The Ghostchain. (Or taking things for what they are)

Those who profit from the capitalist confusion defend it by means of a bunch of sophisms and lies through which they attempt to influence all human activity. And so they do not hesitate to affirm that the bourgeois social order has helped the development of culture to an extraordinary degree, and that art, for example, has conquered unexplored territories which, before, seemed inaccessible. These words, written in 1939 by Rene Magritte, speak directly to our present.

Since I first learned about blockchain technologies and its currencies in 2013, my conviction (now re-affirmed) has been that I am not interested in any technologies that leave people behind and make everything more difficult for everyone. Full stop. But after reading  NFTs, or the Readymade Reversed by David Joselit and resisting the urge for weeks to write about the new and utterly regressive contract between art and crypto-finance, the suggestion of Joselit about breaking this contract was finally irresistible to my growing Luddite streak. In Magritte’s text Bourgeoisie Art, the communist painter denounced too, “the capitalist hypocrisy of always refusing to take a thing for what it is”. I decided, therefore, that the first step would be to take these things for what they are.

The negative effects of blockchain computation are not just their wasteful consumption of energy or the resultant proliferation of techbros with too much time on their hands during the pandemic, but also their expression of the intensification of social inequality provoked by the last financial crisis, which, according to the economic geographer Paul Langley, has produced a financialised capitalism that emphasizes investment as a ‘political technology’ concerned with speculation more than with commodification.

The mainstream disruption of crypto-finance into the immediate reality of digital culture–which today is simply culture as such–amplifies the worst aspects of art’s political economy by heralding the entry of the almighty destructive power of technological innovation, this time in service of the truly precarious and risk taking avant-garde of digital art. Digital artists, meaning, artists at the bottom of the art market pyramid–a place where most artist exists and, like all art, it is hard to sell our work–are the lucky marginal customer selected by crypto-finance to justify the normalisation of blockchain technologies and the deployment of the casino layer of the web, a new social-technical layer, glorified as web3 by their evangelists.

It goes without saying that the global art market is a decadent enterprise based on rampant speculation, that in collusion with institutions, it only seems to exist to serve the rich. Salespeople representing NFT platforms use this fact to spread reactionary narratives about  taking back control. We hear that now, finally!, digital art can be turned into a unique asset that can be sold for a certain amount of crypto without intermediaries. And, unlike the already financialised trad art market to which only an elite portion of artists and collectors have access, everyone can sell and everyone can collect in this space. Artists can even get a cut every time their NFTs are flipped. Ok.

Looking at Ethereum’s blockchain information page about these tokens implemented in smart-contracts, I found the word asset used thirteen times to plainly explain that an NFT is a way to represent anything unique as an Ethereum-based asset. It compares the internet of today with the internet of assets,  assures you that your asset is secured in the Ethereum blockchain, that minting an NFT requires it to be confirmed as an asset on the blockchain and that the owner's account balance must be updated to include that asset.

Not once is the term asset explained.

It isn’t just that the NFT market and  everything in the entire crypto-universe looks, walks and behaves like a scam, ponzi-scheme or fraud. But, following the provocation of Magritte, this is an exercise about taking seriously the asset quality of NFTs, hoping to articulate with more precision the interdependence between financialisation and assetization, and to spot the broader social and political effects that turning things into digital assets have in the societies we exist in as artists.

Asseths

I get the file, you get the file, everyone gets the file. But only the person that pays the artist—because artists should get paid—has a contract that gives the illusion of ownership over that digital asset.

Joselit writes that “Duchamp used the category of art to liberate materiality from commodifiable form; the NFT deploys the category of art to extract private property from freely available information.” This bold description matches perfectly with what Langley and other authors call assetization, a political operation that “crystallises financial logics, techniques and values”.  More precisely, this term describes the process of Turning Things into Assets in Technoscientific Capitalism.

In using this term, I am not trying to introduce a trendy new word to reframe and mystify the myriad problems posed by blockchain computation. By addressing the asset form, I am trying to remove the fog produced by using the category of art and its forms to conceal and divert the attention from the financial categories and forms that shape the crypto-logic of scarcity. When we talk about tokenization, we are really talking about assetization.

Assets are a general thing; wiki-definitions of asset include: “an economic resource, or something of value; something or someone of any value; any component, model, process or framework of value that can be leveraged or reused; a resource by means of which intelligence is gathered”. And, of course, assets may also be confiscated by debt collectors.

Ironically, the word asset's etymology lies in the ancient Middle English asseth.  This was a missed branding opportunity for the crypto-capitalists, considering that according to the specifications of the ERC-721 Non-Fungible Token Standard used by Ethereum’s smart-contracts to create unique tokens, other names considered for calling this type of deed were distinguishable asset, title, token, asset, equity and ticket.

In the recent essay collection Assetization. Turning Things into Assets in Technoscientific Capitalism (2020) – free download available – Kean Birch and Fabian Muniesa explain that no thing in this world is an asset per se but that almost anything can be turned into an asset. The question of the future, “who ‘owns’ it and how they end up owning it and what that means for everyone else” (463) are central to the study of assetization.

Sociologist Jens Beckert notes that finance always needs to craft stories about the steps that will transform the present into a specific financial future. Synthetic, made-up assets are constructed through a process of “narrative transformation”(37) that, in turn, transforms socially the participants in the economic activity related to these assets. When some artists make a quick buck out of crypto, many others—the majority, in fact—lose money chasing the new Californian crypto-dream, it is not an exaggeration to say that artists participating in this market have been rapidly transformed by crypto-wealth. This has happened both materially, by quickly cashing out (I hope!) ponzicoins into fiat for necessities, green charity or buying more NFTs, and subjectively: what Birch calls the investor gaze is manifested as radiant red-lasered eyes, shilling images in our timelines 24/7: #NFT #HIC. Drop, metaverse and space become part of the digital art lingua franca; .eth follow @handles; social interactions take place in Discords with market caps and generally, there is a self-identification of artistic labour with the type of capital extracting it. In the metaverse artists are not just artists, they are crypto-artists. They don’t make just art, but crypto-art.

Marx calls this commodity fetishism, meaning the personification of things and the reification of people. Crypto-art is the personification of crypto, while the crypto-artist is the commodification of artists.

But under the lens of assetization, Birch and Muniesa consider that commodification and the commodity form in the Marxist sense, are not sufficient in a world where the speculation of intangible things like carbon offsets, patents, stocks, hype and now, file-based art, is dominated by  “the emergence of trendy scientific specialties (e.g., big data, AI, biotech, fintech)” (11) in the context of deepening capitalisation and the dominance of things that function as capital rather than commodities. Their proposal is that the major financial form today is the asset.

We see this clearly in the dynamics of the crypto-art economy in the process required for a crypto-artist (really an investor) to mint an NFT (a contract). They must first convert their own fiat currency to .ETH (the crypto-currency) in order to load their wallet (an account) used to pay for the gas fee (the cost of the computation provided a miner) resulting from minting the smart-contract in the Ethereum blockchain. The artist then lists the NFT under a reserve price in the hope of receiving bids.  In the end, it doesn’t matter if the asset (the NFT) sells or not: more blocks are added to Ethereum’s chain while Ethereum’s market also has been further capitalised by the conversion of fiat into ether.

Capitalisation and fictitious capital may seem like mysterious concepts that could be elaborated forever. However, it is quite simple. Capitalisation is the extraction of value without direct involvement in its production, but instead by making a claim on its future benefits. The production of fictitious capital is a ghostly process of accumulation that, as Marx put it, transforms value into a “mere phantom of the mind”.

NFTs could be understood as capitalised property, a term Birch uses to describe “the transformation of something (e.g., knowledge) into a revenue-generating and tradable resource”. A commodity points to the present: when someone buys a song from Bandcamp, they are just paying a fixed price for a download. An asset points to the future: an owner of a copyright portfolio, for example, can count on a future income stream from it.  However, it is not completely clear if an NFT is capitalised property like a copyright portfolio, or just an speculative asset that might have a higher price in the future. Just like trad artworks, they are assets but their capitalisation is unclear.

Vending Machines

Other important characteristics of the asset form are that they are unique, and it is not easy nor cheap to reproduce them. Digital files storing art referenced by the NFTs minted in the blockchain still circulate as copies, neither unique nor hard to reproduce. The smart-contract is the irreproducible, unique part. The non-fungible token.

In the end, the only distinctive quality of NFTs as anything beyond blocks of crypto-data is the wild promise of an automated, trust-free fairness that, so the metaverse says, will end the abusive and unfair dynamics of cultural markets by removing the market intermediaries who make the bulk of the money and replacing them with vending machines that automatically split the equity.

This vending machine analogy is how Ethereum itself explains what smart-contracts are and how they work: money + snack item = snack dispensed, albeit with the carbon in the form of CO2 emissions rather than sugar. In other words, smart-contract = token + asset. This metaphor, used to illustrate that smart-contracts can remove the need for an employee or intermediary industries, is a dishonest way of hiding the fact that to get rid of intermediary industries, first it would be necessary to deregulate (even more) entire sectors of the economy in order to get rid of workers in between.

Reintermediation, consolidation and capitalisation – or in the cant of crypto-valley evangelism, democratisation, disruption and paying creators – are also characteristics identified by Langley in fintech platforms (such as Swish, PayPal, cryptocurrency exchanges like CoinDesk, and a new breed of decentralised finance, or DeFi, powered by blockchains like Ethereum) designed to supposedly include the bottom of the pyramid while in reality they just profit from them.

In the internet of assets – the casino layer of the web – who cares about workers? One vending machine per child. Do not worry, there is no need for intermediaries. The only thing needed is a public ledger devouring energy to decentralise the verification of all economic transactions concentrated within the chain of preference.

Proof of Carbon

Financial assets is a category that reveals in a literal way the interdependence between assetization and financialisation.  In Fictitious Capital (2017), Cédric Durand notes that we often use the term financialisation to mean the deregulation of some sector and the social consequences that come with “the liberalisation of finance; the internationalisation and increased sophistication of financial markets; the growth of indebtedness among firms, households and states; the tendency toward the privatisation of social security systems and of nature; the fragmentation of the workers’ movement; the proliferation of financial crises...”. Like assetization, financialization can´t be understood in isolation but as he explains, the focus is the accumulation of fictitious capital, which not by chance, is “connected to the addiction to fossil fuels.”

Gold and crypto-currency mining are, quite literally, dirty businesses. Bitcoin lead developer was aware of Bitcoin’s CO2 problem at least since 2009. Green-washing projects like #carbondrop or #cleanNFTs (or Art into Acres from the trad art world) are not just happenstance. The purchase of carbon offsets from companies like offsetra to green-wash the emissions associated with the energy-intensive ‘proof of work’ used to verify transactions in the Ethereum blockchain, also emulates the impulse of the financial sector to speculate with social problems. According to Digiconomist, Ethereum's network annual consumption of energy is now similar to that of Hong Kong and Iraq. The much hyped introduction of ‘proof of stake’ as a low-energy and higher-efficiency alternative at some indeterminate time is presented as a future salve to the present consciences of crypto-artists and crypto-speculators. The technical problems in the horizon of PoS (not to mention the vested interest of miners who have sunk vast quantities of capital into their operations) seem to merit little attention in the middle of this gold-rush. For Langley, assetization is crucial for the development of carbon-finance, and where the speculative interest is placed in generating returns from “mobiliz[ing] investment for climate change mitigation and adaptation”. Today, we can see carbon-finance in action in the form of “phantom carbon credits.”

Carbon-finance is also responsible for green-grabbing (337), where land grabs and dispossession of local communities in the South are justified as side-effects of financialised conservation initiatives.  But the North too will suffer the consequences of green crypto-finance and their efforts to merge the production of electricity with Bitcoin mining. It is not surprising that dephased coal plants in upstate New York, are being re-deployed to focus on “clean” mining powered by fracking gas that, nonetheless, threatens wildlife and water quality, not to mention their carbon emissions.

The politicization of assets

It would be wrong to claim that crypto-finance is wholly responsible for the assetization of art and culture. This process began some time ago: most pertinently with the development of music copyright portfolios and intellectual property regimes.

What smart-contracts do is not really novel, not even in relation to the purportedly new modes of property and HODLing in common that some claim to be forms of organization never seen before. As a side note, groups organised in decentralised autonomous organisations (DAOs) are text-book assetization as they manifest the imperative of investment as a social relation, giving place to the “emergence of a society of engaged, conscientious stakeholders that adopt the shape of a ‘society of investors’”(50), obviously concerned with the governance of such communities.

But as engaged as investors may be in their community, the cost of a trustless technology is that while there is control over an asset, ownership is an unfulfilled desire. The moving images referenced only as meta-data in smart-contracts, the art, do not exist in the blockchain. They are stored off-chain using a p2p protocol called IPFS. Art is not relevant for execution of the smart-contract because the blockchain only trusts what happens in the blockchain. A collector owns the token issued in a given chain, sure, but there is absolutely no relation of actual (legal) ownership: it’s just an inaccurate shorthand.

So what can you do with assets you control but don’t really own? Having a distinct mode of ownership and control that can be uncoupled and reconfigurated are also characteristics of assets identified by Birch and other authors, but also they are simply just part of the process of assetization, requiring management and mobilization of ghostly property in novel ways. This is not much different from the phenomenon of duty-free art in the trad art market, and “a broader concern with offshore financial flows, tax evasion, and wealth management.” (29)  Let’s be clear again: the trad art market turns art into speculative assets too. Crypto-art markets are analogous: they speculate with art as digital assets.

Just like in the trad art-market, the form of the collection also intersects with the asset form in the crypto-art market. The urge to show off wealth is not tamed in the anarcho-capitalist metaverse: quite the opposite. Assembling collections of crypto-art serves exactly the same function as assembling collections of trad art, despite all claims of wanting to democratize this market. They also boost prices by “situating them in a context that augments their memorial force (signature, heritage, singularity).” (31) Against all logic, provenance, authenticity, and uniqueness are all now simulated in digital form.

This is the part of the text where I am supposed to cite Walter Benjamin and complain about how the concept of aura is misinterpreted. I am sure that blockchain technologies and the attempt to normalise the tokenization – or assetization – of reproducible art,  would have been his worst nightmare; as Esther Leslie shows in her biography of Benjamin, he “was keenly aware of the ways in which the production of culture within the property relations of capitalism acted to constrain the progressive, democratic potential of culture.” On the other hand, as Magritte wrote too, we can’t pretend that “there have been no valid views on art formulated during the course of capitalist domination.”

While some constantly appeal to the return of aura in digital artworks, others suggest getting past The Work of Art…. in the age of crypto-culture. I agree with the latter. Benjamin’s thoughts on gambling and the phantasmagoria of the marketplace are much more relevant to understanding the new tools being developed for the future that blockchain investors want to seize.

We aren’t done with Benjamin. Let’s follow up with the conclusion of his most referenced work in the crypto-space and respond to the assetization of culture with the politicization of assets.

Ghostchain

In conclusion, NFTs are contracts being used to deploy the category of art to extract private property, turning art things into digital assets that can be loaded into a vending machine. This frictionless machine only dispenses art as a ghost, a form that–like all exchange value–is magical and mysterious but should not be confused with aura, simply because there is no such thing as an authentic digital copy. It is not the ghost in the vending machine either. It is the ghost of property, a fictitious experience of ownership glancing back at us through our screens. Capitalised aura, perhaps.

In the metaverse, property and ownership are utterly illogical but this doesn´t matter if artists can get money for food and to pay taxes by assetizing a digital file in the form of an NFT, while in the process, helping construct the illusion that this is the future that awaits all artists.  Indeed, as Lana Swartz wrote in New Money. How Payments Became Social Media: money is one of the ways that the border between two distinct realities is maintained.

Even when captured by the conceptualism fostered by financial imagination, artists are not the problem. The problem here is wasteful blockchain computation in service of the assetization of every single thing and the promise of an anarcho-capitalist future full of frictionless vending machines.

If we, artists, don’t take NFTs for the assets they are, then who?  We need to get involved in the casino layer of the web, but to turn it into a social, political, and economic liability, not to fix it and make it work for us.  We all have to do things we don’t like or don’t want to in capitalist society: this is very different to actively promoting and shilling for capitalism.

I’m sure there are already forms of assetization using the assets of one chain to create more assets in other chains, betting on the capitalisation of new chains, creating a fungible financial centipede of tail-less capitalisation.

But if assets are just made up narratives about the future, perhaps we can create other stories where the value of the future is brought into the present with the intention of decapitalising these chains and make it socially and politically expensive to keep adding blocks in them, until blockchain infrastructures eventually turn into abandoned ghostchains.

No assets. No blocks. No chains. Disconnect the crypto-farms. For the metaverse, this may seem like nonsense, but we can already see left-overs of things turned into assets as physical, real capital constantly decomposing around us at a scale beyond  imagination.

An abandoned train track rusting in the middle of nowhere. A warehouse full of broken-down vending machines. A landfill of gashapon waste from the trad sharing economy. The ghostchain.

All that will be left are the copies of the blockchains. Ghosts of private property.

These copies could become a valuable historical document - a decentralised digital monument to the financial impulse of our present time of turning anything into an asset at any cost. A monument for a future where we no longer have time or patience for destructive technologies without social utility.

This born-digital monument would be owned by no one, no one person would dare to control or download the copies of the ghostchain, because–following Benjamin’s thesis on culture heritage–these files and their ownership are tainted by the financial barbarism that produced them.*

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Unless noted, all page notes (from): Assetization. Turning Things into Assets in Technoscientific Capitalism (2020). Edited by Kean Birch and Fabian Muniesa. The MIT Press. 2020.

Thanks Julian Duane for helping me edit and shaping the final text. And to Rasmus Fleischer and Magnus Eriksson for their feedback and time discussing ideas around this essay.

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About the author: Geraldine Juárez (b. Mexico City) is a Mexican-Swedish artist working with time-based media, sculpture and performance about the histories, imaginaries and materials involved in the social production of technological culture.  Her work has been exhibited and performed in Casa de Lago, Jeu de Paume, Skogen, HKW, Transmediale, Fotomuseum Winterthur and the 57th Biennale in Venice. Her texts have been published by Constant, Continent, Scapegoat, Sink, Paletten and K.Verlag.  In 2018, Rojal Förlag published her artist book Flux until Sunrise. She lives in Berlin.