in Miami where we do light projection onto the sculpture. For example, this is showing what I showed you, that clock nature. It’ll highlight the time up to the current block height. 

These cut-out sections represent the halving eras, so the first three being lit up show where we are in time. At that time, we hadn’t quite hit the 2020 halving so that’s why the fourth section isn’t lit up. There are some ways to map the node data. If you had a projector projecting light onto the sculpture that was linked into your full node, that would work too.


Saifedean Ammous:

Nice, that’s amazing. Tell us about how you’re selling these.



These are being sold entirely peer-to-peer. The first one I was able to display was at The North American Bitcoin Conference in 2020. It was the last thing that happened before this whole pandemic nonsense happened and you couldn’t do anything in person. I was very lucky to get that opportunity. I displayed the piece there, and one of the speakers at the conference bought it. 

Then, two twitter users contacted me. This is a series of ten pieces. Just like bitcoin, it’s hard capped. I’ve had three of them sold previously and I’ve done a complete re-design of the fourth – that one was sold at a bitcoin only auction. All of them were paid entirely in bitcoin. I’ve had someone after the auction offer me 80,000 USD and I had to turn that down, flat. I said bitcoin only. 


Saifedean Ammous:

How many have you sold so far, in total? 



Actually, almost all of them are sold. At this point, only number 9 is available. I am going to bring number 7 to the Bitcoin Conference in Miami. Number 10 is reserved, and all the other ones have been sold.


Saifedean Ammous:

So, there’s only one left? Good way to market this.



Yes, and this happened entirely through the bitcoin network, basically twitter. Twitter was the entire thing; bitcoin twitter was the entire marketing team here.


Saifedean Ammous:

Bitcoin twitter is an incredible force of nature. One of the remarkable things about it is how the discerning people really are, and how good things will find their way to prominence. Bitcoiners can be pretty critical. If you bring up something that’s bullshit, people are going to call you out on it very quickly. Bitcoin twitter gets its bad reputation from the number of people that are confronted with truths they would rather not confront. People on bitcoin twitter are not very diplomatic about rubbing truths in people’s faces. 

The flip side of it is, if you got something of quality, it’s amazing how quickly it becomes apparent. Whether it’s an anon account who comes in and provides interesting information, like PlanB for instance, he came in and made that model and now he’s got 250,000 followers, something like that. Everybody is always talking about his model and it triggers people a lot, but because it’s a good model, it gets attention. I think this is also a good case of that. 



Absolutely. Just to point this out, you had a tweet that really made me think and it said, bitcoin price continues to follow the predicted value from the Stock to Flow model. At that point, I decided to start including the math here. I added the bitcoin Stock to Flow equations to this number 4. Actually, on the number 5 sculpture that I’m just completing now – hopefully I’ll be finishing it tonight, I engraved The Bitcoin Standard, your book, above the model math. I figured that was the proper placement there. It’s such a seminal work and it really formed a lot of my personal opinions. 

Honestly, I’ve read it a long time ago and I’ve recently re-read it now that we were going to have this talk. I had two totally different experiences with it. I did include a lot of your financial information as to what makes things money here. I didn’t understand what money is or why things were important, but things like scarcity, durability, fungibility, verifiability, portability, divisibility, all these things that ring very true to me to such an extent that I had to encode and engrave this on something that I hope lasts 132 years or longer. 


Saifedean Ammous:

I hope so too. Tell us about the backstory, you mentioned this to me on twitter – how my book helped you think differently about the art that you do. First of all, how did you react when you first read the book? What were you doing back then and how is the work that you’re doing now different to the work you were doing back then?



The reason I came across your book is you came to my town and did an in-person talk to promote the book. At that point, I think it was January 2018, in my Bitcoin journey, I was pretty hardcore into the shitcoinery spectrum. What you were telling me made sense but also, I had my own personal biases that were built in, so some of it made me think this guy is wrong. You even said at the talk, all the good developers are working on bitcoin. If any developers are working on a shitcoin, they’re not a good developer. I thought, this guy is narrow minded, he’s not thinking right. But man, when I look back at that over time, I see who the person in that room was that was right and the person that was wrong. 

My experience with your book and the art chapter was very similar. When I read your book, a lot of it resonated very true, it was just common sense for the most part. When I got to the artistic flourishing chapter, my brain went into revolt mode and I was saying; this was all wrong, this guy is an idiot, and he doesn’t know what he’s talking about. I read it like you were talking to me and a lot of the things you were saying was: “there’s no good art today”. 

I was reading it like you were telling me that I wasn’t making good art and I was personally insulted. I talked to other artists and creators over time and I think a lot of people had that experience. Part of my problem was, I wasn’t a bitcoiner when I read your book. 

When I go back now and read it coming from a first principles perspective, you weren’t saying that there’s no good art now, you were saying that good art is hard to find. Mastery is something you should look for; you should look for quality. Right now, we’re in an era where that’s not what’s promoted. We’re in an era of commercialized mass-produced art that takes no effort to make and is treated as a high platform of cultural significance because people are pontificating rather than just being struck by the beauty of something. I was reading it wrong, and I do want to say, if somebody did have that experience, wherever you are in life, if you read the Bitcoin Standard before, you should go back and read it now. It’s good.


Saifedean Ammous:

Thank you, I appreciate it. Obviously, it triggers a lot of people. It may have been worded a little too enthusiastically. Sometimes when I’m writing and I’m in the mood, I can get a little too expressive. I wanted to make the point on time preference, and I had so many ways in which I could’ve discussed this. 

I spoke about examples like – inventions and technology, and one of the examples I wanted to speak about was architecture but it’s not something that I know enough about. I thought that art, I don’t claim to be an art critic or anything, is a great way of illustrating the point on time preference. The low time preference is what allows people to think of the future and the long-term. 

If you start thinking about the effect of money on time preference, which is the topic of chapter 5 in The Bitcoin Standard, in the Austrian school, the reason people hold money is because money is a hedge against uncertainty. If there was no uncertainty in the world, no one would need to hold money. Why would you want to hold it when you could just hold investments? 

If you knew what was going to happen in the future, when you needed to spend money, and you knew when you were going to earn the money, you could make it so that you never hold money. You allocate your resources straight into investments and you cash out the investments immediately when you want to spend, so you never really need to hold any money. 

But the reason we do hold money is that the future is uncertain. If the future’s uncertain, investments can always be liquidated, bankrupt, lost but money is the thing that has the least risk. It’s the most liquid good and the one most likely to be accepted in the future. Holding money is the thing that gives us the least risk for the future. It makes the future less uncertain; it makes it more likely that we are able to provide for the future. If money is hard, the future becomes less uncertain. You’re expecting the money to hold onto its value and you’re able to provide for your future-self better. 

On the other hand, if the money gets easier, the future gets hazier, harder to predict and therefore you start thinking of the future less and less. If you apply this lens to art, it’s actually incredibly powerful as an explanation. People don’t think much about the long term when they’re building their art. You also see the reflection of time preference on individuals. 

You, as an individual, in order to be able to develop mastery in any field, you need to lower your time preference. Whether you want to become an athlete, artist or writer, whatever it is that you want to do, it’s going to involve a lot of time doing unpleasant things. You don’t become a professional athlete by just waltzing into the world championship and picking up the trophy. There are many days, nights, months and years that need to be spent practicing before you can come near the trophy. That’s a lot of work, a lot of work for the future and a lot of work for uncertainty. It requires a very low time preference to engage in something like this. 

If you want to become an athlete, you have to control yourself, your desires and you have to prioritize the future. You have to give up on a night out with your friends and all kinds of things that people your age would be enjoying, but you cannot indulge in them because you have to focus on something else. If you think about it this way, once you start realizing this is important for the production of good art, then it makes sense why we see so much of the modern art that is just, as Stephen was saying, people making statements. There’s nothing wrong with making a statement but it’s very easy to make a statement, it doesn’t require much work and effort. 

It’s quite telling that artists would rather make statements than make art. Making art that is eye-catching, breathtaking and interesting is hard work. Look at your sculptures, it’s taken you a lot of time to do that and you were working with lasers, it smells unpleasant. It’s not fun, I’m sure you had to turn down many days on the beach in Miami and many parties and many nights out in order to make this thing happen.



Absolutely! My friends thought I was becoming a hermit at that point. One of the really interesting things is, in your book you said that no one could be considered to be an artist at that time without putting in the dedicated work and the time it takes to do that. I think that’s a really important thing. It’s a double-edged sword now. 

We live in a time where this conscious decision to use low time preference thinking to create art is a conscious decision. We have a very high time preference world we live in, it’s easy to make photoshop art in two seconds and post it up as a creative thing. There’s a drive as an artist or anybody, to use that time preference in your daily actions and saying where do I invest in myself and my skills? You can continuously produce art but you have to try to shoot a little above your skill level so you can get better. You can’t just keep doing the same thing. Art made for commercial reasons will differ a lot of times from art made from passion reasons.


Saifedean Ammous:

Why do you think so?



For example, I made my sculpture with no patron, nobody wanting it, no one would really care if I sold it. I just made it because I wanted to. That’s seven months invested in low time preference art. It wasn’t because there was gold at the end of the rainbow or defined payout that I was going to get. It was something that I made because I wanted to. In the past or right now, you see a NFT thing going on with ethereum and people posting multiple things over the weekend: “hey, this is the art that I’m making.”. Art made for commercial reasons is something that you produce quicker, with a lower time preference and under different guidelines because you’re looking to create beauty. 


Saifedean Ammous:

I’m not entirely convinced of this. I’m going to disagree on this but maybe you can correct me. The way I see it is, at some level you must’ve considered the possibility of selling this. You wouldn’t be able to go through the rest of your life making these things if you weren’t selling them. eventually you will have bills to pay. You can’t keep dedicating your life to something that isn’t financially rewarding. 

On the other hand, the market is very good for artists. If I think that I want to sell this, you need to convince people who are going to be paying. I think that’s a very valuable form of feedback. Sometimes people will ask me why I don’t just put my courses online for free. On the one hand, if I was going to be doing it for free, I will not be making any income from it, I’m not going to be able to dedicate as much time doing it. 

On the other hand, as an Austrian economist, I think it’s really important to be selling things to customers because that’s what gives you the feedback on what you’re doing, it tells you what’s good and bad. If I put my courses online and anybody can click and find them, I won’t know how much people value them as opposed to people who actually pay money for it. They have an incentive to take it and pay attention to the course and offer me constructive feedback. I think it would be a little bit different if it was being given away for free. 



I’m not saying to give it away for free. I’m actually coming at it with a different perspective, I have a day job so when I create my art, it truly is something that I’m doing without – yes, I may hope to sell it and I’ve been selling it from a long time so it would be a total lie to say that’s not something that I would’ve presupposed. At the same time, if no one bought it I would be 100% happy with that thing on my wall. The benefit to me as an artist is, I get free value for my art when I do sell it. I’m not living under the pressure of not eating if I don’t sell. When I can get value, I feel like people are giving me a fair exchange.


Saifedean Ammous:

Also, when you think about great work, great artists, great musicians, that’s how they made their living. I could be wrong, but I can’t think of too many examples of people who made great art without being their profession. 



That may be but as a bitcoiner, not speaking as an artist, one of the things we like to do is stack Sats. For me, I have my day job as the way that I’m able to pay my bills and get from point A to point B in the real world and then I have the Bitcoin that I’m able to stack. For example, as an artist you can take a canvas that’s 10 dollars, a set of paints that’s 20 dollars and turn it into a masterpiece that’s worth 100,000 dollars. 

As an artist you have an ability to create magic and stack Sats. As long as your input value is less than your output value, you’re doing good on a Sat stacking level. I totally understand what you’re saying. Maybe even today, I’m an outlier, I don’t do this as my full-time job. There are artists that depend on it and that is a concern.



Saifedean, may I just add a comment there?


Saifedean Ammous




Something that you’re getting at is, if an artist is relying on selling their work full time and make a full-time salary, they might not be incentivized to create such a dream project because it might not necessarily sell as quickly or with as much enthusiasm as something on a smaller scale that appeal to a smaller budget. That’s how I look at patronage, a patron is willing to sponsor a much more ambitious project that might not necessarily sell on a dependable basis.


Saifedean Ammous:

Yes, but the patronage itself is a way of selling. You’re getting money to produce the work. The patronage will allow the person to share the work with others. For many people, that’s a good that they’re willing to pay for. They want to be the ones to finance museum wings. In a sense it’s also what art is doing. Finding a patron is not very different from finding a customer, I’d say.



Sure, I worry about the dilution of the vision though. If you’re having somebody pay up-front for it, are you beholden to something that they like? 



If it’s a commission where the patron is demanding that it be created in precisely the way that the patron wants, a lot of the time it can be destructive to the creative vision of what the artist is trying to do.



There’s freelance artists that do this for a living, they’re amazing and can produce works for other people to their specifications. That’s just not something that I can do personally, so I just follow my own value stream. Everybody is different in their abilities and visions.


Saifedean Ammous:

An example that just occurred to me, the Mona Lisa was Leonardo da Vinci doing a job of painting some woman for a portrait, right? I think her husband paid him to draw his wife, that was a day job. People can denigrate the aspect of selling things, but it wasn’t so romantic, it was just turning up and drawing somebody for a portrait. You keep turning up every time and you just keep getting better every time you turn up. You take the feedback from the consumers who use it, you keep tinkering and then one day you hit a magic recipe. One day you hit the magic formula that gives you the Mona Lisa or the Casablanca.



Yes, I totally agree, and I certainly wasn’t denigrating selling. I think selling art has got me 100% to where I am. You’re right, each sale helps you get to the next one. I 100% invest all my art sales. Especially every fiat thing. I have an Etsy stock; every single sale goes back to art supplies. For me, that’s how I create value. Without that ability I wouldn’t get to where I am. Like you said, the Mona Lisa may just be a day job for him but because he got to that level of mastery, the world can see it. Even though it was a pay for day job, he didn’t think much of it because he had achieved that mastery through (???) that the world recognizes it. 


Saifedean Ammous:

I think so. You mentioned some of the shitcoin based art that is in the space today. You’ve dabbled in that space? Can you give us a brief bitcoin maximalist take on what is all of this stuff and why we shouldn’t be paying any attention to it?



Absolutely. As I said, in that 2018 time I was heavy into my shitcoinery phase. ethereum was the platform where art was happening. I did a lot of contracting NFT projects, everything from individuals to centralized services, even different chains. I played around with a lot of it because at first, it seemed revolutionary. In that shitcoin mindset: “oh this is amazing, art on the blockchain forever, this is immutable!”, I was totally sold on that, but I looked deeply into things. 

As I kept going and seeing what this actually was, I learned very quickly that what things are presented as are not actually what you’re getting. There’s a lot of trickery. NFT is hot right now and the bitcoin maximalists make fun of the NFT people, they say :”you’re just buying a jpeg that you can copy and paste”, but it’s way worse than that. 

There’s actually no jpeg that the people are buying. You don’t even get the jpeg. All they get is a hash of that jpeg that’s placed into the token metadata of the shitcoin they hold now. There’s absolutely no art on it. If you go outside the walled garden of their little database, there’s no cats on ethereum, it’s just another shitcoin. 


Saifedean Ammous:

How does it exactly work? You don’t buy the jpeg, anybody can see the jpeg, right?



Sure. That’s an important thing, how does it work? The artist will create the art and it’s then uploaded to a file sharing platform called IPFS which is another shitcoin with another called Filecoin. It’s basically a decentralized “storage platform” and a lot of artists are tricked into thinking that their art is immutable and will live forever on ethereum.


Saifedean Ammous:

So, it’s really just a Dropbox with a Ponzi scheme.



Yes! Your art is on Dropbox and there’s a link to your art on Dropbox. The hash of your art is the address on this IPFS thing. There’s absolutely no art that’s living on chain and most artists don’t even realize that. They think they’re making tokens and are living on this chain. It’s not that. With the NFT stuff, another thing artists get excited about is secondary market sales, meaning if you create art and you sell it to a buyer, if they resell it, you as the artist wouldn’t get money so some of these platforms have secondary market sales and it’s very hyped up. 

What people don’t realize is this is not enforced at the protocol level. It’s not on Ethereum or on another chain. It’s just within the walls of a smart contract. If you’re on one of these websites and you sell your token, it works. As soon as you try to transfer it to your friend, there’s no secondary market sales if your friend then sells it outside of that contract. A lot of collectors will understand this. Another thing about IPFS is it isn’t permanent. The way it works is, if the website that is holding your art stops hosting it, your art disappears immediately. There’s zero immutability. Having this be art on the blockchain forever, that’s total nonsense. 

As soon as those people stop putting your art on the blockchain, if that company fails, your crypto kitty is nothing but a token. It has no art attached to it at all. That’s the opposite of immutability. Also, from an impermanence perspective with Ethereum, as an artist, do you want your art on a broken chain that may roll back? We had the DAO hack and they just rolled stuff back. Can you believe that art can be on that blockchain forever? From an artist’s perspective, I don’t think that’s very powerful.


Saifedean Ammous:

From an economist’s perspective, the image itself that you’re creating is not scarce. The idea that people are paying money for it is ridiculous. We’ve seen these bubbles come with crypto kitties before. Every couple of years, there’s a new generation of people that are into this. Ultimately, you can see the picture anywhere which is not the same as owning a physical piece of art. If you can’t establish some mechanism for the scarcity, then I don’t see where the value is. 

As an economist, I fully support the notion of people valuing things themselves. That’s what economics is about. I understand that people want to pay money for this and I think this is really the market solving the problem of people having money.



I’m very happy to see artists be able to monetize art. The other side of it is pretty sneaky. Another note I had is, anybody who has the same jpeg, you can hash it and issue a new token that has the same jpeg attached to it, so the scarcity is ridiculous. Crypto kitties all the way down.


Saifedean Ammous:

That’s a good way of describing it. What do you guys think of art on a Bitcoin standard? If we were to continue to witness more of the world economy move on to the bitcoin standard, what is the world going to look like, what will it lead to and why?



From the research that I’ve done on Instagram, I think I’ve only seen the tip of the iceberg of what’s out there. I have no idea. If I spend another 50 years researching what’s out there, I expect to be constantly surprised every single year about all these great artists. I think there’s thousands of brilliant artists out there that I have no idea exist today. Bitcoin is just a way to fund the projects that they’ve been trying to do.



If what your book says is true, that the sound money time does influence the quality of art, we should de facto see the quality of art increase. I do think you will see that, like you said, if artists aren’t concerned about or worrying about the future, it allows you to create art, dance, music and songs of higher quality. 


Saifedean Ammous:

I hope so too. My book seems to really hit a nerve with a lot of people that are into modern art. They can point to things that might not, in their mind, belong in an economics book: “why did you make fun of Hirst or Rothko?”, or any of those people. Perhaps it was a little bit tangential, but it did drive the point of time preference home. 

Specifically, picking on those people is very important. Use them to demonstrate how silly the work is and how little talent and effort it takes and how much of a high time preference it is. A part of me saw this chapter as a piece of modern performance art in its own right. These idiots, the people who get really worked up about it and like this kind of stuff walked into it by making my point for me. Modern artists have taken Jesus Christ and The Virgin Mary, put them in jars of piss and received applause. They sold these works for millions of dollars. 

The whole thing is all about making statements. It seems, as described in my book, as more of a prank than an artwork. In that sense, it’s astonishing how many people think that it’s ok to piss all over The Virgin Mary and do these sacrilegious things against religious figures that are revered by billions of people all over the world. These very same people think that it is completely heretic and unacceptable for me to make fun of David Hirst or Mark Rothko. 

It’s absolutely amazing when you think about it in that way. Somehow, making a statement is a good thing if it’s a pretentious artist who is making it and it’s really actually against something that’s valuable to many people, but these bums, the people who vomit over pieces of cloth and call it art, why is it so wrong to make fun of them? 

Maybe you don’t see the point of having it in the book, but I think it really does drive the point home that this is political. Modern art in its form is truly political. It’s political in a way that doesn’t deserve to be called art. It’s about making a statement and shock value instead of actually trying to do something that makes the viewer think and see something nice. Instead of giving us something pleasant, it has to be a statement, it has to be shocking, jarring and ideological. It challenges society and it has pretentious claims. 

All you’re doing is recreating the things you’re challenging because you’re creating a new cast of priests – artists and art critics. It is fiat art because these people go around and decide that a mattress with a bunch of scribbles on it is valuable art whereas that stuff isn’t. It is fiat art. Looking at the world of art you see where the influence of government money comes in. This is the sort of thing you would not see in a hard monetary standard. 

It’s shocking to read about it but in fact, a lot of modern art was financed by the US government and particularly the CIA as a part of The Cold War. The Soviets were producing their own brand of garbage fiat art, so the Americans felt they needed to produce even garbage-er art to compete. We can’t just let the Soviets beat us to garbage art! Then the Soviets would win! It’s insane bureaucracy that always looks for justification for finding more funding because it can. That’s the kind of people who make it in bureaucracies, the people who are always finding excuses for why they need more money. 

A lot of this has come from the fact that there was a lot of funding being given to the modern art movement in order to make it grow. You see the influence of not giving an incentive, or not giving a temperament that would allow them to produce long term works of art. 

On the other hand, you have the fact that easy money leads to a lot of resources in the hands of bureaucrats who can very strongly influence what society gets to see as art, what gets taught in art schools, what gets taught in public schools about art, what gets displayed in museums, which museums get funding and what for. There’s an enormous amount of government funding for modern arts and I think there’s a very compelling case for why it should be a big flat 0. 

We wouldn’t run out of art if we didn’t have the government finance those things. We’d run out of fiat art, art that is either political propaganda on one hand or financed for political ends. Effectively, even if it’s not those things it’s just controlled by bureaucrats. It’s encouraging to imagine what bitcoin could do to this. 

Bitcoin could fix this in both senses. It could give everybody a lower time preference because it makes the future less uncertain because you can save for the future. We get that by stopping the devaluation of the currency that finances things like modern art. Hopefully, this is how bitcoin fixes this.



I’ve never thought about the government financing crappy art in that way, but that really makes so much sense when you see the source of easy money feeding it in a certain way. You’re going to get that fiat art out of it. I had never thought of that, but it makes sense for propping it up. It’s no secret that a lot of the art market tends to be money laundering, moving money around through different assets. this whole thing is propped by the fiat system and I never considered that, so you just blew my mind with that monologue.


Saifedean Ammous:

I would also add our discussion with Michael Saylor on the previous seminar, not the recent one a couple of weeks ago but seminar number 5 where we discuss inflation. Effectively for fiat money, this is another angle for art and how fiat influences art, because nobody has a good store of value, people look for anything with any element of scarcity as a store of value. 

There’s an enormous demand for extra money that is looking to diversify out of having to hold a savings account which is donating money to the government because it’s being devalued by inflation at a pace that the interest rate can’t keep up with. Instead of keeping your money in a savings account, you diversify by looking for other stores of value, you buy property, gold and art. Even modern artists can’t make art at an inflation rate that is faster than the FED can make money. 

That artist is only going to be alive and awake for a certain amount of hours and there’s a limit to how much of his art he will be making. Their artwork is going to have a higher stock-to-flow than government money. It’s going to dry out eventually, the stock to flow will be infinite and there’s not going to be any more of it. 

People speculate on this by holding onto art and because the money continues to be crappy, there’s an endless line of people looking to diversify out of their crappy money and there’s always going to be an endless line of bagholders willing to pay more for Rothko. There will be more bagholders to sell to them. As long as the money is continuing to devalue, it makes sense to keep investing into these things, the games of greater fool, even though the particular artist’s art will not increase, art over all continues to increase, it’s still less inflationary than fiat money. 

I think this is another angle, if we do have a stable store of value you could use, just how many people that are currently buying art would be buying art? How much less money would they be spending on art? Maybe that’s a good thing. Instead of modern art being a financial asset, where it’s a way of protecting people from inflation, we’re mass-producing paintings so people can store their wealth in them. Maybe when we take that out, it becomes more about taste and about building for the long-term. The people that will be buying the art will be buying it for the sake of the art itself. This will hopefully beat inflation in the long run.



Yes, I would love to see a world where that happens, where you have bitcoin fixing this. It eats the store of value of art as an asset so, people aren’t using that to store their value, they’re using bitcoin. The art that is produced is bought because people love it. You’re getting true beauty or something that resonates with the buyer. That was my point before when I was saying I make it to create beauty for myself. That tends to resonate with other people because it’s authentic. I would love to see a world where bitcoin fixes this.



There is a huge incentive when people donate art to museums, they get a tax break. Because masterpieces are so rare, there’s an incentive to increase or broaden the definition of what a masterpiece is. You get more and more crappy work donated to museums for the tax breaks. That just dilutes the standard that a museum will hold for its existing collection. By introducing the Bitcoin standard into society, like you were saying Saifedean, the standard of what a masterpiece is can revert to what it used to be. 


Saifedean Ammous:

I certainly hope so. I think the money laundry angle is quite interesting. If you can get your art critic friend, pay an artist 10,000 dollars to scribble some things.



You manufacture an artist.


Saifedean Ammous:

Yes. You manufacture an artist and you then pay an art critic to say this thing is worth, you buy it for 10,000 and they’ll say that it’s worth 10 million dollars because it’s so unique, you donate it to the museum, and you could get a tax break for a 10-million-dollar donation to the museum. The tax aspect of it creates enormous incentives for the inflation of the value of art. It makes sense for people to keep inflating the value because it helps them make donations that are tax deductible. 



It’s truly fiat art, art by decree. You have these gate keeper critics like you’re saying, that will be your gateway into the world of, if they say “good” its trusted that their parties are security holes.


Saifedean Ammous:

Absolutely. It will be amazing watching, as bitcoin continues to grow, what of all of these things we’re talking about ends up transpiring and how it changes. One of the many exciting things about watching the bitcoin world advance.



Saifedean, I just wanted to ask what kind of art you personally enjoy, whether musical or visual.


Saifedean Ammous:

I have to say, the inspiration for my chapter on art is something that I always thought about for a very long time, long before I heard about Bitcoin, long before it existed, long before I had even learned economics. I grew up with my grandfather always complaining about how bad modern Arabic music is compared to classical Arabic music. 

When I was a kid, I used to think: “oh well he’s just grandpa and he likes the old days”, clearly the music today is no different from back then, then as I became a teenager, I started to enjoy old classical Arabic music and I started to wonder why is it we don’t have anything like this being produced today. The book was written for an audience that is not very familiar with classical Arabic music so I essentially projected it onto modern and classical art, it’s the same dynamic effectively. 

With Arabic music you see the same phenomena. Back in my grandfather’s day, great artists like Umm Kulthum who is my favorite – she’s an absolute phenomenon, she’s an Egyptian singer whose career stretched for about 70 years. It was one continuous success after the other. She started singing at the age of 5. In her twenties she became very famous in Egypt. By her thirties or forties, she became extremely famous all over the Arabic world and became the prime superstar for 30 years, and continues to be, arguably, still the most popular artist in the Arab world, even 46 years after her death. 

She died before I was born but it’s all that I listen to. Learning about her and her life was quite shocking, educational and even inspiring. On top of being an incredible artist, what is truly astonishing about her is how up until her twenties, she was mostly managed by her father and older brother. By her twenties or thirties, she was in charge of her own career. 

She was the prime superstar of all Egyptian music. She managed all of this with incredible success. Essentially never had a bad day in the office. It’s remarkable, she delivered consistently for so many decades, working at the top of the game with the top artists, composers and musicians in the country, all vying to work for her. She managed them and every aspect of her business really well. It’s absolutely astounding when you look at her work. 

One song would take many months of preparation. She would sing, there would be a composer, a writer who would write the songs and an enormous band that played it. She managed them all and she was the boss of the entire operation. She wasn’t just the woman who got up on stage and sang, she was the manager of the entire operation. She was the boss. Everybody deferred to her, nobody could say no to her about anything. It all worked and was all extremely successful. 

It always made me think, why is it we can’t do that anymore? Why are musicians today so different? You read about her stories and the stories about her contemporaries, it’s a different world. They’re very different from the current day musicians. I could never quite put my finger on it until I learned Austrian Economics and learned about time preference. Then it started to make sense. 

Particularly with the move toward easy money, I think that’s when it starts to make sense. You start seeing, in the times when you have governments that are inflationary, songs in Arabic music getting shorter. The songs started getting faster, quicker and more superficial, the lyrics became far simpler and far more childish. The whole thing became a much more high-time preference operation. 

Usually people will say that it’s commercialized, but as we were saying earlier, I don’t think that’s the problem. Umm Kulthuum did this as a job. That was how she paid her bills. She was commercial, getting money from it. Musicians today are also making money from their songs, but she used to spend a lot of time working on these songs and now they don’t. Time preference is really the best way of understanding that. This is my personal background story. 

I highly recommend reading about Umm Kulthuum and getting to know her music. Her music is a very acquired taste, it’s not very easy for non-Arabic speakers and many Arabic speakers to like it from the beginning. It can be a little jarring but it’s absolutely amazing.



That’s very cool to hear. I feel like we’re getting back into the area of The Bitcoin Standard book where you run into the modern artist people carrying their torches. Do you think anybody is producing music of that same quality that she did, today? I understand what you’re saying, the vast majority of it is crap fiat but is there an enclave hidden somewhere of people doing her level of quality?


Saifedean Ammous:

Not really, no. There’s hope though. Recently, I’ve become very obsessed with listening to all the modern singers that do covers for her songs. you get much better recording quality and much better instruments. The light at the end of the tunnel is, we’re seeing a revival in the interest of that music. We’re seeing some of the successful artists are focused on reproducing that kind of music. At least the demand is there. 

Looking at the modern crop of new artists that are copying here, there is development, a drive toward doing something like this. At this point they excel mostly with covers of her songs. We’re very far from producing anything similar to what she used to do though.



Sure. I don’t push back on the fact that there’s no Michelangelo or Leonardo da Vinci today. I certainly agree there but do you think that there’s great art being created today that will last for a long time? Or are we still in a cesspool of basically nothing.


Saifedean Ammous:

No, absolutely not. I don’t think it’s basically nothing. Obviously, there’s a lot of great art. It doesn’t get as much exposure as the fiat art for the institutional reasons that we mentioned earlier. There’s always talent. On a bitcoin standard, the time preference could be dropped. We’ll see more and more people.



We’ll see more artistic flourishing!


Saifedean Ammous:

I hope so!



I had a twitter user ask: “do you own any bitcoin art?” 


Saifedean Ammous:

No, I do not.



We have to fix that, man! I’m sending you something!



Saifedean, do you mind spelling out the singer’s name?


Saifedean Ammous:

Yes, it’s Umm Kulthuum. I’ll post a link to some of her songs. I was thinking about adding intro music to the podcast, I’ve not done it yet, and I was thinking of adding part of her songs as intro music. Maybe switch them up a bit. Alright, thank you very much guys, this has been a nice refreshing change from the usual number go up propaganda on this channel! I enjoyed this a lot, thank you very much for joining us and I’ll see you guys next week for the next seminar, take care!



Thank you so much!