The Digitization of Ownership and Why It's Really Cool

Trigger Warning: this post has nothing to do with schools, CRT, or even politics. But read on to discover the incredibly cool financial market developments happening right now, but not fully understood. Note that I previously wrote about crypto developments in "Why Conservatives Should Love Cryptocurrencies."

Imagine you could own a $1,000 portfolio that looked like this:

$200    New York Yankees

$375    Picasso's Guernica

$125    Ranch land in Wyoming

$250    David Bowie's song catalogue

$100    James Bond's Aston Martin

$75      Kyle Rittenhouse's prospective legal settlements

Each of these positions represents equity ownership. Crazy? Think again, because it's coming fast. These are all assets of varying sorts and there is no reason they each couldn't have fractional ownership in the form of crypto. 

You probably heard about the U.S. Constitution almost being purchased by 17,437 random people. While they didn't win the bidding, that's hardly the point. They raised $47 million in seventy-two hours. Average donation: $206. (My son was in for $180.) This was all done using crypto currency as the medium of exchange.

Nobody had to hire lawyers to set up an LLC. Nobody had to hire a management team. No intermediaries required.

They came together in the form of a DAO—a Decentralized Autonomous Organization. Basically, a bunch of people buy crypto coins, pool them, and then decide what to buy and what to do with the asset after its purchase. The more coins you own, the more votes you get.

Then there's this. 

A company called BlockBar is making it possible to buy crypto coins associated with uber-expensive bottles of rare liquor. If you own a coin, it's associated with a specific bottle. You can exchange the coin at any time for the bottle itself, which is stored safely.

Let me back up a moment. 

By now, you've probably heard of NFTs (Non-Fungible Tokens). They burst on the scene about a year ago. Until recently, they were just a way to claim ownership of a digital asset, say, an electronic image like this one, 3DPunks #087:

You can be the official owner of this image for the low, low price of $2100. Alternatively, you can copy and paste it, like I did.

It's easy to see why some, including me, were skeptical. 

More recently, though, NFTs have represented claims on a broader range of things such as experiences, access to parties parties, membership in communities, and such. 

More interesting.

But back to BlockBar.

What they are doing is creating NFT coins for tangible assets, and that's where things get very interesting. And not just tangible assets, but theoretically any kind of asset. Team ownership, legal settlements, intellectual property. Basically anything that has a value.

So, why not just own the bottle Macallan 40 itself? 

Because most people who buy these bottles are investors who never drink them, and the coin is more liquid, should they choose to sell. To quote BlackBar's CEO, "You can always exchange the digital asset for the physical, but it is easier to sell the digital asset—you don't have to physically move the bottle, ship it all over the world, and have it be authenticated over and over again by auction houses selling it."

If the Constitution DAO's investors had succeeded, any of them could have sold out at any point, perhaps making a profit.

If this all has a familiar ring, it should. Once upon a time people used precious metals as currency. But lugging gold and silver around was cumbersome and dangerous, so currencies that represented a claim on metals were created. The U.S. had the gold standard as well as silver certificates. How much easier—and safer—it became to engage in commerce. 

What we're witnessing now is an evolution in this concept—the digitization of ownership, all made possible by the underlying security of the blockchain. All sorts of previously illiquid assets, many of which have been unattainable but for the very rich, will soon be liquid and accessible to even the smallest investors.

Just imagine the new forms of investment and speculation this opens up. Think the Yankees just made a bad trade? Sell! Think Kyle Rittenhouse will end up owning CNN and MSNBC? Buy! Just want to brag about owning James Bond's car? Buy!

(The Kyle Rittenhouse angle is interesting, because if you think about it, anyone could sell "themselves," or more specifically, their future earnings stream. There could be an entire subsection of NFTs where you trade in the future prospects of famous people.)

Anyone with even a few dollars to invest can play in the most rarefied of markets.

Guernica

But this has benefits for the very rich as well. Let's say you currently own Guernica. 

(You don't, because it hangs in the Musea Reina Sophia in Madrid, but let's assume that away.)

I'm guessing Guernica is worth $150 million, but hey, it doesn't go with your new decor and you want to sell. You'll have to go through Sotheby's or Christies and pay them 10% of the auction hammer price, or $15 million. The process will take many weeks, and the painting will have to be shipped to the auction house for authentication and viewing. It's all very time consuming and expensive.

This is why trading in and out of things like paintings really doesn't happen much. The friction is too great.

But, if your ownership were digitized on the blockchain, you could sell it tomorrow. Or, if you prefer, sell 49% and still maintain controlling rights, which means Guernica still hangs over your fireplace.

Expenses go down, liquidity goes up. These are compelling things. And they both add significant value to any asset.

Digital stock markets are already being created, such as Open Sea. Most of the listings are, frankly, digital effluence like 3DPunks #087. But tangibles will be there soon enough. Coinbase is planning an NFT market, and they may quickly become the market leader. (Full disclosure: I own shares.)

Sure, all this will take some time. Owners of things will have to decide to go digital, or they'll have to sell to DAOs. But an increasingly varied number of assets will find their way into the crypto space.

Here's hoping our regulators don't feel the need to screw it up. They tend to get very uneasy when confronted with new things they don't fully understand. Digitization is highly democratic, and decentralization is something we all should embrace, particularly conservatives and libertarians.

Digital Picasso ownership? Already here. Not Guernica, but a painting called "Fillette au beret."

Buckle up, it's going to be fun.

UPDATE (2/24/21): Making the Naked Dollar look quite prescient, a DAO is currently raising money to but the Denver Broncos.

The Spence-Yale Connection (or How Schools Go Woke)

                          Welcome Instapundit Readers!

The Spence School

Yesterday's Virginia results were a complete political earthquake. I can't think of a more important non-presidential election result in my lifetime. There were a number of reasons, but none bigger than parents screaming "enough!" We will not let you use our children as fodder for your social experiments.

Of course, this is a rebellion of public school parents. Private school parents are still paralyzed by the (legitimate) fear that speaking up will result in retaliation on their kids, often in the form of tepid college recommendations.

If you aren't familiar with the New York City private school scene, there's a pantheon of sorts. It includes the most sought after and expensive. Most of the schools I've been writing about in recent months are in this select group, schools like Dalton and Brearley. 

Most, perhaps all, have also been experiencing an unprecedented cultural lurch to the left, particularly in the eighteen months since George Floyd. This lurch has been happening even faster in the private schools than public because there are fewer institutional roadblocks to curricular change. School leadership can just decide to make it happen. Boards usually rubber stamp things after the fact, if at all.

Spence, which is all girls, is one of the schools in New York's pantheon. As Spence's peer schools landed in the papers last year with one woke explosion after another, Spence managed to stay under the radar, at least relatively.

Oh, things had been percolating. There was the racial show trial of white high school girl for an innocent Instagram post in 2019, one the school didn't even see before the accused was hung out to dry. Other people who hadn't seen it either were offended, so someone had to pay. The parents yanked their daughters and sued.

Financier John Paulson, one of the most prominent educational philanthropists out there, also wrote a scathing letter to Spence that was later leaked, saying, "There appears to be an anti-white indoctrination that permeates many parts of the Spence curriculum." 

He left the board and removed both of his daughters from the school.

Things were further amplified this June when a Spence parent, alumna, and former trustee (Gabriela Baron) wrote Spence a scathing letter that leaked and went viral. Baron was set off by a video shown in her daughter's middle school class that disparages white women. The video has a rating of TV-MA, which signifies content not suitable for minors under seventeen. Baron's letter noted the school's increased focus on race and how girls were forced to do things like make political protest signs in class. The school apologized. The teacher who showed the video remains at Spence.

I didn't report on this at the time. Some people asked me why, and that's because the story was already out there, and I didn't think the Naked Dollar had anything to add. Honestly, it's only worth blogging if you have some facts or a perspective that others might not. But I do get a lot of information over the transom, mostly in the form of, "I can't be seen speaking out about this, but please get this story out there." (Side note: some of you might actually have to take some personal risk if the culture is to be saved.)

I do get asked a lot if wokeness is a pendulum that will inevitable swing back. I don't know - there are some favorable signs, but I'm still not optimistic.

I also get asked how all this started, because while George Floyd was definitely an accelerant, wokeness was not hatched, fully formed, in May 2020. How did this disease penetrate our nation's best K-12 schools?

Like so many of our culture's bad ideas, the source appears to be the academe. Specifically, the Ivy League. 

More specifically, Yale.

Back in the late aughts, Spence had a problem. They had gone several years without sending a girl to New Haven. The number I've been told is four.

This was occasion for alarm bells in Spence's marble halls. They graduate about seventy girls a year, so that means they had gone close to three hundred girls without a single getting into Yale.

While this might not be shocking for a big public high school somewhere, for a school like Spence it was. Remember, this is an elite school, academically. Also remember many of the parents were likely Yale grads. Wealthy ones, the kind who write checks. Spence's ranks would have been teeming with legacies. I'm guessing around that time, a school in that league would have expected at least a quarter of their girls to get into an Ivy. But if Yale was stiffing them, who might be next?

Something had to be done.

So, according to people I have spoken to, Spence did the logical thing: they hoofed it up to New Haven and knocked on the door of the admissions department. It is thought it was Bodie Brizendine herself, the school head, along with the college placement officer. The conversation went something like this:

SPENCE:    Hey, Yale, what gives?

YALE:          Sorry, who are you again?

SPENCE:    We're from the Spence School? In New York? You used to love us?

YALE:          Oh, right. What can we do for you? Kinda busy here.

SPENCE:    Well, you don't seem to be taking any of our girls.

YALE:          Our admission rate is five percent. What the hell do you expect?

SPENCE:    We used to get a lot of our girls in. Did I mention this is Spence?

YALE:        ....

SPENCE:    Anyway, we were wondering if we were doing something wrong.

YALE:          Uh, yeah.

SPENCE:    Could you be more specific?

YALE:          Look, Spence, times have changed.

SPENCE:    Again, very sorry to be a bother, but specifics would be helpful.

YALE:          Okay. Here's what we see when we look at you: you're an Upper East Side school for the neighborhood rich kids. White ones.

SPENCE:    Well, that is who tends to live in our neighborhood. 

YALE:          Don't care. We're really not interested in white kids anymore. Unless they play a sport. Got any of those?

SPENCE:    Well, we're an urban school, so it's not always that easy...

YALE:          We're gonna need to see more multicultural faces, then. You follow?

SPENCE:    Okay, we see your point. Our diversity numbers could be better. We'll be sure to reach out to other neighborhoods.

YALE:          Yes, see to that.

SPENCE:    Okay, so we're good here?

YALE:          No.

SPENCE:    What? We thought—

YALE:          It's your curriculum. Change it.

SPENCE:    What's wrong with our curriculum? We're proud of it

YALE:          You're kidding us, right? We looked online. So DWE.

SPENCE:    Sorry?

YALE:          Dead White European. Emily Bronte? Seriously? And who the hell bothers with Latin anymore?

SPENCE:    Just tell us what you need. Please.

YALE:         Okay, more Maya, less Milton. You get us? Maybe hire a diversity consultant for this. We like that. And in a couple of years there's gonna be some people named Kendi, DiAngelo, and Coates. You better know that shit.

SPENCE:    How could you know what's going to happen in the future?

YALE:         This is Yale you're talking to lady. Why do you think you people want to get in here so bad? Now, we gotta go before they run out of poached salmon at the faculty club.

Okay, perhaps I don't have a precise transcript of the meeting, and perhaps Yale doesn't have a faculty club. But you get the idea.

Bizendine

Brizendine found herself at a crossroads. Stand up for classical education and cast a blind eye on race, or go with the flow - a flow that was becoming a torrent. I don't have to tell you which she chose. Non-white numbers soared (now nearly 40%) and Spence hired mega diversity consultant Pacific Education Group, founded by...wait for it...an ex-Ivy admissions officer.

You can argue Brizendine was just doing her job, which was responding to the market. Certainly, if Spence's record with Yale (and others) had continued to suffer, her head would have been on a chopping block.

And so, Spence became Yale's dancing bear. Their numbers with Yale recovered.

But - there was an irony yet to be played out. And this is an irony being played out across the private school world right now, not just Spence...

The white parents and board members that panicked about this and jumped into the woke rabbit hole haven't benefitted at all, college admissions wise. 

(Trigger warning. Here's where I'm going to say some of the quiet parts out loud.)

Sure, Spence's number may have recovered, but the white kids aren't doing any better with Yale or any of the other Ivies. If fact, they're doing worse. Turns out the Ivies just wanted the non-white kids (er, except the Asians), and were delighted to get them from the better private schools.

There's nothing wrong with this, superficially, but it certainly wasn't the plan in all those board meetings, circa 2010.

(Side note: private schools that go through 12th grade are far more susceptible to wokeness precisely because of this pressure to deliver what the Yale's want. The K-8/9 schools have some immunity to this.)

There are two paths that remain for the white kids. The first is parental donations, but they have to be HUGE. The number at Yale and Harvard, I'm told, is $10,000,000, and that's the bare minimum for guaranteed admission, assuming your kid isn't an idiot. A flat million will get your kid's file a second glance, but that's it. Below that admissions departments couldn't care less. In fact, they take pride in not caring less. They really, really don't want any of you unless they're ordered to act otherwise.

Makes me laugh when I think about all the alums fretting over whether to increase their annual donations to 10k because they have a kid coming up.

They don't care.

Look at it this way. Yale now has $42 billion dollars in its endowment. Harvard has $53 billion. It takes a lot to move the needle. They can have whomever they damn well want in their freshman class, and it's not your fourth generation kid.

The second way in is sports. They still need to fill those teams (pesky alums insist!), so if your kid is a great athlete with great grades and scores, he/she's got a shot. This fact has fueled the careers of a thousand squash and fencing coaches. But don't kid yourself: Ivy sports are Division I (save football).

I spoke to a number of Spence community members before writing this. Some no longer want anything to do with Spence. Others still care deeply for it, and point out that Spence is not "as bad" as those Daltons out there, at least where wokeness and racial divisiveness are concerned.

I can't say for sure whether that's the case or not, although I can say that's setting an awfully low bar. And to those parents still holding out hope, I would point out the following: even the best of schools can fall to CRT in a single year, and you don't get them back. It all comes down to leadership, and Spence's is about to change.

Felicia Wilks

After about fifteen years, Brizendine is stepping down. Spence has hired someone named Felicia Wilks from the Lakeside School in Seattle. She may be wonderful. But consider that she once ran her school's DEI Department, and when asked in a videotaped interview whom she was reading, the first person she cited was Ta-Nehisi Coates, a leading purveyor of white supremacy alarmism. 

I'd be delighted to be wrong, but these are not encouraging signs.

As always, I want to call out the Lovely People, in this case Spence's Board of Trustees:

William Jacob III                President

Anand Desai                     Vice President

Kimberly Kravis                 Vice President

Akuezunkpa Welcome      Vice President

Arthur Chu                         Secretary

Stacey St. Rose

Dana Wallach Jones

Ellanor Brizendine

Heather Berger

Hannah Overseth Bozian

Michael Clifford

Vanessa Cornell

Erica Desai

Joseph Drayton

Carlos Fierro

Judith Joseph Jenkins

Alexis McGill Johnson

Meredith Lipsher

Bryce Markus

Ahrin Mishan

C. Cybele Raver

Anya Herz Shiva

James Shulman

Jose Tavarez

Daryl Wout