This week Artifact Labs launched it's NFT series in style - taking over 50 of the best bars across Asia. Connecting people, the blockchain and history in one hit. We caught up with CEO and project brain child Gary Lui at HKFTW to find out how they are making history by preserving history on the chain.
Walter Jennings: Welcome to Waves in the Finoverse. I'm Walter Jennings, the host of a podcast brought to you by Finoverse. We're talking with the wave makers, creating ripples, waves and tsunamis across finance, crypto, FinTech, Web3 and beyond. Listen weekly to hear the changemakers talk firsthand about their experiences in this dynamic industry.
This week, Artifact Labs has officially launched themselves into the public and to commemorate the event they took over 50 of the best bar is in Asia for a night of networking, conviviality and of course, NFTs. We were thrilled to have Gary Liu, CEO of Artifact Labs in the podcast booth during Hong Kong FinTech week, and let's catch up on their developments. Gary, nice to see you. Welcome to Hong Kong FinTech week.
Gary Liu: Thank you for having me. It's good to see you again.
Walter Jennings: You're in a new role. Tell me what's changed, you've dropped one of your jobs to focus on another.
Gary Liu: I have. Last time you and I met, I was still the Chief Executive of the South China Morning Post and Media Publishing Group based here in Hong Kong. But since then, we have spun out the NFT project that we were talking about as an independent startup. And I have left my job as Chief Executive of a newspaper and taken on this full time job as a founder and CEO of a small startup trying to make waves in the Web3 world.
Walter Jennings: You're a disrupter, Gary, I had no idea.
Gary Liu: I feel like I'm more disrupting myself in my sleep than anything else.
Walter Jennings: You know, but there is a passion and a joy that comes with a startup that's unlike being in an established company.
Gary Liu: Yeah, I'm nodding my head.
Walter Jennings: I will say, audience, he is nodding furiously. Now, Gary, most of us are familiar with NFTs or nonfungible tokens with relation to art, but I believe through Artifact, you have found a different way of using NFT's. Why don't you let our audience in on the inside.
Gary Liu: The mission of Artifact Labs is to preserve and connect history on the blockchain. And our goal, frankly, is to use NFT's as a mechanism to create digital doubles, digital replicas of historical assets on the blockchain. So they are preserved immutably and then to allow people from around the world to actually co-own these assets, to trade them, to curate them, to educate with them, and to engage in a community of people who really care about the preservation of these things from collective human history that really mattered.
Walter Jennings: So Gary, clearly when you launched this, you were running both Artifact and, as said, South China Morning Post, SCMP, your first introductions of Artifact labs were related to South China Morning Post. Do you want to introduce the 1997 project?
Gary Liu: Oh, I absolutely do want to introduce that. So the first project that Artifact labs really launched while we were still a project within this media company, is the 1997 premium series from SCMP.
Now, for the listeners who may not be familiar with Hong Kong history, 1997 was the year that Hong Kong had its handover, this return in sovereignty from being a British colony to being a Chinese city. And it is obviously a pivotal year in Hong Kong's history but also one of the most important years in all of Asian history. And as the newspaper of record in Hong Kong, the South China Morning Post front pages from that year are incredibly important, arguably some of the most important assets from SCMP 119 year archives at this point.
What we did was we took those front pages, 362, and all made them into NFTs. Each day has a different rarity based on what the editorial leadership of SCMP believed the importance of the day was and overall there were 13,000 NFTs of these front pages printed. With the rare has been July 1, the day of the handover that cover, there are only two NFT's of that day's cover ever minted. These NFT's were packaged together and mystery boxes you can think about as old-school tradable card boxes.
Walter Jennings: I was going to say it sounds like Topps baseball cards without the gum.
Gary Liu: Exactly without the gum, although we probably you know, people were chewing gum when they're opening these things. That's exactly right. And you open them and you discover five different days in history. And you rediscover the stories from those days that you may have forgotten.
So we were very fortunate that we found a community of people who cared about history, cared about Hong Kong, cared about journalism. And those 13,000 FTS, were minted out in about four hours. And that was the seed community that we now call our Artifact community of people who want to collect not only moments, but also memorabilia from history as NFTs.
Walter Jennings: Now, Gary, you say co-own history, because I would imagine that the cover of the South China Morning Post July 1 1997, has an already established owner. So how does that work with an asset that is the South China Morning Post. And now in my mystery box?
Gary Liu: This is a question about commercial rights and IP. And of course...
Walter Jennings: IP meaning intellectual property.
Gary Liu: And of course, NFT's at least to me, and I believe that what makes NFT so darn important is that they completely change the paradigm of digital goods. They are the basis of Web3 in the metaverse that we keep talking about, because they are about IP management. Now, to be clear, the NFT's of SCMP 1997 front pages, those NFT's do not come with commercial rights. They themselves also do not come with any kind of fractionalized ownership rights of the actual underlying physical asset.
So the actual IP of that front page still remains with the existing IP owners, a primarily the South China Morning Post. And the actual physical copy that is in the SCMP library is still owned by the SCMP and not by the NFT owners. That said, what the SCMP did was they created a digital facsimile, a digital version of that front page, that is authentic, that is actually made by the publisher, because the publisher has the right to make that digital version, and said, we are going to allow for people around the world to co-own the digital version of this historical asset. It doesn't come with commercial rights. You can't replicate even if you're the owner, but you do legitimately own a piece of this digital art form.
Walter Jennings: Are you then allowed to share and show your NFT?
Gary Liu: Absolutely, and trade, and curate, and display. And we do hope that people will use it for education. And fact, the utility project that was launched immediately after all 13,000 of these NFT's are minted out, was what we call the community wall.
Artifact labs launched a website on behalf of SCMP that had 362 empty slots, the 362 print days from 1997. And we went and we went to the NFT owners and we said, Would you like to make your NFT available for the public to view. Within day, all 362 slots were filled by the actual NFT owners themselves. And for the first time ever, the full set of front pages of SCMP 1997 publications is now available freely for the world. And that is the accessibility that we want to create by making historical art assets and historical archival objects into NFTs.
Walter Jennings: Gary, I want to ask you kind of a real kind of basic question. First off NFT nonfungible token, meaning that it's irreplaceable that there's only one of them. And fungible means it's transferable with anything. So in your wallet, in my wallet, I've got $100 bill that's fungible, you've got a driver's licence. I've got a driver's licence that would be unique to you that'd be non fungible.
So with an NFT, how can we have two copies of an NFT, I thought they were non fungible and unique. So you say the 1997 July 1 has two owners. I guess it were two digital facsimiles minted at the same time. actually,
Gary Liu: Well, the driver's licence example is not the right example.
Walter Jennings: Okay?
Gary Liu: Because that would be more like what we now call soul-based tokens that Vitalik Buterin kind of introduced in the July white paper, but for NFT's, they are back to your previous example - baseball cards.
Walter Jennings: Got it.
Gary Liu: There can be multiple versions of the same baseball card, but each of them has a series number, and they are unique in that sense, and the fact that I can have a baseball card with a very specific serial number on it, that is different from the baseball card that you have.
Walter Jennings: Understood.
Gary Liu: But you and I can effectively exchange those for other assets. So I can give you a baseball card, and then you're now the owner of it, you give me something else in return, but that baseball card will still be a unique copy.
Walter Jennings: So I'll give you a Mickey Mantle for a July 1 1997 NFT.
Gary Liu: I will take that as a big Yankees fan. Oh, 100%. Take them.
Walter Jennings: Fantastic. Well, it's helpful to clarify, because the exclusivity of an NFT is what has led to a heightened perception of value. So
Gary Liu: Yeah, actually, this is a good point. A lot of people ask me, because we're working with very traditional brands on these NFT projects. What gives an NFT its value? And it is still quite confusing. Actually, it's a significant paradigm shift. This is not a comprehensive answer. But I often give four answers, I say that there are four things that give an NFT its value. The first is exactly what you talked about, Walter, scarcity. The fact that something is a one on one will mean that it has value just intrinsically based on supply and demand, that has value.
The second reason why as value is provenance is the fact that the South China Morning Post minted something that belonged in its own archives that gives value, as somebody else who might actually still own the July 1 1997 newspaper, they literally bought a copy, and they put it at home, they can go ahead and scan their front page and release it as an NFT. I mean, from a commercial rights perspective, they shouldn't, but they could. But it shouldn't be worth more than the SCMP version, because it is provenance because SCMP mentioned it. So that's the second reason.
The third reason is utility. And this is where NFT's right now serve a huge community need, they are a membership card, they allow people to unlock access to groups of people to benefits, to experiences, that they would otherwise never have access to. So that utility gives a NFT its value.
And then the fourth thing is commercial rights, which eventually gets very complicated because there are all different permutations of commercial rights. But when an entity does come with commercial rights, oftentimes that's the reason why it's traded is because once you own it, you can do something with it, you can monetize it in different ways. So for those four reasons, NFT's have very real world value and therefore have an open marketplace.
Walter Jennings: One of the points you mentioned utility and you talked about what else it can get you. I'm hearing more and more about blockchain as a means of engagement, of keeping a community together and allowing them to use it actively. So can you talk about the way you're using the Artifact Labs for blockchain engagement?
Gary Liu: Yeah, so actually, this, I think, is one of the key paradigm shifts for brands and institutions around the world. In the Web3 world and especially with NFTs, you can transform users into stakeholders, that's a very powerful change. People who previously were just readers of the newspaper or players of a game, they suddenly now co own assets that will go up in value, if the activity and their brand engagement creates value.
And having those stakeholders having the entitlement, and the depth of engagement that those stakeholders actually want is exactly what consumer executives like me have been chasing our entire careers. And now blockchain technology allows that to be kind of default, right? And the way that you grow your user base and grow your community. So it is absolutely correct for brands to think about NFT's as a membership tool, right?
The fact that it is scarce, verifiably scarce, the fact that you can create 5000 of something and every single one of them is unique, and you can promise that you'll never create another one, you're effectively creating what in Hong Kong we know as debentures. Right, these are club memberships, these are going to go up in value over time, if the benefits of belonging to that club or that organisation or that community increases, right. And so that's, that's a level of engagement. That I mean, I'm fascinated by and I see more and more and more organisations experimenting with.
Walter Jennings: Well, you know, and it used to be that kind of that level of brand engagement was reserved for the super fans, who bought all of the brand and wore all of the brand and spent every free vacation time with the brand. But now it seems that even people who are just having a strong association can now have a little bit of co-ownership with their favorite brand.
Gary Liu: And that's exactly the way it should be right look at what Starbucks is doing right now with what they now call Odyssey, they've launched what is effectively an NFT membership programme that is attached, or I should say, additive to their existing membership programme. And it's gonna be so interesting to watch this thing grow. They're introducing the 25 million strong active membership to Web3, without any of them knowing that they're actually owning virtual assets at this point, right?
And, and when you can scale and membership to millions of people, because every single one of these assets is unique. That's when the economics of Web3 really come into play. So I think more and more brands should be paying attention this, they should be watching the development of this technology closely. And wondering how it can change the way that I associate with and communicate with and interact with my buyers and my customers?
Walter Jennings: Well, I'm looking forward to learning more from Artifact Labs as you begin helping more and more companies engage with consumers around their brand. But I want to dive back when you and I met a year ago, you were talking about Artefact Labs as a way of preserving history and perhaps taking this to other guardians of history. Can you talk about the role of NFT's in preserving history?
Gary Liu: The beauty of blockchain technology is that you could record information in a way that makes it near indestructible, because of the fact that it's stored in servers that are decentralised, because of this consensus mechanism that powers blockchain. It means that you're no longer at the whim of individual powers, whether it's governments or executives, that natural disasters, right, or war, or whatever else that could wipe out servers and a mountainside are no longer a threat because it's decentralised and distributed all over the world, that single companies like Google and Amazon are no longer the single point of failure for information storage.
Think about that, when it comes to historical preservation. If we can create digital versions of our collective human history, and store it in this way, so they're no longer able to be destroyed so that they are indestructible, then we can actually say that history is now guarded immutably that is something that we cannot say today. I mean, I often talk about this at the newspaper, we spent so much time every single year testing sprinkler systems, and paying for better conditioning and worrying about the state of our physical archives, at our print plan out and typo in Hong Kong.
And then we work with museums and libraries to make sure that those alternate versions of our archives are stored properly. But once we're able to meet those archives, those new stories, that first draft of history, onto the blockchain, we can legitimately stop worrying, not stop caring, but stop worrying about their preservation long term. I think that's extremely valuable not to mention the fact that once they become NFT's, you can now make them available for people to own and share and use in a fundamentally different way.
Walter Jennings: You know, it's easy to get the easier to get the concept if you extend the arc of history. I was prior to COVID, in Eastern Europe, in Europe, and I went to Prague and visited a library that was built in the 1400s. And you know, they talked about the destruction and that it occurred over the centuries, with various wars and floods and fires and lightning strikes that really damaged their collection. And so history isn't safe.When it's in its only physical preserve.
Gary Liu: I'll tell you, the Czech Republic, in fact, are using NFTs as a membership card that you can buy to help fund the restoration of their royal castles, and all of the art that has been collected and some fallen into disrepair over the years in those castles. So I think that allowing, I mean, bringing this kind of asset into the decentralised world into Web3, will have many many ripple effects, and they will largely be positive. I mean, I'm a little bit of a homer for this stuff, as you can imagine, but I really do believe in it.
Walter Jennings: Now, Gary, when you mentioned the 97 premium series, you must have met a few super fans, then had a few surprises. What were some of the unexpected benefits of getting involved in a project like that at the retail level? Would you tell us about some of the people that love Artifact Labs in the 97 premium series?
Gary Liu: For crypto insiders and true de gens. The fact that we mentioned our first NFT's in 2022, already makes us late. However, for people in the news industry, we are way, way, way, way, way early. And the advantage of being early is that we are co-discovering what these assets actually mean to the community with the community, we get the opportunity to actually ask questions, we get the opportunity to admit, hey, we don't know the answer. We don't actually know where you want to take these assets in the future.
And when you want to take the collection. We don't know what kinds of other archival assets you want created as an omen to this NFTs. We don't know what other kinds of museums or news organisations or brands you want us as Artifact Labs to go chase. And so the best part about all of this and being one of the early players in this world is that we legitimately get to ask because we're not even pretending to be experts at this point.
Walter Jennings: And Gary, I know that SCMP is invested in some Metaverse and was looking to bring Hong Kong to the Metaverse how might Artifact labs leverage the Metaverse for its own growth?
Gary Liu: Yeah, it's a really good question. I think again, if we're able to recreate physical assets in the digital world on blockchain as NFT's, then those assets can live in 3d space and in meaningful ways in the Metaverse when the set of Metaverse actually scales right when it's actually relevant. So just by creating these assets, we are securing a future in which these assets can exist in a virtual world and a Metaverse of some kind.
We're already experimenting with that SMPS own archival assets as NFT's in the Sandbox exist, right in the Sandbox executions that we built the central pier experience, and also a second one that we haven't announced yet, but we'll announce in about a week. There are already NFT's of SCMP contemporaneous reporting from decades ago in those universes, right. And so that's the majority experiment underway. And we do think that long term more and more of these assets ought to exist in virtual spaces in virtual worlds.
Walter Jennings: We'll come to visit you in the sandbox and whichever Metaverse Artifact Labs is in and look forward to seeing the collection there.
Gary Liu: Please, please come join us and tell us what else you want to see. Because we're in listening mode.
Walter Jennings: Fantastic. Well, Gary Liu, CEO of Artifact Labs, thank you so much for coming to Waves in the Finoverse.
Gary Liu: Thank you, Walter.
