Despite NFTs having garnered significant mainstream attention over the last several months, there still seems to be a general misconception about what they are, and what exactly they have the potential to do.
Suggest that they can be in any way transformative, and you might be greeted with a quizzical stare, suggesting bemusement as to how exactly an image of an ape stored somewhere online is about to change the world.
And, that is, in a way, a reasonable point of view. After all, if the mainstream perception of NFTs is that they are massively overpriced JPEGs changing hands for no other reason than to publicly flex one’s wealth, then that might be because there are indeed some massively overpriced JPEGs changing hands for no other reason than to publicly flex one’s wealth.
Personally, I don’t have a problem with that aspect of the NFT world. There are frivolous physical collectibles, and now there are frivolous digital collectibles, and that is entirely natural. Value is established organically and socially, according to the perceptions of the people making the transactions, and the objects that will be deemed to hold worth vary over time.
And, some of these JPEGs are, without question, scarce and historically significant in the unfolding human story of online culture, art and finance.
So, if an august ape in a gray T-shirt goes for 500 ETH to Justin Bieber, well, that doesn’t seem so outlandish. As it goes, I think Bieber’s simian was, within the confines of a collection of cartoon animals, a tastefully minimalist choice, it has resale value, and anyway, 500 ETH is not such a big deal to Justin Bieber.
However, returning to the point, while this reading of NFTs (as nothing more than overpriced apes) is understandable, it doesn’t come close to understanding the real utility of the technology, and how it will enable new, improved models of business, across a variety of disciplines.
Artists
While making a living from creating art is still incredibly competitive, and there will never be any guarantee of success, NFTs facilitate disintermediation, allowing artists to make direct connections with potential buyers, fans and collectors, and keep a full cut of the rewards.
Way back in 2008, an essay appeared in Wired magazine proposing that creators could make a living through having just 1,000 true, paying fans. That idea has been criticized by some but also, recently, advanced further, with the suggestion that nowadays just 100 higher-paying fans would suffice.
The original essay was written pre-crypto, and our current move into a world of decentralized, digital transactions, in which the creative assets themselves are blockchain-based and tokenized, only enhances the reality of the 1,000 (or 100) fans approach.
What’s more, compared to traditional art markets, NFTs bring increased liquidity and more efficient price discovery, and they make it far easier for speculators to take a punt on upcoming artists and, in the process, assist those artists in furthering their careers.
And, on a very immediate level, let’s also not forget the royalties that can be programmed into NFT sales, permitting artists to take a percentage every time their work is traded on secondary markets.
Gaming
The world of gaming, and games journalism, has for some time been prone to divisiveness and conflict, some of which is bitter and drawn-out. That sounds a little strange when you consider that we’re talking about, literally, playing games, but if you’ve ever tried to make sense of the gamergate online wars, you’ll have seen extreme levels of rancor.
As such, I’m not inclined to pay too much attention when there is a flurry of outrage from parts of the gaming ecosystem, but it is worth being aware that there is some hostility towards NFTs and blockchain technology. However, look at the bigger picture, and NFTs being tied in with gaming seems not only inevitable but advantageous and geared towards opening up new innovations.
One big plus point of minting NFTs is that it creates an alternative means for developers to build funds. Capital can be raised from crowds, and players, or just believers in a project’s potential, can hold a stake in what is being developed.
Then there is the issue of true ownership of in-game assets. We are still at a very early stage when it comes to the development of metaverse-like environments, or persistent, online worlds, and there may be a long way to go before it is possible to easily move avatars and items between distinct virtual environments.
However, provable asset ownership is a critical early stage of a movement in that direction, and it seems counter-intuitive to outright reject this kind of exploration.
And, when a game, or a gaming world, is truly a web3 development, it has the potential to become an open platform that can be further built on and expanded by interested parties, creating shared value, and with royalties and payments easily facilitated.
Misplaced resistance
Perhaps, some of the resistance to NFTs is due in part not only to the idea that they are just over-hyped JPEGs but also because there’s a perception of exploitation and cash-grabs within the crypto space.
Have there been rip-offs? Sure, undeniably. We’re talking about digital currencies, after all. But, these occurrences are not characteristics of the underlying technology and are not unique to this means of transacting.
Or, to put it another way, very few people would refuse to make use of the internet on the grounds that there are, in the world, other people who use the internet with nefarious intent.
Looking at the whole of crypto, NFTs are pulling in new directions, and bringing people in, artists, designers and musicians, for example, who expand the scope of what blockchain technology can do, and who it is for.
Far from ripping anyone off, NFTs open up models of value creation in which anyone can build, commit and claim their fair share.
