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NFT stands for non-fungible token. An NFT is a digital asset linking ownership to physical or digital items, ideas, and/or rights. Some examples include works of art, tweets, real estate deeds, reservations, club memberships, royalties, and more.
NFTs are held in digital wallets and securely recorded on a blockchain — the same technology behind cryptocurrencies. The primary difference between NFTs and cryptocurrency are: NFTs are made to be unique and cryptocurrency (much like other physical currency) are interchangeable.
NFT ownership data is stored on a blockchain ledger. Blockchains are a fundamental technology because it changes how data is stored and governed. Instead of relying on one authoritative entity/person to store and govern the data, the data is decentralized among a large number of stakeholders via the blockchain. One key benefit of this technology is that data written on a blockchain cannot be refuted once it is stored.
A variety of industries and big brands are excited about NFTs because they possess a combination of attributes and benefits at scale not previously possible. NFTs on the blockchain allow for:
1. Authenticity - Each NFT has its own definition and uniqueness based upon what's written on the blockchain.
2. Ownership - NFTs are stored inside digital wallets. They can't be copied or duplicated.
3. Transferability - NFTs can be easily transferable; allowing users to trade and exchange them instantly and easily.
Since NFTs are digital bits, they are easy to acquire, transfer, and cannot be duplicated. This makes them great signals to demonstrate possession. This is important because ownership is synonymous to identity. As an example, the majority of Nike sneakers are purchased for what they represent. Brands understand the clothes, cars, movies, alcohol, and tickets we purchase reflect who we strive to become. In many ways, we are what we buy. Brands understand the uniqueness of NFTs allows them to control scarcity while still ensuring authenticity.
In addition to demonstrating identity, NFTs can also include various forms of utility. Examples include rights to music royalties, voting rights to whether a sports team trades a player, and direct access to your favorite celebrity. With the diffusion of NFTs, we expect to see more digital provisioning on the internet.
Lastly, NFTs being digital allows them to be managed and controlled at scale with precision. We can ensure small amounts of royalties will be paid out to a large audience with accuracy while also having access to a record of all historical payouts. Being completely digital, we can also reuse NFT code to create, enhance, or remix variations for other use cases.
We're still in the first inning of NFTs. The implications of the blockchain changing how we live online has yet to come. The combination of what NFTs can be used for fueled by the opportunity to program them at scale makes them a powerful new type of media. At this stage, we believe the possibilities are still wide open and it would be a disservice to claim we understand what lays ahead. We're waiting for the world to unleash its potential.
Even though the NFT market has been nothing short of "explosive" over the last year, NFTs are still a niche market in its infancy. Often times world changing ideas start out looking like toys and the NFTs of today appear much the case (https://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy). The majority of NFTs today revolve around PFP-based collections (profile picture collections) owned by a primarily young male millennial demographic.
The first version of PFP NFTs started out as simply profile pics (https://blog.developerdao.com/the-spirit-of-nft-cans-frogs-and-a-15-minute-hero-dream-of-everybody). In the second iteration, we've seen PFP collections used as a form of membership in niche communities, paralleling the job of status-as-a-service during the nascent stages of social networks (https://www.eugenewei.com/blog/2019/2/19/status-as-a-service).
We believe this occurrence is completely normal. Big ideas do not come from a vacuum and are born out of many smaller innovations (https://mtpress.mit.edu/books/democratizing-innovation); the reality is niche groups foster innovations until they build enough momentum to cross the chasm into the mainstream (https://en.wikipedia.org/wiki/Crossing_the_Chasm).
For better or worse, the times we live in jumpstarted the NFT industry. Quantitative easing over the past decade fueled all speculative assets and NFTs were the perfect storm. The NFT Market Surpassed $40 Billion in 2021 (https://www.bloomberg.com/news/articles/2022-01-06/nft-market-surpassed-40-billion-in-2021-new-estimate-shows#xj4y7vzkg) and the most expensive NFT to date is a series of them called The Merge and created by a digital artist named Pak. The series sold for $91.8m in December of 2021.
With any explosive emerging opportunity, we will find bad actors profiting off of the circumstances. This holds true in NFTs and cryptocurrency at wide. Millions of dollars are scammed, phished, or stolen every quarter. In May 2022, actor and comedian Seth Green lost four NFTs totaling $311,220 to a common phishing scam (https://www.vice.com/en/article/m7v89x/seth-greens-apes-gone-begs-internet-not-to-buy-them)). News of these scams big and small are well documented in the media (https://www.rollingstone.com/culture/culture-features/nft-crypto-scams-how-to-not-get-scammed-1286614/). Any holder of NFTs today will advise being cautious with your digital wallet and be particularly wary of scams. A sad truth is many people were onboarded into the NFT space because of the potential monetary gain, and many fell victim to compromises that cut their NFT journey short.
Our frustrations with bad actors led us to Swapbox. We found that the transaction was frequently one of the main vulnerabilities for holders -specifically with peer-to-peer trading.
Peer to peer trading, aka bartering or swaps, is a type of transaction humans have used for commerce since the dawn of civilization. In transactions involving illiquid assets particularly (e.g collectibles), swaps are an ideal option to get what you want with what you have immediately. This community need and frustration is pronounced on the Discord trade channel of NFT projects. Despite users wanting to trade, a few NFT projects even prohibit trading altogether to protect their community from the scams and complications that come with it.
Today, NFT holders trading on their own outside of the safety and purview of projects and admins is wrought with potential opportunities for scammers. Swapbox plans to fix this by building solutions that work with and are directly authorized by NFT project owners.
Furthermore, as builders, holders, and dreamers, we see an opportunity to reinvent commerce in the web3 era -the third wave democratization of the internet. Up until web2, peer to peer trading has not been able to scale and take off due to challenges with trust. Over the last decade, item authenticity and deliverability required some version of a middleman or escrow to act as a buffer. In web3, however, trust issues can be resolved because i) authenticity of goods can be verified by referring to the blockchain ledger and ii) smart contracts can facilitate a trust-less exchange between two parties (https://www.gemini.com/cryptopedia/trustless-meaning-blockchain-non-custodial-smart-contracts).
Armed with tools to scale, Swapbox's vision is to leverage our newfound digital identities to facilitate the trading of NFTs. By combining game-like experiences with trading, we believe in facilitating more meaningful narratives around the NFTs we own. Much of this inspiration comes from both web2 and also in real life gatherings such as card trading events, bazaars, and flea markets.
The things we buy and do are more than a transaction; a painting, a limited edition vinyl pressing, or even a date are meaningful because of its surrounding context. We care about who, why, when, and how a painting was painted, who and how it was sold, and which hands it previously exchanged. We believe the transaction when placed in a vacuum (as we've mostly seen in web2) is only one piece of the overall context. Often times, the best narratives are social and our goal at Swapbox is to help create better context behind how and why we collect and trade.
Despite current market conditions that will inevitably cycle through highs and lows, we believe cryptocurrency and NFTs are the key enablers of web3. Our mission to assist with this wave is meaningful to our society at large. In respect to the NFT market specifically, Swapbox is convinced a few unmistakable tenets should always stay true:
A baseline of safety is necessary for the steady evolution of NFTs. It is very difficult to achieve meaningful progress when a constant threat of scams discourages adoption by both new and seasoned users. The numerous scams encountered today, nearly considered a rite of passage for any NFT holder, are a reflection of how successful the scams have become. Making safety a core component of system design and encouraging safe behavior is top priority.
At the core of web3 is a notion that ownership can be more fairly distributed. This distribution ultimately falls in the hands of communities large and small. Swapbox will enable communities and help them further their goals. More specifically, providing tools to help them foster community and build real human relationships.
Content and creators are king (https://medium.com/@HeathEvans/content-is-king-essay-by-bill-gates-1996-df74552f80d9). Intellectual property such as the NBA, Pokemon, Marvel, and many others are the real drivers of distribution. This continues to hold true in a new world of NFTs and community owners. Intellectual property in NFTs, whether legacy or born in web3, will continue to be king. Swapbox's role is to get out of the creators way and help their content shine.
Users ultimately adopt new worlds and ways of doing things because of experience. Today at Swapbox, the experience we refer to most often is 'fun'. In our experience with traditional collectibles (e.g stamps, vinyl, and sports cards), the common theme always revolves around fun. Enthusiasts find it fun to collect, trade, and discuss their collectibles with other fellow enthusiasts. In today's world where attention is a premium, all new offerings will contain elements of fun.
At Swapbox, we recognize our work stands on the shoulders of giants: the 60 odd years to get us to web2 and more recently the invention of blockchain, the protocols behind them, and the NFT projects who paved the path thus far. We believe NFT's and their underlying technology will help move the world into a new age of digital ownership. The NFT market is still vastly in its infancy, and there is a potential to build amazing things for the world to enjoy and have a stake in.
Founded by MIT alumni, game industry, and media/IP veterans, Swapbox's mission is to connect people through their shared passions. Through our combined knowledge and experience, we believe we can play a role in facilitating the need for distributed ownership in the digital world.
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