Republicans rushed into NFTs, then crypto crashed. Here's what happened next.
What's next for Web3 tech in politics?
Cryptocurrency was already in free fall when former first lady Melania Trump jumped on board.
Trump released her first NFT, “Melania’s Vision” by French watercolor portraitist Marc-Antoine Coulon in Dec. 2021. The cryptocurrency used in the sale, Solana, was worth about $178 at the time, down from a peak of about $260 the month before. Like Bitcoin and other cryptocurrencies, it saw its value collapse following record highs in 2021, and today Solana is worth about $32.
Republicans including Trump, conservative artist Jon McNaughton, and Arizona Senate candidate Blake Masters were among the early political adopters of NFTs, or non-fungible tokens. It’s a record of ownership written by multiple computers into the blockchain, a digital ledger that can’t be faked, and the tokens can be bought, sold, and collected as digital art. For some political campaigns, it represents the future of fundraising.
Like artificial intelligence, the metaverse, and other emerging post-pandemic technologies, blockchain-based tech is often classified under the umbrella of Web3. Web 1.0 was one-way, wherein content was delivered to users, and Web 2.0 was/is participatory, wherein users can react by way of comments and user-generated content, like blogging and social media.
Depending on who you ask, Web3 might be the internet’s glorious decentralized future or it’s a Ponzi scheme. Cryptocurrency’s crash decimated NFT sales and seemed to validate the critics, but Web3 advocates in politics still see a future.
Into the MAGAverse
“I don’t see this as rolling backwards,” said Christina Cravens, the CMO of social network Parler. The company, which caters to conservatives, launched an NFT marketplace called DeepRedSky and partnered with the ex-FLOTUS for her NFTs and a sister NFT brand, USA Memorabilia.
Sales have been soft for many of Parler’s NFT collections. Just 2% of its National Parks NFTs have sold, as have 16% of the NFTs in the Valor Collection, which pays tribute to every U.S. military branch except the Coast Guard and Space Force.
CrytoTRUMP Club, Parler’s version of the Bored Ape Club, is made up of unique cartoons of former President Donald Trump customized with hats and accessories. Of the 1,000 NFTs minted for an early release, 391 have sold. There are 10,000 slated to be released in total.
Some collections have sold better. About 63% of the former first lady’s Women’s History Collection have sold, as well as nearly 69% of the POTUS Trump Collection, which shows photos from the Trump administration on rotating silver and gold cards.
Raising money for a cause can boost sales. “The MetaRose,” an animated looping video of diamonds coming together to form a flower, was released in May to benefit Fostering the Future, Trump’s foster care initiative. Just 202 of the 3,000 NFTs minted remain, according to Solana.
“Sometimes it’s trial and error. You look at the market as a whole,” Cravens said. “I think as we move forward you’ll see smaller collections that are smaller counts.”
Parler’s NFT sales mirror industry trends. The number of NFT sales dropped nearly 47% between the last quarter of 2021 and the first quarter of 2022, according to a report by NonFungible, which tracks the NFT market. In July, OpenSea, the largest NFT marketplace, announced it was laying off 20% of its employees.
Still, Cravens said candidates are looking to use NFTs as gifts for donors or as a form of gamification, offering them as contest entries for events or as exclusive campaign merchandise.
Show me the Bitcoin
The 2022 midterm campaign is a proof-of-concept cycle for Martin Dobelle, CEO of Engage Labs, which helps campaigns accept and convert cryptocurrency political donations to U.S. dollars.
Dobelle said accepting crypto donations is technologically intense, and political professionals “don’t have the bandwidth to learn all about crypto, how to accept it, and then how to work with it within the confines of FEC guidelines.”
While crypto has cooled, Dobelle said he thinks it will recover with the rest of the tech sector and be a big part of the 2024 campaign.
Crypto found early fans on the right thanks to its libertarian appeal and a growing desire to build an alternative web infrastructure that’s uncancelable, but digital currency is bipartisan. Of the 15 candidates Engage Raise now serves, eight are Democrats, six are Republican, and one is a member of a third party.
“It’s a very diverse group ideologically, intellectually, philosophically, and everyone brings something to the table,” Dobelle said of the candidates, which include Rep. Dan Crenshaw (R-Texas) and Sen. Ron Wyden (D-Ore.).
January Walker, a third-party House candidate in Utah who tweets using the handle @UtahPolitician, accepts crypto donations through Engage Raise and offers NFT merchandise.
For a $50 donation, supporters get an NFT yard sign, and for $250, a digital NFT campaign button. A coin is priced at $1,000 and a flag for $2,800. In addition to virtual merchandise, donors also get physical items like stickers, yard signs, and pop sockets.
It’s not just small-dollar donors funneling crypto cash into campaigns. Megadonor Sam Bankman-Fried, CEO of the cryptocurrency exchange FTX, donated about $40 million to mostly Democratic and some Republican campaigns during the primaries. And expenditures from the crypto lobby are up by a third as the industry seeks to shape how it’s regulated.
Cryptocurrencies have been used to launder money, and critics worry about its potential misuse in political campaigns.
“There may come a day when cryptocurrency is fully transparent, but that day is not today,” said Craig Holman, a government affairs lobbyist at Public Citizen, a consumer advocacy group. “When it comes to campaign finance, everyone is looking for a way to get around the rules, and this is open to that.”
The Federal Election Commission has allowed campaigns to accept Bitcoin since 2014, but some states have passed their own rules. Arkansas, California, and North Carolina have all banned crypto donations in state races, according to Government Technology, a research company for state and local government.
The possible Web3 future of politics
The cryptocurrency crash and accompanying NFT sales slump have been labeled a crypto winter, but Web3 still has plenty of room to grow. A Pew Research Center survey found only 16% of U.S. adults have ever invested in, traded, or used a cryptocurrency, and 51% haven’t heard about NFTs.
The most impactful Web3 tech for politics, though, might not be crypto donations or NFT merch. Proponents say blockchain voting could make voting easier and build trust in the voting system.
Already, West Virginia, the city of Denver, Utah County, Utah, and two Oregon counties have let U.S. military members, religious missionaries overseas, or others living abroad vote on smartphones using blockchain-based technology. Dobelle, the Engage Labs CEO, said he sees upsides and downsides.
“Do you really want everybody’s vote, which is supposed to be private, on a public ledger?” he said. “But if you can figure that out and anonymize the data, then that solves people’s concerns overnight about voter fraud.”
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