Title: The Future of Tokenized Culture

Author: LUCA SCHNETZLER

Translator: TechFlow

One year ago, I began to reconsider my stance on NFTs. During the market downturn, the concept of practicality seemed meaningless. The idea of reallocating value from X to Y seemed destined to fail. Deeply entrenched in a utility-centric mindset, I began to question the purpose of my efforts. It wasn't until I had an epiphany that NFTs are simply culture. Today, my view on NFTs is very clear: culture and identity will ultimately prevail, while everything else will diminish in importance over time. Despite subjective differences in identity, the impact of culture is undoubtedly profound. This realization has sparked my obsession with culture, and I believe the trajectory of tokenization will move in this direction.

Currently, the cryptocurrency industry is focused on pursuing the next breakthrough in technology. It feels like 98% of the talent and resources in the industry are striving towards this goal. While I acknowledge the importance of addressing infrastructure challenges, I believe that the ultimate state of cryptocurrency is not far off. So, as the industry seeks to create cheaper and faster transaction solutions, I ask: what comes next in a world where cryptocurrency technology reaches its peak performance?

I believe the future of culture is tokenized. I envision a world where the majority of crypto tokens are cultural tokens—tokens serving as indices for people to speculate on various cultures of the past and present. Today, we see signs of this through so-called meme tokens or NFTs. However, I believe the potential and opportunities are greater than most people realize.

First, let's address an obvious question: why tokenize culture? The answer has two parts. First, tokens create consistent incentives, motivating community members to embrace the culture and drive its development. Second, tokens democratize access to culture, allowing anyone with internet connectivity to participate. The combination of consistent incentives and democratized access leads me to believe that the future of tokenized culture will have more pros than cons in terms of cultural dissemination.

This opens up a new category of tokens called cultural tokens. Under cultural tokens, there are the following subcategories:

• Social Tokens (ST): Tokenization of individuals/influences
• IP Tokens (IPT): Tokenization of intellectual property
• Consumer Brand Tokens (CBT): Tokenization of consumer brands
• Non-Fungible Tokens (NFT): Tokenization of art and collectibles
• Historical Artifact Tokens (HAT): Tokenization of historical artifacts
• Meme Tokens: Tokenization of memes
• Sports Tokens (MT): Tokenization of sports

Some cryptocurrency purists may dismiss these trends, but I believe these are pessimistic views. In recent headlines over the past few years, all of the above have driven interest in the cryptocurrency industry. Why? I believe the answer lies in simply meeting consumer demand. Consumers understand memes, they understand toys on shelves, and they understand Veblen goods. The tokenization of culture is effective because people understand culture. Whether you like it or not, the average person doesn't care about ZK proofs, optimistic rollups, or parallelized EVM. While all of these things are amazing, they have not become a driving force to attract more people to participate.

I believe there is a yin and yang relationship between infrastructure and culture. Without the right infrastructure, on-chain culture will never thrive; without culture, our industry will never grow.

Therefore, I encourage anyone with a negative attitude towards cultural tokens to reconsider their approach. Whether you like it or not, we need each other.

Building the Future of Tokenized Culture

The purpose of writing this article is to help inspire more crypto builders to contribute to cultural development. Although the following graphics are just a doodle I made on Figma, I believe it still reflects reality. Everyone is turning left, and no one is turning right. At least for those reading this article, it means you're early.

It's clear that people want on-chain culture, and they want more of it. However, while the industry is focused on building more efficient versions, few builders are developing products around the acceleration of on-chain culture. In my opinion, this is where the biggest opportunity currently lies. If everything goes according to plan, there should be consumer applications on-chain whose enterprise value exceeds that of the underlying chain. Culture is not just IP and memes; it can also be applications, markets, games, DAOs, and more. In the real world, examples of companies building, creating, and pioneering culture include Instagram, Snapchat, and LVMH.

Paradigm Shift

A paradigm shift is occurring at the intersection of culture and the end, not only in the cryptocurrency field but also in traditional finance. The development of cryptocurrency is progressing at a lightning-fast pace, allowing us to glimpse the potential of the financial markets in the near future. In the 90s, you had Bowie Bonds; in 2020, you had $GME; today, you have $DJT, each representing a version of culture in some form. For $GME, it represents the meaning of "opposing bankers and short sellers," and for $DJT, you are speculating on Donald J. Trump, in a sense, it is a social token. Unfortunately, for traditional finance, this future may or may not reach its peak form due to entry barriers. Nevertheless, the concept of culture- and trend-driven financial assets is not new, and with the increasing speed and accessibility of cryptocurrency, it will only become more prevalent.

Editor's Note: Bowie Bonds refers to the $55 million "Bowie Bonds" sold by the musician in 1997, with the securities backed by the future income from 25 albums recorded before 1990. $GME refers to the GameStop short squeeze event. $DJT is the abbreviation for former US President Trump, and a new stock with the trading code "DJT" is currently gaining popularity in the US stock market.

An Interesting Idea

Tokenizing culture can also be understood literally. Imagine a world where you tokenize real-world intellectual property and let it exist on-chain, serving as a fun beacon on-chain for the community to speculate on. Here's how it works:

Create the X Protocol/Launchpad to bring real-world intellectual property onto the chain. The protocol lands Star Wars and launches an officially recognized Star Wars token → Star Wars authorizes its intellectual property to the X Protocol and launches the official $Stars token. Through the authorization agreement, Star Wars receives 15% of the token supply, unlocked monthly. The X Protocol promotes this officially supported $Stars token, sparking the curiosity of billions of Star Wars fans. If even 1% of Star Wars fans become interested in cryptocurrency, it would be a huge win for our entire industry. This model's snowball effect could potentially bring more traffic to cryptocurrency.

Some may question the logic and benefits behind this move. The answer lies in the brand's need for attention and revenue. This model can prevent brands from facing systemic shocks when they cannot compete for attention in an AI-dominated world, and it can also earn more money from intellectual property by tokenizing it (tokenized intellectual property is likely to have higher upside than selling to traditional private equity/mergers and acquisitions).

Final Thoughts

For me, the biggest opportunity in cryptocurrency today lies in the development of the cultural layer. The best entrepreneurs don't build for themselves; they build for their users. It's clear that cryptocurrency users now want more culture. To all cryptocurrency entrepreneurs, I say it's time to give people what they want; the future of culture won't build itself.

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