What are they? Why do people care? Where's it all going?
I've been casually thinking about NFTs for awhile now, but since I haven't had my blog up for awhile now and my thoughts have been too random (and long) to really compile into a proper tweet storm...I haven't really done anything but *think* about and watch the NFT space throughout this time.
(That's not entirely true: I do have an old NFT related project currently on ice called cryptogameobjects.com that, as is my usual, was *way* too early)
Anyway, this tweet from @dherman76:
which generated a conversation that directed me to many of the links I reference below.
And in reading that conversation and those links, I was finally motivated to take some notes and try to figure out a way to share my related thoughts (with the one or two of you in the larger world that might be interested in the same things).
So - introducing my new Substack, Kevin's Newsletter: A developer's take on startup related things.
The idea or hope is to cover a slightly deeper dive into a topic, a trend, or technology about once a month. With a strong focus on pointing out the things I'm reading, hearing, or being exposed to as I learn about or think about a given topic (you can think of it as me "learning in public").
With that in mind, and out of the way, here's my first attempt at bringing you into my exploration of NFTs. If you’ve got additional reading, or thoughts around this topic that you’d like to share, please do email or tweet me any time.
Well start with a tweet storm that was referenced as
The Gist: The world will grow more digitized and decentralized. Value inherently means prioritizing, ranking, or coveting one thing over another. The bets, and the risks, are in picking what you value today vs. what you believe others will value in the future. Scarcity is a key, if not the key, value factor in a digital world.
My Take: I like this line of thinking right up until the 'scarcity' bit. The common case people make around the scarcity thing is the Mona Lisa example...but to me this confuses scarcity of talent with scarcity of time (or timing). The orig. Mona Lisa is valuable b/c of the talent that went into producing the orig. and the lasting reputation of the artist behind it (and to some extent the admiration and preservation of it since). Not as much b/c of when it was created (though it does play a small factor).
But is there value in owning one of the 'first' NFTs? Or in owning the first of any digital good? I guess in many cases there is some social status value there...but only if/when that given path is the one that get's chosen by the crowd (and as long as the crowd remains).
It isn’t as direct, or simple, as just launching a set of NFTs and then, because, they are NFTs and you are early, they will gain value. There has to be something more to make them special that goes beyond "early" or "timing" (i.e. b/c of the creator, b/c of the utility, b/c of crowd attention). And to me, that's the hardest thing to truly understand or guess properly at the moment (why some catch on and others don't).
Reading #2: https://variant.mirror.xyz/
The Gist: Creators, their audiences, and developers can all make more money in a marketplace built around true digital ownership (vs. the centralized, gate-keeper, systems of today that often are not truly aligned with the creator or consumers best interests). Ownership of digital assets is a social status thing (the more well known/shared a digital thing is, the more value true ownership of that thing becomes). Creators make more b/c contracts can include things like royalties from after-market sales. Consumers make more b/c ownership value can increase over time (vs. access, which generally remains at a flat value). Developers make more b/c it's an open, decentralized, system that doesn't limit or control what they can build (wide open opps that are only controlled directly by the market vs. a central power/authority).
My Take: A lot of the tools to really make these concepts easily understood, and mainstream, are still not quite there yet...but I think this article does a good job of laying out some of the motivation/vision for the three groups of creators, consumers, and developers.
Of the three, though I am one, I think the least interesting bit is the developers right now (much like advertisers, developers will chase the crowd and so that doesn't really have anything to do specifically with NFTs in my opinion as much as it does with the traction they are seeing -- though it does become a self-feeding loop). The royalty bit for creators is still a little too fuzzy for most I think (and as far as I know, still pretty hard to execute upon)...but I think we are starting to see the early utility traction on the consumer side of things (though I think there is value in more than just pure 'ownership' with room to push the boundaries on the 'access' front too).
Reading #3: https://a16z.com/2021/02/27/nfts-and-a-thousand-true-fans/
The Gist: NFTs can be used by creators to make more money from their true fans. They help remove middle-men currently between the creator/consumer. They provide more granular control over price points and offerings (to better serve specific, niche, customer demands). NFTs also help lower the customer acquisition costs for creators (b/c adoption of crypto itself is driving people towards its unique use cases and things like NFTs).
My Take: I'm not sure I agree that NFTs help lower C.A.C. or that they allow for easier/better pricing options, but I do strongly agree that they can help remove the middle-men currently sitting between creators and consumers. With the information associated to an NFT contract, you can enforce many of the 'rules' that traditionally required a central platform or party to enforce (like limiting access or verifying ownership).
Reading #4: https://blog.coinfund.io/all-digital-content-is-going-on-chain-ae26a7071657
The Gist: The volume of digital content has been and continues to explode. The future is not about ownership of this content, but rather access/permission to consume that content. NFTs are best understood as encapsulating intellectual property rights to the assets they describe. They can be used to determine who controls access (earns money from it), as well as to determine who should gain access to a given bit of digital content (pays money for it).
My Take: NFTs can finally provide us with a way to fairly trade and share digital content (without having to illegally copy or steal things). Rather than a central authority controlling or limiting access to content that I've paid for, NFTs have the potential to shift that control directly to me (instead of sharing accounts, I can just share access to a specific bit of content. And b/c we only paid for it once, only one of us has that access at a given moment in time.)
Reading #5: https://opensea.io/blog/guides/non-fungible-tokens/
The Gist: A deep dive into the technical details of NFTs, the brief history of NFTs, and the current state of the NFT market (from one of — if not the biggest — central market for NFTs right now).
My Take: Too technical and long for the average person, but if you really want to understand the terms, technology, and history behind the craze THIS is the article to start with.
Reading #6: https://linda.mirror.xyz/df649d61efb92c910464a4e74ae213c4cab150b9cbcc4b7fb6090fc77881a95d
The Gist: Covers the basics of what an NFT is, and some details on how they are used today, thoughts on how they can be used going forward, and how value might be generated with them.
My Take: The article does a good job listing out a lot of different ways NFTs might be useful. It also does a good job of highlighting the concept of fractional ownership, which I think is a HUGE new thing that makes the digital landscape very different from what has been experienced in the physical world of the past.
Personally, I think one of the most interesting/promising use cases for NFTs is simply ticketing. An NFT that provides access to, proof of attendance for, or fractional ownership of certain events/goods seems like a no-brainer to me (and way better than today's version of tickets, contracts, and certificates).
Reading #7: https://www.theatlantic.com/ideas/archive/2021/04/nfts-show-value-owning-unownable/618525/
The Gist: People have complex reasons for buying things, some of the current draw of NFTs is because it's both complex and abstract. Since you don't own a physical item, nor the copyright or other permissions, all you really own is a pointer. So it's not about utility, or even ownership, really -- it's about the belief that others do or will also value the pointer as time goes on.
My Take: The author believes that right now, "only the cool kids" understand the why, what, and which NFTs might have value...but like the lottery, any regular can play and just *might* win big.
While I don't entirely agree (I don't think it's as random or useless as the article seems to imply), I do think even this take means that the NFT market can be both entertaining and potentially rewarding to regular people. With newer tools (and a booming economy) it gets easier and cheaper to play every day. Meanwhile, this 'gambling' aspect is specifically what the powers-that-be are concerned about -- it's too easy for regular people to lose their money. Yet, in-part, I think this is specifically what is drawing in more 'regular' people (to both buck the powers-that-be AND get in on the fun).
Reading #8: https://www.notboring.co/p/status-monkeys
The Gist: A great deep dive into framing the "Status as a Service" essay and how it relates and explains why NFTs are starting to generate such 'value' and gain more mainstream attention. The gist of the argument is that NFTs provide social capital, utility, and entertainment ("the social network trifecta").
My Take: NFTs are status that you can carry across social networks, not nec. social networks themselves (though I think I do buy into using the concept of "how to value a social network" as the same way to properly value or frame the current NFT craze). Combine this view with the 'new' ability for fractional and distributed ownership, and I can see where this is just the start of something potentially VERY big.
Additional reading suggestions:
The orig. "Status as a Service" essay heavily referenced in reading #8 is also highly recommended reading: https://www.eugenewei.com/blog/2019/2/19/status-as-a-service
A really great example of the ‘fractional’ purchase trend, and the kind of things it makes possible (as it drives value in various collectables up) is the recent Super Mario Brothers sale: https://www.theverge.com/2021/8/7/22614450/unopened-copy-super-mario-bros-sells-2-million-record