NFT was Collin’s Dictionary’s word of the year 2021. However, the truth is nobody knows what *is really going on* or where this technology will lead. The only ones who do have an inkling are those who spend more than a modest amount of time online and they fall into a couple of camps as far as I can see: There are the detractors who only see .jpegs, scams, money grabs and vapid hype; there are the investors who look to make money either by flipping or hodling; there are those who see NFTs as a huge innovation that is going to disrupt many outdated ways of doing things far outside of just the digital realm.
As for me, I’m primarily in the ‘huge innovation’ camp combined with about 10% investing and 10% skepticism. There is plenty out there regarding NFTs and so here I will just give you my own thoughts without rehashing all that is widely available. I’ve also already written posts about NFTs which I’ll share. For those in the NFT skeptic camp your ‘must see’ documentary is “The Line Goes Up.”
The documentary is fantastic and although I do agree with much of it, I disagree with the conclusion that NFTs are just a passing fad or a scam. After all I’m old enough to remember when ‘they’ said the same of the internet itself. I remember when people were afraid to share personal details on social media because ‘the baddies’ would hack them and kidnap their children. Now we cannot get them to stop oversharing their kids photos, political opinions, dinners and pretty much anything that comes into their heads. And while I’m on a role, ever heard of Amazon? It will never replace the brick and mortar ‘they’ said! Therefore, over the decades I’ve learned that nobody can predict the future since most of what ‘they’ said in the past was completely wrong.
Nobody knows what the future holds and technology has taken our world to a place unimaginable back in the ’80s. All we can do is take an educated guess based on our past experiences but just like technology, those past experiences become quickly obsolete when used for predictions. As for me, my past experiences tell me crypto and its progeny the NFT have a huge role to play; they just need time to grow and mature past this juvenile stage where a lot of weird crap is happening.
Before I get started, here is my skeptic post and within it another link to my first post which details my personal discovery of NFTs. I am not a starry-eyed fanboy of NFTs busy posting rocket emojis all day and I call out the nonsense when I see it. I’ve written about a few of the examples in my post but let me address the gamer outrage towards NFTs as I am a gamer myself. Yes, gamers are absolutely right to be outraged as the NFT was introduced as yet another way to nickel and dime their customers just like those stupid loot boxes Electronic Arts got in trouble for. However, just because one company tried to employ an NFT in an evil, greedy way doesn’t mean you throw out the entire technology. If some car salesman tries to sell you a shitty extended warranty package you don’t foreswear driving cars forever do you? In any case, here is an excellent article from the NYT about the affair:
And here is my post regarding my skeptical side on NFTs.
Now that I’ve addressed my healthy skepticism, let’s get to why I overwhelmingly believe NFTs have an incredible future. We can start with those who think NFTs are simply .jpegs, pictures that can be easily copied. If they can be easily copied then they hold no value right?
Well, let’s look at baseball cards. These are cardboard pictures of grown men playing what would seem to be a child’s game. Other people like to collect these pictures on cardboard, especially the ones of men who can hit and catch a ball really well! If we were to explain this to someone in the 1800s I would imagine they would think we were being either silly or had a mental defect. The only reason they hold value is because OTHER people think they hold value and like to collect pictures on cardboard of other men who play a game really well. Weird if you ask me!
“Collect” is the key word here. I started to pay attention to NFTs after something my son said one day which was, “People like to collect things.” A very simple statement but a very true one. What is it about human nature that drives us to collect? Perhaps it is a primal instinct from our days of hunting and gathering when gathering food meant survival? This instinct was passed down over the millennia and in recent times, instead of food became things like beanie babies, baseball cards and now NFTs.
NFTs are simply the next step in this tradition of collecting and with technology it only makes sense that collections would become digital. They hold value because *other* people think they hold value. The argument then is that digital items are easily copied. To this I would argue that yes, the pictures can be easily copied but not the immutable receipt and that is what makes all the difference. That receipt proves ownership.
I can easily pop down to Kinkos and copy my friend’s Willie Mays card as many times as I want. I can even increase the size and make an entire poster if I wished. The only thing to stop me is for the card company to send out their lawyers whose costs would certainly outweigh the benefit of stopping some guy from making a copy of a baseball card. But it wouldn’t even be on cardboard and therefore not *original* so why should the baseball card company even make the effort.
The same holds true for NFTs. Yes you can copy the image but with NFTs you cannot copy the receipt and you cannot go to Kinko’s (now FedEx) either. Now that I think about it a skillful person could make identical copies of baseball cards but nobody could fake a purchase receipt on the blockchain. So doesn’t that make an NFT superior to a physical baseball card? Now I do get that those NFT receipts link to a picture which could get lost unless the image itself is hosted on the blockchain but I’m sure this vulnerability will be worked out eventually. In any case, baseball cards can get ruined by water or any number of physical factors so both types of collections, physical and digital, are vulnerable.
However, it is not the image, nor collecting things that really hold the value for me. It is the communities that are popping up around NFTs that I think is incredibly valuable. This is something I really enjoyed in the beginnings of the mainstream internet but then got lost. I’ll explain.
In the 90s, America Online was the frontrunner in bringing people together online. I was so fascinated being able to go into those chatrooms and chat with strangers all over the world. Believe it or not I even ended up corresponding in the real world with a pretty girl that I met in those chatrooms!! As a high school boy all this new interaction was incredibly exciting (aside from the pretty girl) and left a deep impression on me. I couldn’t wait to get online and participate in those chat rooms, so much so, I even quit playing video games for a while.
Well, over time trolls were born and chatrooms weren’t fun anymore so I stopped participating. The next iteration was social media where the idea was a bit different. Instead of popping into random chatrooms you only connected with people you actually knew (with some exceptions). It wasn’t real time chat like the old AOL chatrooms, but instead a personal “wall” became the standard and although you could comment back and forth quickly, it didn’t have the same feel. That was fun for a few years but was also eventually ruined but not by trolls. In the beginning people were apprehensive about sharing but overtime they began to overshare and to this day have found no limit. Now everyone is arguing about politics, religion, or the issue of the day; they are uploading daily selfies and videos, seeking out praise and affirmation; there are endless reposts, junk, ads, and frankly much of social media has become a very toxic place. In the year 2022 sites like Facebook are considered places for old people. It is being left behind, although Facebook has done a good job at recognizing this and thus tries to stay relevant by buying up new platforms such as What’s App, Instagram and changing its name to Meta.
The technically savvy and young have moved on however and the main platform for social interaction is now Discord. If you’re reading this post about NFTs then I do not need to explain Discord but will say it is a great place for communities and has grown beyond just the gamers for which it was intended. So how do you create a great community? Well, you just need to share some type of interest and you’re in. The communities are gated as you need an invite to join and this is where NFT has some great functionality which add an extra layer/aspect to a community beyond just an invite into the club.
The Discord NFT communities remind me of those fun AOL chatrooms back in the 90s. For many servers and channels within the server you need to own an NFT for access and it is this investment which proves your desire to be part of the community. The NFTs types are seemingly infinite but for me I like Japan, the 90s and a new blockchain ecosystem called Dfinity or The Internet Computer. Within the Dfinity world I belong to a few Discords where I have access to channels based on an NFT I even received for free! My contributions add value to certain parts of the ecosystem and I am rewarded with something of value in return instead of just the useless “likes” or “upvotes” from places like Facebook and Reddit. More on this later.
Purchasing an NFT for access helps keep out the trolls and connects me with those of similar interests. It is like AOL chatroom 3.0! Furthermore, unlike Facebook I’m not mostly limited by people I know in real life but instead have the excitement of meeting people from all over the world! In fact, given the current political state of the USA it is best to not interact with those I know in real life on social media anymore (many have gone insane and are busy “doing their own research.”)
Therefore, the value for me is often not in the actual picture of the NFT but rather the access to communities I really enjoy. With AOL I had to pay an expensive monthly fee for this type of access and experience. With NFTs and crypto I have the ability to get paid for my contribution to these communities through things like NFT airdrops or even digital tokens. My contributions bring value and I’m getting value in return. If the community becomes popular or ‘valuable’ then the NFT increases in price as demand for access increases. This sounds like a fine model to me and one that will continue to succeed. I would note that it isn’t all roses however, as scams, rug pulls and generally crappy projects abound; in fact, they are popping up daily like weeds. Money always creates problems – this is nothing new – but money also creates opportunities. Is it really any different than stocks during the .com boom of 1999 – 2001? Many companies popped up out of the blue, just as many went bust, some did decently and a few went to the moon. I think the same will happen with NFTs. With a stock you’re buying the underlying value of the company believing others will want to purchase their services or goods. So let’s talk about another utility of NFTs.
We’ve discussed NFTs as art, as the key to communities and this brings me to a third function which are projects. The cool thing is an NFT can be all three of these things as once. Above I mentioned that with stocks you’re buying the underlying value and assumption you’ll be rewarded in the future for holding the stock. Well it isn’t much different with NFTs that have projects behind them. If these projects succeed they could become companies themselves and for anyone paying attention, established companies are creating their own NFTs. Whether we buy a stock, an NFT from an established company, or one from a brand new project, we are hoping it will gain in value. The NFT then IS my stock. Not comparable you say? Well, stock owners used to be issued a physical share and now it is just digital. I’ve got nothing physical to show for my stock purchase except for my broker’s promise and the law behind it. A stock can be just like an NFT except an NFT is often better to look at than my stocks. Actually I should say an NFT can act just like a stock but has so much more utility such as also being art and access to communities.
In conclusion I’d say if nothing else I’m enjoying the ride immensely. It reminds me of the internet in 1995 where I’m learning new things, meeting new people; the internet is EXCITING again! This experience is something I would PAY for if it were a service but yet I’m the one getting paid! If you want dividends you need to buy the stock. In NFT land, if you just hang around for a while you might even be gifted an NFT whereas in all the years I’ve stocks nobody has gifted me one (except T-Mobile years ago but that doesn’t count).
I like the stock NFTs.
