Non Fungible Tokens, known as NFTs, are the hottest craze in the cryptocurrency world. But what are they? With a multibillion-dollar market cap, why do people pay hundreds of thousands of dollars, and in some cases, millions for digitally stored avatars, pictures, art, GIFs, tokens (and the list goes on)? Kevin Roose covers NFTs, crypto, AI and social media as a columnist for The New York Times. In 2021, a PNG of his NYT column sold for over $500,000. He joins to discuss the value proposition of blockchain-based assets, the role of scarcity and speculation in determining value and the future of cryptographic assets in a metaverse focused future.

Note: This is a rough transcript — please excuse any typos.

Kevin Roose: It's the quality that gives most offline objects their value. The reason that real estate is valuable is because there isn't all that much of it relative to the demand. The reason that Picasso paintings are valuable is because you can't copy them infinitely. And we know who owns them, and there's a record of their ownership. So NFTs in some sense are just taking this concept of scarcity that we see everyday in the offline world and making it possible to do online..

Chris Hayes: Hello, and welcome to Why Is This Happening with me, your host, Chris Hayes. Today's intro is gonna be short and to the point. I don't understand what nonfungible tokens or NFTs are, except at the highest level of conceptualization. If you have been following me on this podcast, and if not, welcome to Why Is This Happening Where I, Chris Hayes, interview people to learn things basically, to figure things out.

That's basically the intellectual project of the show. We did a show with Joe Weisenthal of Bloomberg on cryptocurrency, which was really helpful in clarifying for me. But at one point, I was, like, "Well, could we do NFTs too?" He's, like, "I'm not really ready to d-- (LAUGH) do an NFT thing."

And I was, like, "All right, well, I'm gonna bookmark that." Because I feel like once, (LAUGH) as happens to people, you know, when you age and technology happens rapidly, like, the second that you're, like, "All right, I got my head around this thing," then there's a new thing that you don't have your arms around.

And again, it's not, like, high-level math that, like, I struggle to work through. It's not linear algebra, you know, that I was trying to do in college. (LAUGH) It just takes someone with the patience to walk you through it. And part of the thing that's weird about the crypto discourse is it's a combination of bizarrely polarized.

There's the, like, psychotically pro-crypto camp and then the, like, "Crypto is garbage camp." So it's very hard to get a perspective in between those two, and then it's also, like, you kinda feel like everyone's talkin' their book, which is finance speak for when people are talking up the stocks they own.

It's, like, "I have all my money in NFTs and think they are the future, and you should buy lots of NFTs, maybe some for me." It's, like, "Well, I'm not sure if I (LAUGH) really want to, I'm really gonna believe that." So I found the perfect person to do today's, like, what's the deal?

That's really what this podcast is. It's just my way of doing what's the deal with what's the deal with NFTs? Kevin Roose, whose work I've read and admired for a very long time, in fact, I think I reviewed his second book in the New York Times book review, if I'm not mistaken.

He's a New York Times tech columnist. He writes about NFTs, crypto, AI, social media. He's got a great book called Futureproof, which is all about the age of automation, which I've actually just been going back through for something that I'm working on now. He's just a smart guy and a mensch and just a decent and enlightened individual in a world (LAUGH) in which those people can sometimes be hard to come by. Kevin Roose, welcome to the program.

Kevin Roose: What an intro. Thank you for havin' me.

Chris Hayes: I mean, I hope, like, I don't know you that well. I hope, like, after the week after this publishes something horrible about you doesn't come out (LAUGH) after it's out.

Kevin Roose: I have--

Chris Hayes: Always dangerous to vouch for people.

Kevin Roose: --dark skeletons in my closet.

Chris Hayes: So okay, so let's do the 101. Nonfungible token is what an NFT stands for. Walk me through what that means.

Kevin Roose: Sure. So let's start with just the words themselves. Something that is sort of not new to crypto but has been around since the invention of money is this concept of fungibility. Fungible assets are assets that can be exchanged for any other type of that asset. So dollars are fungible because I can trade you a dollar, and you can give me a dollar, and we both have a dollar with the same spending power. It doesn't matter which serial number is on the dollar.

Chris Hayes: Right. The particular dollar doesn't matter. A dollar is a dollar is a dollar. And sometimes you'll hear about the "fungibility of money," which is a phrase you'll hear about. You sometimes hear it in the context of, like, budget decisions, you know, where it'll be, like, "Is the government paying for abortion?"

And it's, like, "Well, they gave the state $20 million, but you can't pay for abortion." But then the state paid $20 million for abortion. Like, does that mean that it paid for abortion or paid for birth control in the case of a Supreme Court case, right? Because the dollars are fungible, right. You give $20 million, so the degree to which you can sort of earmark or hive off different sources of funds is a question you might have heard and a context you might have heard of fungibility in the past.

Kevin Roose: You're totally correct. And bitcoin, the first cryptocurrency is a fungible cryptocurrency. There's no difference between one bitcoin and another bitcoin. You know, people will gladly trade you their bitcoin for your bitcoin. It doesn't really matter which one you have.

And then in 2015 or so, this cryptocurrency called Ethereum came along. And Ethereum was different from bitcoin, in that it allowed people to create what are called smart contracts. So instead of just using it to, you know, trade money, although it does have its own cryptocurrency, Ether, the Ethereum blockchain lets you essentially program little bits of code onto this blockchain, this distributed network of computers that keeps track of all the transactions.

And so what that allowed for is the creation of these so-called nonfungible tokens, these little snippets of code, these contracts that lived on the Ethereum blockchain and that could essentially be used to denote ownership, to say "Chris owns this token, and it can't be exchanged for any other token."

And you can see it on the blockchain ledger, and it's permanent, and it can't be revoked or counterfeited. And so that sounds like a fairly straightforward and simple, incremental technological change. But what it allowed for was this kind of scarcity that previous to this, you couldn't really have on the internet.

Like, the internet is a giant copying machine, and what we've seen since the dawn of the internet is that once something is on the internet, you can copy it an infinite number of times with no discernible difference or loss in quality.

An MP3, you can copy it a thousand times. Each copy is, sounds exactly the same as the original. And you can't tell the difference. You can't tell which one was the first one. But this nonfungible token, this Ethereum smart contract, it allowed for the kinds of scarcity that we see in the offline world.

You could have one of a thing. You could have a special, you know, certificate almost that would say that you own some asset out there in the digital world, and that no one else could claim to own that credibly. And that you could buy and sell it as if it were, you know, an offline good. So that is sort of the theoretical basis for NFTs. Now what they have become is, like, a giant industry, and we can talk about that.

Chris Hayes: Right. So let's just stop there and keep going with the conceptual part, 'cause I think if we go back to the blockchain, right, and the idea of cryptocurrency, the fundamental interesting intellectual question here is how you build an architecture that's public and distributed that can trace who has a dollar if I pay you a dollar, right?

And there's a relationship between that and NFTs, because the idea you need is, "I'm gonna transfer the ownership of my dollar, my bitcoin to you, Kevin Roose." And there's gonna be a ledger that's distributed on the internet, doesn't involve the government, that traces the bitcoin I used to have, you now have.

In the same way, if I took out a $100 bill and passed it to you, it would physically move from my wallet to yours. And when we talked to Joe Weisenthal, like, the sort of brilliant hack the inventor of the blockchain comes up with is essentially a kind of very clever way to distribute this process that produces a public record that can't be sort of messed with that will trace that 100 dollars or that one bitcoin moving from me to you and evades the copying problem, right?

Which is, it evades the copying problem of, like, "Oh yeah, I paid him $100, but, like, I really kept the $100." You can't do that with a physical $100 bill, but because the internet is a copying machine, well, how do you get around that? So at the root between "I've transferred that $100 to you," now let's talk about a Picasso painting. (LAUGH)

The same idea. I have a Picasso painting. It's the only one of its kind, you know, verified. It's not a copy, and you're gonna buy it from me. So you transfer the money, and then I transfer the painting to you. Now again, you don't have the copying problem there. I mean, actually you do in the art world, (LAUGH) so we can get to that in a second.

Kevin Roose: Right, there's forgeries.

Chris Hayes: Right, well, that's actually what's very interesting. But given that I'm gonna hire an insured art shipper and I'm gonna pack it up in a crate and it's gonna go, then it's physically gonna be in your museum or it's physically gonna be in your collection, right?

So NFTs are replicating in the digital world that exact kind of thing, the scarcity and the transfer and the tracking of ownership for only one person or a set of limited prints by Chuck Close, right. There might be ten, or there might be 100 lithographs, right? It's creating the digital equivalent of that in the internet space of something that we have had in the offline world forever basically.

Kevin Roose: Right, and it's the quality that gives most offline objects their value. I mean, the reason that real estate is valuable is because there isn't all that much of it, you know, relative to the demand. The reason that Picasso paintings are valuable is because you can't copy them infinitely. And we know who owns them, and there's a record of their ownership. So NFTs in some sense are just taking this concept of scarcity that we see everyday in the offline world and making it possible to do online.

Chris Hayes: I definitely am a person who has the kind of, like, "This is ridiculous, what are these people doing feeling" when I read NFT stories. But, like, that's just true of a lot of things people spend a lot of money and swap back and forth, right?

So, you know, when I was growing up, baseball cards were a big thing. There was this Pittsburgh Pirates player named Honus Wagner. I think he was a second baseman in, like, 1916 or something. And for some reason, I don't know why, I think it was relative to the scarcity that, like, the Honus Wagner baseball card was the most expensive baseball card.

And at the time I thought, like, "Oh, that's kind of funny and eccentric," but I knew this fact. I also knew other cards that were really expensive, and it was just a market for rare goods. I mean, there's antique books, there's art, there's a million different things that are traded on these markets.

In some ways, all of their prices are irrational. (LAUGH) Like, I mean, you can say, like, "Guernica's a frickin' dope painting, so it should be worth a lotta money." But I mean, like, you know, I don't know, taste is in the eye of the beholder. Like, (LAUGH) really who's to say? I think that, like, it's important to ground the discussion in that base level of what real-world versions of these markets look like before going to NFTs. Because I think without that reminder, they truly do look ludicrous.

Kevin Roose: Totally. I mean, the people that I've found that actually understand NFTs the best, who sort of have the mental architecture to process what's going on are artists. You know, talk to artists, and, like, they're used to rich people showing up to art fairs and galleries and just paying absurd sums of money for things of, like, dubious, real-world value.

Chris Hayes: Like, used tissues or Marcel Duchamp's urinal, yeah.

Kevin Roose: Totally. I like that thing, so here's millions of dollars and I want to put it in my house. So, like, to them it's sort of intuitive that, yeah, you have this thing that allows internet objects to be scarce like physical world objects, so naturally rich people are gonna use them to not only, like, display their personal tastes but to speculate and to, you know, show off.

I love talking about this, because I find it so fascinating. I think we forget how much of the economy just, like, runs on, like, very wealthy people signaling their status through the consumption of scarce goods. Like, the third richest man in the world is Bernard Arnault, the chairman of LVMH, which is the Louis Vuitton Moët Hennessy company, like, a company that sells status objects for rich people.

It is a huge industry, and so I don't think it should surprise us that NFTs have become as popular as they are. The thing that people like about NFTs is that it's very easy to determine authenticity. You just look it up on the blockchain. There's a record and a durable record of whether something is authentic and whether the person using the cartoon avatar on their Twitter profile actually owns that or not.

Chris Hayes: So, okay, so that's the grounding. And again, like, my priors going into this discussion is neither more nor less ridiculous than many other ridiculous things that people with lots of money spend money on. Okay, but you just mentioned the avatars. What's the deal with these, (LAUGH) like, I'm sorry, excuse me for a moment, dumb-ass-looking cartoons? (LAUGH) Again, no accounting for taste.

There are some people who think Guernica's dumb-looking, and there are some people who love All In with Chris Hayes at 8 p.m. There are some people who really don't like it. That's just, there's no accounting for taste. Some people don't like me. (LAUGH) Some people just, they hate the sound of my voice, they hate the way I look. Hey, you know, we all like different things, so I don't want to yuck anyone's yum.

From my perspective, I don't get it really, but, like, I also don't get why there's such this, like, what is the deal with this very specific aesthetic that has grown up around these, like, ape-looking cartoons that every tech bro now has. And they're buying and trade, like, what is that?

Kevin Roose: You know, I wish I knew, but you're right. I mean, there is a developing aesthetic around NFTs. Like, a lotta the most popular projects are, like, these, you know, pixelated CryptoPunks or these, you know, ape cartoons. They're called PFP projects often, 'cause they're literally profile pictures.

Like, they're designed to be shown off in that specific way. And I really didn't get the whole, like, sometimes they're called community NFTs, 'cause what happens is they'll sorta make thousands of them at once. And then that's sorta, like, the limited edition.

Like, there are only 10,000 of these, and so you gotta go collect 'em. And so earlier this year, I was, like, very confused by this. And so I just decided, you know what? I'm gonna join one of these. I'm gonna, like, pick up one of these ridiculous cartoons, join the community, and see what it's all about. And so I got this thing called a Pudgy Penguin, which is not the Louis Vuitton of PFP NFTs. It's more like the Coach. You know, it's up there.

Chris Hayes: It's nice.

Kevin Roose: It's nice, but it's, like, no one's gonna be impressed by it.

Chris Hayes: Now does the New York Times pay for that, (LAUGH) or do you pay for that?

Kevin Roose: No, I actually borrowed that from someone who's involved in the project. Like, he sent it to me, and I had it in my crypto wallet. And then before I published the story I sent it back. So I didn't make any money. It was a total. (LAUGH)

Chris Hayes: Just doing a little ethical audit here.

Kevin Roose: Exactly. No it's important, because a lotta the people writing and opining about crypto, as you mentioned, like, do have skin in the game. So we have to be careful about that. So I get this Pudgy Penguin, this, like, ridiculous cartoon penguin. And I'm, like, "Okay, so now what?" And then I enter this Discord, this chat room where all of the other Pudgy Penguin owners are hanging out and talking. And it's, like, a community. And I changed my profile picture--

Chris Hayes: Sure. Wait a second. Do you all have the same Pudgy Penguin? Meaning, like, all people have different copies of, like, a limited edition? Or do you have different Pudgy Penguins?

Kevin Roose: We have different Pudgy Penguins. So, like, (LAUGH) my--

Chris Hayes: I'm absolutely gonna lose it the more times we say this phrase. (LAUGH)

Kevin Roose: So, like, some of them have hats, and some of them have sunglasses, and some of them, you know, have rare ones that are more valuable within the, you know, sort of spectrum of Pudgy Penguins. And there are more common ones. Like, baseball cards, or Magic: The Gathering cards or Pokémon cards or whatever.

So I, you know, make it my profile picture, and then I just get flooded with, like, jubilant penguin avatars who are, like, "Welcome," and "We're glad to have you." And "Let's talk, and let's hang out." And it's, like, this whole social scene.

And so I think that really, like, sort of made sense to me, as someone who, for example, like, has played online games for a very long time. Like, the idea that you would pay money to, like, get into a community of likeminded people and have something to talk about with them and sort of a fun exercise to do on the internet.

Like, that doesn't seem all that strange to me, and so I think that's a piece of it too that we're seeing with these profile picture NFTs is, like, people just want to be part of something. And they're willing to pay a lotta money to do it.

Chris Hayes: Yeah. And I was about to say a thing that I stopped myself from saying, because it's self-refuting, which is, like, wealthy people buying art I sort of get. Because you can put it up in your home, you know, or other places. Then people come in, like, "Oh wow, that's beautiful."

And I was about to say, "But I don't get this." But the answer is, like, well, they put it on their profile picture, which, like, way more people see than any amount of foot traffic in even the most visited home. So in that respect I guess I get it too, right. That's not that different.

Kevin Roose: Yeah, I mean, and that's the kind of bull case for not only NFTs but for this whole, like, sort of digital metaverse economy. It's, like, as we spend more of our lives on the internet, like, the objects in our physical homes become less valuable. The objects and avatars and hairstyles and things in our virtual environments become more valuable.

Chris Hayes: So I do think here is where there's just a profound economic question about what value is and what price is, right? And, like, there's different traditions of this. There's sort of the kind of neoclassical tradition where it's, like, "Well, value is just determined by where the lines for demand and supply intersect."

And there's other theories of value, classical economics and then Marxist labor theory of value that essentially, like, institutional ownership relationships that produce the value and what profit is. And there's a sort of profound question here about what we're dealing with, right?

So it's, like, so let's talk about real estate, right. So, like, real estate in the real world has this feature that is like the Dutch tulip boom or, you know, these NFTs, right. Like, certain real estate markets get super hot. People can flip houses, and they can buy the house with the knowledge they could sell it to someone else, which is part of its value.

But also at the same time, like, the home I'm in right now really does keep the rain off of me. (LAUGH) It does provide a warm space for my family to live in, and there is an actual use of it. It's not all baseball cards, right? It's one thing where I get in the world where, okay, where art or these, like, essentially versions of Pokémon trading cards.

But this vision now of the metaverse, where, like, someone's paying however much money for, like, a plot of virtual real estate, that is a hard bridge for me to cross conceptually. This idea of this stuff that's purely virtual, that offers no tangible thing.

Like, you pay money for a car, you pay money for a house, you pay money for your kids' education. You pay money for whatever different things that people spend a lot of money on. You're gettin' somethin' out of it, you know. The sheer amount that you use for collecting or speculating tends to be pretty small, but now there's this vision of a full economy around that that I find a little harder to understand.

I will say, like, if you talk to people in the NFT world about this, they'll point to, you know, the fact that some of these NFTs have actual utility to them. Like, if you buy a musician's NFT, you get backstage passes to their concerts. Or you buy some museum's NFT and you get admission to the museum.

So there are tangible benefits to some of these projects, not all by any means. But those do exist. So there are tangible benefits. But I think that the bigger issue that you're pointing to here is real, which is that I actually don't think that the metaverse and NFTs are, like, going to substitute for all areas of offline consumption, all asset classes.

I think it's best to kind of view it as, like, the financialization of culture. Like, we can take these things that have qualities that get people's attention or entertain them or make them feel something, and we can turn those into financial instruments that can be bought and sold on a 24/7 market.

There's a saying in crypto that, "It's only a bubble if it bursts." You know, there is this feeling that this can keep going on for a very long time. But I think most people in crypto would acknowledge that the NFT thing has gotten totally insane.

And that there is no way that all of these NFTs that people are paying hundreds of thousands or even millions of dollars for are going to be worth nearly that much in the future. So there's definitely speculation going on. There are definitely scams. I get pitched these insane, even by NFT standards, projects every day. My email inbox is just flooded with, like, garbage, nonsense NFT pitches.

Chris Hayes: You did a great thing, a very valuable service for the paleolithic New York Times readers like myself.

Kevin Roose: The olds. (LAUGH)

Chris Hayes: Who I can no longer make fun of as them, 'cause it's now an us. I want you to talk about the NFT that you created, speaking of speculative mania, right after we take this quick break.

Chris Hayes: You wrote a great column about NFTs where you also made an NFT, so walk me through that. Because I found that quite useful just as a pedagogical tool.

Kevin Roose: Yeah, well, it started off as kind of a joke. I was talking to my editor, and I was saying, "You know, I should really write about these NFT things. They seem to be taking off. You know, celebrities are making them. They're selling for millions of dollars."

And so what if I wrote a story about NFTs and explained the whole phenomenon and then turned the story into an NFT and, like, sold it for charity, for the Neediest Cases Fund? Which is the New York Times sort of internal charity. And to my great surprise, my bosses said, "Sure, go for it."

And I think part of their willingness to let me do this crazy experiment was that no one thought it was gonna sell for anything. Like, there was this Slack that I had where, like, my colleagues are just betting on, like, how little money this sale is gonna bring in.

Because, like, who wants an NFT of a New York Times column that you could read for free on So I write this column. I go through this process called minting, which you have to go through a platform. So there are lots of NFT minting platforms.

The biggest one is called OpenSea. I used one called Foundation. And you essentially take your artwork or your picture of a newspaper column or whatever you're minting, and you upload it through their site. And then you pay what's called a gas fee, which is Ethereum's basically, like, sort of congestion tax.

Demystifying NFTs with Kevin Roose

And then you create this piece of code on Ethereum blockchain that corresponds to your uploaded asset. And then you create a smart contract on that blockchain that governs the auction itself, that says, you know, these are the terms. This is how long it runs for.

When it's over, the top bidder, the money goes to this wallet, and the asset goes to that wallet. And it sort of automates the auction process. So in my case, I set up a 24-hour auction. I set the reserve price, the kind of minimum acceptable price at half an Ether, which at the time I think was, like, $800 or something like that.

And I was, like, very skeptical that it was gonna bring in even that much. And so I watched and sort of crossed my fingers and saw to my great surprise that people started bidding on it almost right away. I mean, the first bids were $1,000, $2,000, $5,000.

And I was thinkin', like, "This is cool. Like, we're gonna make some cash for charity. This'll be a fun column. I'll have something to write about next week." And then I went to bed and woke up the next morning, and a bidding war had broken out. In the closing hours of the auction, the price went from, like, $30,000 to $50,000 to $100,000. And then ultimately when the sort of virtual gavel fell (LAUGH) the top bid was 350 ETH, which at the time was, like, more than $500,000--

Chris Hayes: Geez Louise.

Kevin Roose: --and I think today is, like, $1.5 million.

Chris Hayes: Okay, but, like, why? Like, why? The actual asset was a JPEG, right or an image file?

Kevin Roose: Technically, it was a PNG, but yes, same diff.

Chris Hayes: It was just a file of the column. And at some level it's, like, okay, I can see the logic of the first NFT made by the New York Times might be a really cool, important and valuable historical artifact basically someday. Right? I mean, I guess that's the logic--

Kevin Roose: Yeah, I mean, I tried to convince my editor that everything I write should be valued at $1.5 million, but it didn't work out. But I did do a followup column where I basically called up all the people who had bid on this auction, and I asked them exactly that question, like, "Why?" (LAUGH)

"Why are you spending, you know, hard-earned money, like, hundreds of thousands of dollars on this, like, thing that you could read for free?" And it was sort of interesting. Like, there was a group of people, mostly kind of the lower end bidders who said, like, "Look, this is just, like, a marketing expense for me basically. Like, I've got a crypto startup or I'm, you know, an NFT artist. And if I get my name in the New York Times, you know, through bidding on this auction or winning this auction, like, that's basically advertising for me."

So that sorta made sense on, like, a purely economic transaction level, until a certain point at which, like, it would just be cheaper to take out an ad in the New York Times to promote whatever you wanted to promote. So the higher dollar bidders sort of had different reasons.

Some of them said, you know, basically "This is speculative. I think this is gonna be worth a lot of money someday if, you know, NFTs take off. And maybe I'll be able to resell it for much more than I paid for it." And then there were kind of more heady explanations, like, "I wanted to signal my belief in this space and basically, like, vote of confidence for NFTs as a thing, as an asset class, and get people interested in it." And the bid itself kinda becomes, like, marketing for the enterprise.

And then, you know, the guy that actually won the auction, this, you know, sort of pseudonymous person in Dubai, who only goes by the name 3FMusic sent me this little statement over DM that was, like, you know, "We just believe in the NFT space, and it's gonna revolutionize art. And, you know, we want to support creators." That was all I could find out.

Chris Hayes: I mean, that in some way is even truer of the NFT space than the crypto coin space, which is just the evangelical zeal. The almost religious or, like, deep cause movement, cause-related language around it as a project that binds together identity with ideological affinity with faith about what the future will be that feels different than other spaces.

And can make it I think feel a little like, how about every calm down? Are you trying to screw me here? And I think as a New Yorker, like, I had to teach myself not to feel that way with, like, actual evangelizing religious people. (LAUGH) Like, my instinct when they, like, you know, want to talk to me about God or Jesus is to be, like, "Whoa, is this a scam?"

And it's, like, no, this is just, like, how they evangelize. And I can't tell which it is. And I know this is something actually that you've written about in a sort of past life actually interestingly enough. But how should I think about the character of the culture around NFT and its zealousness and its sort of evangelical quality?

Kevin Roose: Yeah, it's a really good question. And I thought about that a lot. A couple weeks ago, I went to this, like, big NFT conference in New York that was, like, the biggest conference to date. Thousands of NFT, you know, collectors and artists and fans.

And you sort of, like, look around something like that, and you see the kind of, like, subtribes of this movement. There's, like, the people who are just in it to make a profit, like, the pure speculators, and there are lots of those. And they sort of stand around the perimeter of the room.

And they're wearing, like, Patagonia vests, and they're, like, sort of jotting notes to themselves. And then there are the crypto wealthy, the people you mentioned who just, like, have tons of money and want to spend it on something that feels cool to them.

I do think there is a core of sort of true believers, like, people who believe that NFTs are solving something fundamentally wrong with the economy, especially for artists and musicians and creative people. Which is, like, it kinda sucks to be a musician on the internet today.

You have to be on Spotify, because that's where everyone is, and you get millions of streams, and then you get a check for $17. You know, your record label rips you off, and you get into contract disputes. And it's, like, not a great status quo for a lot of creative people. And so I do think you have people, and I've talked a lot of artists and musicians who, like, genuinely do think that this is going to be sort of the salvation of creative pursuits in the digital economy.

Chris Hayes: Right. So in the same way, like, Joe when we were talking about crypto was, like, "What's a use case?" Right, and the use case is, like, if you want to, you know, move cash, you want to make a payment without the interference of government or any laws anywhere, right.

And obviously there's a lot of, like, black market use cases, so you want to run drugs or you're trafficking people or you're buying weapons. But there's also, like, you want to deposit money into a dissident group behind the curtain of an oppressive regime, right?

So that's, like, an interesting and possibly socially really important use case for crypto. In this case, like, let's talk more about this. Which to me the one sort of persuasive real use case here is returning power of ownership. Like, the intellectual property, the power of ownership, the specificity to stamp a thing as "I made this thing," go out into the market yourself without relying on someone else to sell that thing, and get the full value of it back is profound and powerful. And right now because the space is so unmediated is the promise, right, here of NFTs.

Kevin Roose: Right. I mean, we talked earlier about the financialization of culture, and there's an addendum to that, which is that culture has been financialized for a long time. It's just that the people keeping most of the profits were record labels and movie studios and Mark Zuckerberg and, you know, the people who currently serve as, like, intermediaries on this whole market and strike the deals and find the talent and, you know, sell the ads.

And they reap most of the benefits of this so-called creator economy. And so what excites people about NFTs is the possibility that instead of, you know, paying a 97% tax to Spotify every time you stream a song, or instead of creating content on YouTube, and maybe it goes viral and you get $28 in ad revenue, that you could actually keep a much bigger percentage of the pie. That the artists and musicians and actors and YouTubers and gamers and whoever else could have a much more direct relationship with the people consuming the things that they create.

Chris Hayes: I guess I'm gonna sound sort of cynical here or just jaded. But I think that Tim Wu's great book The Master Switch always guides my thinking here, which is I think sometimes people will confuse the liberatory potential of a technology for its newness.

Which is to say, like, when something's new and a market is immature, small operators have more power. And what ends up happening is that it consolidates, and then you get very mediated forms. So it's, like, YouTube felt that way in the beginning.

It felt like it was giving a lot of power to these individual YouTubers. Then that consolidated over time. As Tim Wu writes in The Master Switch, this happened with things like radio. It happened in fact in movies, which before the studio system was just, like, thousands of people with cameras across the country makin' movies and passing the reels around. Part of me feels like I'm a little skeptical that to the degree that that's happening with NFTs now that that's a feature of the technology and not just the immaturity of the market. And some big players are gonna come in and consolidate it.

Kevin Roose: Totally, and to be clear, like, I know I sound like a booster of NFTs and crypto right now. But really, like, the scenario that you've outlined could be totally correct. It could be a market that is just immature, that's going to centralize over time.

I am not, like, making the case that this is bound to happen or destined to happen. But I do think the difference that people in this community see comes down to, like, things like custody. Like, YouTube, yes, it allowed anyone to upload videos.

Chris Hayes: You didn't control it or own it.

Kevin Roose: They were on YouTube servers somewhere. YouTube was the gateway by which people could discover it, and YouTube got to sell the ads. And it was, like, there was a similar dynamic in TV and radio. Like, someone had to own the airwaves. Someone had to put the things on the air.

Like, the media required intermediaries to work. And I think in the case of NFTs, what's different is that there is this, like, decentralized ledger behind everything so that no one really can shut off the access to it. Like, you know, there are lots of technical ways that, like, NFTs can get messed up after the fact. But the basic token, this thing that lives on this Ethereum blockchain, like, that will be there as long as that blockchain exists. And there really is a way for people to kind of own the media directly.

Chris Hayes: It's a really useful distinction actually on the technical side. I mean, I think that you see in Facebook's rebranding, for instance. Like, obviously large entities are gonna try to move very quickly into these spaces and try to extract all the profit from it and also stamp out anything that allows this distributed nature.

And I think, you know, that's the promise of what people call Web 3, right, which is the blockchain architecture is kind of a return to Web 1, which is the kinda pre social media architecture of the web, which was very distributed. Usenet boards, it was protocols that were not controlled by a single company.

It busted outta the walled gardens of AOL and Prodigy and CompuServe into this set of distributed architectures that anyone could join. And then that got brought back into these sort of gated communities of the social media companies we know now and the social networks. And the promise in some ways of the blockchain as a tool, right, is to bust back out of that again.

Kevin Roose: That's what people think in this community. They think that this is, like, sort of a return to a more primitive state of the internet before we had these giant billion user platforms that took over the ad market and commandeered all of our attention everyday.

So that's what they see in it, and I think that's, you know, some amount of consolidation just seems to me inevitable. Like, there's going to be a Facebook NFT store, and those NFTs will be sold by Meta now. They will keep a fraction of those sales. I'm sure I'd have this reported. I don't know that this is happening for sure, but I can just imagine that happening.

I think what people like about this asset class now is the decentralization. I actually think that if you centralized it, they would become a lot less attractive assets to people. Because part of the appeal is, like, portability, right? There's this whole idea that in Web 3 or whatever you want to call it, the metaverse, like, you will be able to take your crypto wallet and all of the token in it, and you will be able to use them in various different ways, like, across proprietary systems.

Right now, like, if you buy a fancy sword in, you know, some video game, like, you can't take that to other video games. It won't work. And so the thing that people talk about all the time in crypto is this concept of interoperability. The fact that you could have an asset that you could take into any number of digital environments, some of which are owned by big companies, some of which are open source or whatever, and you could still use those assets.

Chris Hayes: I have an assumption and a mental image of the people in this space that is very stereotypical and I don't know if it's true or not. You know, it feels to me, like, something makes my skin crawl a little bit about this sort of language of, like, David versus Goliath when, like, the Davids are all, like, really pretty affluent and privileged people with (LAUGH) lots of money.

And I feel like that's kinda the vibe I get from the rhetoric in this space. But maybe I'm wrong. Like, who are these people, like, at the conference? Like, who are they? Who are the people who are bidding who are not the pseudonymous guy in Dubai or woman in Dubai?

Kevin Roose: It's funny. It was sort of, like, a tech world reunion. Like, I went there and I was, like, "Don't, you, like, live in San Francisco?" It was, like, all of San Francisco had, like, migrated to New York for the week. So yeah, it's a lotta the same people.

It's, you know, venture capitalists. It's sort of early adopter engineer types. But it's also artists and musicians. And it was funny, just to your point about sort of the contradictory rhetoric of some of this stuff. Like, I was in line.

There was a party, one of these crypto groups, what they call a distributed autonomous organization called Friends With Benefits. Through this party in Greenpoint in Brooklyn, the way that you got into the party was by owning the token of this group.

Like, you needed a certain number of tokens. You would scan your phone at the door. If you had enough, they would, like, let you in. And these tokens, like, are quite expensive. Like, you know, cost hundreds of dollars to get into this party.

And at one point, they, like, sort of ran out of room in the party. And so they auctioned off an NFT. And the NFT, like, the winner of the auction was gonna be able to bring in, like, five friends and skip the line. And it was, like, the VIP pass.

So here I am in line outside this club, like, waiting to get in, hearing people, like, tell me about the liberatory, democratizing potential of NFTs. Meanwhile, they're stuck because they don't have enough of the crypto token to get into the party.

And the auction for the NFT that allows you to skip the line starts. And, like, someone pays $55,000 to get into this party. And it's, like, "Weren't you just saying that this is gonna, like, open up culture and democratize everything and, like, isn't this just the velvet rope all over again?"

Chris Hayes: Perfect. Yeah, and you mentioned distributed autonomous organizations, and maybe we can sort of segue to those, just since we're doing all the alphabet soup. People may have seen this story about one of these groups bidding on an early copy of the constitution. And again, I've got, like, the four-line answer to what one of these are that would check the box of, like, I quote "understand" it, but I don't really. So explain it to me.

Kevin Roose: Sure. So a DAO, as they're called, is a sort of emerging collaborative sort of co-op run on crypto tokens. So if you can imagine, like, a group of people, they buy these crypto tokens. It makes them a member of this, think of it like an LLC.

It's leaderless by design, and the way that decisions are made within the organization is to vote, you know, most times using these tokens. So you mentioned the constitution DAO. That was something that popped up very quickly, in, like, a week raised something like $50 million and bid on a copy of the U.S. Constitution, which they did not win.

But the whole sort of premise behind the organization was that people who contributed to this would get governance rights over this copy of the constitution and would get to help decide, like, where it was displayed and which museums exhibited it and things like that.

So that's sort of an emerging form. A lot of the DAOs that exist right now are actually, like, sort of groups of investors who are basically pooling their money to bid on NFTs and other digital assets. So you can think of it like a syndicate, like, private equity firm, whatever analog comparison you want to make. They're these new types of groups that basically kind of run like co-ops on the blockchain.

Chris Hayes: Co-op on the blockchain.

Kevin Roose: They've also been described as group texts with bank accounts.

Chris Hayes: Huh. Yeah, I mean, but the question for decision making, the key one is that they vote. Or is it the way that company stock votes is that Zuckerberg's got a majority of the share, so he controls the company? That's not the case here, right? They are equitably distributed among the members?

Kevin Roose: No. People can own more or fewer tokens, and each DAO sort of gets to set up its own, like, rules. Like, is it one vote, one token? Some of them have been saying one vote for every wallet, like, so that sort of evens out the playing field a little bit so that the whales don't just get to make all the decisions.

Chris Hayes: That's just corporate structure though. I mean, it's just a corporation. It's a different way of thinking about it. You can have nonprofit corporations, you can have for-profit corporations. But when you talk about incorporating, you're basically saying, "There's a group of people who are going to collaborate under these bylaws," right? And that's what we're talking about here.

Kevin Roose: Yup. And a lot of what DAOs are doing, you could do in any other corporate form as LLC or a corporation. The difference is I think that instead of having bylaws that a lawyer writes up and people approve and shareholders sign onto, a lot of it's encoded in the actual code, in these smart contracts that govern how this organization works. And some people think that's an innovation.

Chris Hayes: I want to pretend that I understand that, but I don't. (LAUGH) So try to get me there. Like, what does that mean when you say "the bylaws are encoded in the smart contracts?"

Kevin Roose: So at a basic level, let's just make up a hypothetical DAO. You know, you and I and eight of our friends, we decide that we want to pool some crypto and go buy some NFTs. So we set up this DAO, and we build it into the smart contracts that, you know, every time a new NFT is bought, the ownership is distributed in this way.

You get this many percent according to how many tokens you own. And, you know, our friend gets twice as much because he has twice as many tokens or whatever it is. We set it up so that there's a way that proposals can be made and voted on and approved for how we're gonna spend any proceeds that we make from that. And this is all happening transparently on the blockchain. Anyone can go, you know, look up or audit our smart contract and figure out what we're doing and how much money we have and how we're dividing it.

Chris Hayes: Right. So all those bylaws function as code that automate the processes that, like, a person might, like, oversee at a meeting if we had, like, the IRL version, right?

Kevin Roose: And that's the dream. And I should say, like, that that's not always how it works in practice. Like, for example, this DAO that tried to buy the constitution. Like, they didn't--

Chris Hayes: Yes. There's a lot of, like, you know, the Oscar Wilde line about, like, "the problem with socialism is it takes up too many evenings." Like, (LAUGH) it seemed like that was taking up a lot of evenings. Like, it definitely seemed, like, I'm familiar with this dynamic of a bunch of people in a fairly flat horizontal group structure fighting over what to do.

Kevin Roose: Exactly. (LAUGH) It's one of the slowest ways you can make decisions is by consensus. And so, you know, I think that in that case, they did have to make a lot of compromises. They did have leaders. They actually, you know, were going to set up an LLC that would have legally controlled this copy of the constitution.

There was some vague notion that people would be able to vote on it. But, like, it was sort of, like, a, you know, hastily pulled together thing. So in practice, these DAOs, some of them are pretty indistinguishable from more traditional companies and corporations and LLCs.

But that's the vision is, like, you could have a totally leaderless organization of people and capital in which, like, all of the rules are set in stone on the blockchain. And everyone inside and outside the organization can see what's going on.

Chris Hayes: I guess the final question is, like, this is a real thing, right? I think about Second Life a lot, which if people don't remember is this sort of virtual world where, like, for a while it was, like, all the rage. And people were, like, having, like, lecture events in Second Life and, you know, meeting people in Second Life.

And there was a million trend stories about Second Life. You know, Second Life was gonna be the, you know, the universe we were all gonna be in. And then all those did not age particularly well. And I guess my question is, like, what's your gut about ten years from now on this?

Kevin Roose: I'll answer this by way of saying what I think about this space in general, which is that I'm not necessarily, like, pro crypto or anti-crypto or pro-NFT or anti-NFT. I am definitely pro-understanding these things.

Chris Hayes: No, that's my point. I just want to understand them. I find it weird how polarized it is. I don't care. (LAUGH) I mean, I don't have a dog in the fight. It's not like--

Kevin Roose: Spoken like a no-coiner, Chris.

Chris Hayes: Yeah, well, I guess, like, it's not like is a person gonna get healthcare or not? Are we gonna, like, continue to, like, fund the Saudis bombing the Yemenis or not? Are we gonna vaccinate people or not? Like, I have real dogs in those fights, I feel like moral claim.

Like, are a lotta people gonna buy NFTs or not I don't feel some strong stake in from a political, moral, ethical. I'm just sort of curious in the whole thing. It seems to me that there's, like, all sorts of ways that terrible mischief can be done with this.

It also seems to me, like, the politics of a lotta people in this space are, like, really bad. But that seems maybe separable from the technology. But again, I agree. Like, the whole conversation seems very polarized to an outsider in a way that I don't quite get.

Kevin Roose: Yeah. And it sort of reminds me of the early days of social media when, like, the question that everyone was asking was, like, "Will Facebook and Twitter ever make money?" Like, are these viable businesses or not? Are these fads? Will people log onto Instagram to see photos of their friend's avocado toast? Like, is this just a fundamentally stupid endeavor?

And it took a while to, like, understand that this was going to work and that actually there was a whole different set of questions that maybe we should've been asking earlier, like, how will a global speech regime governed by Mark Zuckerberg work, and what, you know, trade-offs will that entail?

And, like, how should we regulate this stuff? And, like, we treated it as a joke until it was already too big to change, in any meaningful way. And so I think the mistake that a lot of skeptics of crypto are making now is sort of falling back on this question of, like, "Will it work or not?"

I think a much more useful question would be, like, "What if it does work, what do we do then?" Maybe it won't. Maybe it all blows up, and this is a giant Ponzi scheme, and we all feel very silly for having wasted our time talking about it. But I think the chance of it working is not zero. And if it does work, it will be a massive transformation that we're going to need to deal with.

Chris Hayes: Kevin Roose is a tech columnist in the New York Times who writes about NFTs, crypto, AI, DAOs I guess too, social media. He's author of Futureproof, a book all about the age of automation, as well as some other books. Kevin, that was exactly what the doctor ordered. Thank you very much.

Kevin Roose: Thanks for havin' me. I'll see you in the metaverse.

Chris Hayes: All right. Once again, my great thanks to Kevin Roose. That was clarifying, deeply clarifying I think. I hope it was for you as well. So last chance for the holiday mailbag. You can send your questions, comments, feedback, send over your thoughts

You could tweet us using the hashtag WITHpod. We love mailbag episodes. And we'd love to hear from you guys, we really do. You guys are out there on the other side of this microphone, and I feel like I know you, but I like to really actually know you.

So send your thoughts and your questions, your feedback, only positive (LAUGH) to Why Is This Happening is presented by MSNBC and NBC News produced by the All In team and features music by Edie Cooper. You can see more of our work by including links to things we mentioned here by going to

Tweet us with the hashtag #WITHpod, email “Why Is This Happening?” is presented by MSNBC and NBC News, produced by the “All In” team and features music by Eddie Cooper. You can see more of our work, including links to things we mentioned here, by going to