The collective amnesia and paranoia of society never fail to rear their head during times of radical innovation. The fear change breeds, especially when the proposed change seems to threaten the day-to-day functions of the majority, is ever present throughout history.
When electricity was harnessed in the late 1700s, and early 1800s, many were hesitant to adopt it as a source of power. People were afraid they'd be electrocuted by simply flipping a switch; that their houses would burn down from electrical fires; that a whole working class would be eradicated.
Fear of electricity spread and deepened when a Western Union lineman, John Feeks, was electrocuted and instantly killed by a live wire he worked on. The above image was a cartoon in response to that gruesome event.
In the same vain, many years after the first long-distance telephone call was made in 1877, the sentiment surrounding it still hovered on the borders of fear and skepticism. Public sentiment deemed it a technology of atrocious nature.
Additionally, people were uncomfortable with the possibility that anyone with enough technical skills could tap in and listen to any long-distance call they saw fit.
These were valid concerns.
However, looking back, it seems almost silly to have feared these things given the applications we benefit from every second in the 21st century. So to that, I ask this: Have we forgotten the improvements of the early systems we once ridiculed? Are we not living in a world of advanced and secure telecommunication systems? Do you not read this from an advanced telephone, in a home powered by electricity that runs through properly insulated and installed wires?
Today, I see the same public sentiments surrounding the early stages of blockchain, cryptocurrencies, and more recently, NFTs. I will use this article to highlight why once again the fear of these 'JPEGs' comes from a place of misunderstanding and a lack of innovative optimism.
Speculation-as-a-Service
During the 2020-2021 NFT market craze, the public saw unfathomable price tags for NFT collections and projects. Pictures of Bored Apes, pixelated CryptoPunks, and Generative Art soared to hundreds of thousands of dollars. When Beeple, a well-known digital artist, auctioned off a collage of his Everdays art series as an NFT for $69 million in March 2021, people began to notice.
But many saw NFTs as merely speculative drivers with no real utility or value. To me, speculation is the price to pay toward mass adoption. However, they saw the emissions the underlying system produced and called out its supporters for utilizing a technology that played its own part in damaging the environment.
NFTs aren't real art!! - they screamed.
And their concerns were somewhat valid. If they are just another speculative tool, and another contributor to climate change, and not real art, then...
What are NFTs?
To me, NFTs, or Non-Fungible Tokens, act as digital certificates to prove ownership over anything. Let me explain using the analogy of a piece of clay.
I want you to imagine you have molded this piece of clay into a unique structure. Something truly one-of-a-kind that can't be replicated completely even when attempted because it is:
Non-Fungible - an item that is not interchangeable with another of the same type due to its distinct set of characteristics.
You decide to create a digital token/certificate to represent this clay figure. An NFT. How? Well, you find out that NFTs are created or "minted" using:
Smart Contracts - a self-executing piece of code whereby the terms of the agreement between the buyers and sellers are directly written and forever etched into the contracts program.
When minted, this NFT will contain an ID and Metadata which provides additional information about the figure. In this example, this metadata can include:
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Sculptor/Sculpture name
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Date of creation
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Type of Clay
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Height
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Width
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etc.
You now ask the question, "where is this digital certificate of my sculpture being stored?" Well, it's on the:
Blockchain - a public and global network of computers working independently yet in tandem to validate and reach an agreement on the execution of the created smart contract.
On the blockchain, anyone can verify who created the clay figure, what it was sold for, who it was sold to and when that sale occurred. The buyer and seller will always have a record of that transaction regardless of the availability of the platform used. This is the beauty of the underlying technology. More information on this can be seen here.
Now I want you to replace that piece of clay with:
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and the list goes on -> ∞
It is no surprise that the applications of this technology are near limitless. Yes, there have been numerous instances of people losing their digital assets due to targeted phishing attacks.
Yes, there have been numerous instances of collectors having their accounts drained from NFT scams.
However, to paint the future of this technology with the brush strokes of its previous failures puts a dampener on its strides toward adoption & innovation.
It's not all scams
After the first iteration of the web, we saw everything, and I mean everything, move into the digital space at an unprecedented rate. Communication, commerce, entertainment, and even money all become accessible at the click of a button.
With the invention of blockchain, cryptocurrency, and NFTs, these interactions not only became more solidified in the digital space but allowed us to partake in them on our terms.
Many already partake in digital ownership without realizing it. If you have ever bought an E-book, an online album, or have a collection of photos you've taken online, you own them in the digital space. The same idea exists for NFTs; however, the only caveat is that if Audible, Google, or Apple disappeared tomorrow, the things you own on those platforms would evaporate with them. Why? Because of centralization; a single point of failure.
The Creator Economy
With NFTs, creatives have been able to reach a decentralized and global market of collectors without being gridlocked by their location, the terms and conditions of extractive centralized platforms, or by having to sacrifice their creative process for said platforms.
There is complete autonomy and ownership over a creator’s process, revenue, and intellectual property. Allow me to use myself as an example. When I wrote The Read-Write-Own Economy:
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I created a collection of 500 articles
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Set a fixed price
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Minted it on the Optimism Blockchain
Not only was I able to get some collectors, but I also received close to a 100% of the money they paid for my article. A feature that is not available in existing traditional content-creator marketplaces.
However, If Quix was ever to disappear, my article would still exist on another, such as OpenSea.
You see, during that 2021 craze, people dared to test out this new technology. So much so that, we saw the masses generate about $5 billion in NFT sales on OpenSea in January alone!
Although primarily driven by degenerate speculation, we proved that the system did in fact work. Artists were able to focus on creating for their 1000 True Fans; projects were able to crowdsource their ideas with no barriers; and all-in-all, communities sprouted and organized to further test the boundaries of this technology.
Token-gated Communities
The phrase, "Not just JPEGs" became more of a reality when projects began to expand the features of the NFT their collectors owned. By allowing holders to gain access to exclusive content, discounts, or holder-only private spaces, people began to see the value of purchasing these tokens.
One such example of a token-gated community powered by NFTs was the Bored Ape Yacht Club (BAYC):
The additional perks varied from project to project but one thing remained the same, you needed to hold the NFT. It is no surprise how the artists of today can use this to their advantage:
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Free Merch
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Exclusive parties
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Exclusive fan hubs
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Discounted concert tickets
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Early-Access to unreleased tracks
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and the list goes on -> ∞
Funding Public Goods
When NFT communities organize to achieve a common goal, they usually do so under the umbrella of a DAO, a Decentralized Autonomous Organization. Simply put, this describes an organization governed by a group of people who use smart contracts to make decisions on the funds received from their NFT sales.
Some features of DAOs are that:
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They are not controlled by a single authority but by every member who owns the NFT (Decentralized).
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They rely on the instructions coded into the smart contracts; thereby, allowing the execution of ideas without the need for intermediaries (Autonomous)
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They allow transparency of funds and decision-making, as everything exists on a public blockchain (Transparent)
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They allow each member of the DAO to have an equal say in the decision-making governing the organization (Inclusivity).
As stated, these organizations are usually built to support a common vision, and a favorite of mine is that of monetizing:
Public Goods - an object that is non-excludable (used freely, often actually free) and non-rivalrous (used without depletion) - @noun40__
I will explain this with a working example:
Nouns
Nouns is a generative-art NFT project that auctions 32x32 pixelated characters that depict:
a person, a place, or a thing.
One Noun is generated, and auctioned off every day, forever, and the proceeds of the auction are placed into the community treasury for the members of the Nouns DAO to use as they see fit.
As of writing this, the treasury contains 28,219 ETH (~$34 million) and the members of the DAO have voted on 200 proposals as seen in the image below:
The great thing is that they have actually executed on their original vision; to be an open-sourced brand that funds ideas. Although they have funded several ideas already, here are my favorites:
- Nouns X Fitz Frames, providing prescription glasses to kids.
- Gnars, attempting to build the Red Bull of Web3 by funding extreme athletes.
Nouns are not the only ones executing on this. Many NFT communities are coming together to fund public goods, and in my opinion, this trend will continue as the adoption of the technology increases.
The Limit Does Not Exist
Envisioning the road ahead is often difficult when you don't understand the journey you're on. I say this for those who call this technology everything it's not; a tool for speculation, a scam, and a danger to the climate (at least not since The Merge). In my opinion, I believe NFTs will continue to play a huge part in this era of social and digital interactions. So now that you understand, indulge me as I make a few predictions for the future:
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Our digital avatars will become more interactive as developers continue to integrate Dynamic NFTs.
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More centralized corporations will adopt DAO methodologies.
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Multi-billion dollar open-sourced brands will emerge and have a cultural impact across the globe.
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The technical jargon & underlying infrastructure will be abstracted away to onboard the next billion owners.
- As seen with Reddit's Digital Collectibles Collection.
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We will play NFT-powered games without realizing it.
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Digital communities will explode on decentralized social media platforms.
People are often fearful of change because they hold on to the desire of returning to a time and a way of life they perceive as lost. However, we must all practice a little bravery and dip our toes into the unknown, especially when it shows such promise. This is the only way, we as a society can continue innovating -> ∞ and beyond.
If you enjoyed reading this, you would enjoy the resources I got inspiration and information from. Check them out below!