When you browse through Crypto Twitter you will undoubtedly come across tweets proclaiming that “we are so early.” That if anyone doesn’t “get” NFTs, they’re “ngmi.” This community is clearly confident that NFTs will be part of our future. While I also share this belief, I must admit it is less clear how we arrive at this conclusion. In my mind, you need a personal awakening, an aha moment.

For me, it was the realization that NFTs let you capture ownership and decisions.

First, let me talk about ownership using my Twitter banner as an example. My banner is a photo taken of a calligraphy artwork that reads “施無畏 (semui).” It is hand written, quite old, and irrefutably owned by me. Folks can download my Twitter banner and use it themselves, but I am secure in the knowledge that I own an original edition; it is there on the wall of my study, so how can that not be true?

Now, let’s replace the calligraphy example with a digital artwork.

An NFT is a smart contract on the blockchain that can represent ownership of a given digital item in the form of a token placed in a digital wallet. The digital item itself may not be on the blockchain, but it is tied to the contract through metadata. By having the NFT token in your wallet, you can demonstrate your ownership of a digital item as if it were hanging on your wall at home. Anyone can copy the image as much as they want, but it does not change the fact that you own the original.

Here is where the argument for NFTs usually stops, but I think it is important to acknowledge a couple social agreements that need to exist for this to work.

1. We all agree the blockchain entries (smart contract tokens) represents ownership

2. We all acknowledge that whoever creates NFTs are or represent original creators

3. We all agree that the file referenced in the smart contract is the original

On the first point, we need to agree that a blockchain smart contract represents ownership. There are many articles that go into the fact that NFT ownership and copyright are not the same, but what I raise here is a more basic question: how can a smart contract actually give anyone ownership over a digital item? The answer is blockchain’s ability to cryptographically secure an asset with a private key, and acceptance of this is the first social agreement. Digital ownership is represented by your ability to control it, and you control it with a private key that only you know.

A private key is a digital code that allows you to move an asset from a digital wallet. If you private key is compromised, anyone can transfer your assets out of your digital wallet. If you lose your private key, you lose your ability to control the digital asset, and the wallet is essentially “dead.” This is generally the same as lost Bitcoin fortunes, but with NFTs it goes a step further; unlike Bitcoin which needs to be transferable to have utility, an NFT has value to you because you own it. In the case of lost private keys, you no longer own the digital asset because you no longer control it, even if no one else does either. We must accept how a smart contract token represents digital ownership, how it is maintained, and how it is lost.

On the second point, we need to agree that whoever creates the NFT has a right to do so in the first place. This person may be an artist, or they may be a group of people working with the artist as part of a broader project. In either case, the artwork created must be rightfully created and owned for anyone to establish ownership of it on the blockchain. You can’t (shouldn’t) assert digital ownership of something you don’t actually own, and implications of intellectual property rights must be considered.

It is theoretically possible to create another NFT using the same media file as a source. For example, CryptoPunks are NFTs on the Ethereum blockchain. However, anyone could technically take their image and create new smart contracts that proclaim ownership. CryptoPhunks on Solana is an example of this, albeit the images are flipped to the left. If you own an NFT that was minted where the creator does not have ownership of the original intellectual property, what do you actually own? It will be similar to knock-off copies of designer handbags or accessories in the real world. For an NFT to have legitimacy, it must be rooted in ownership of an original creator, and by giving NFTs value, we implicitly agree this is the case.

The last point is a fundamental social agreement that needs to exist for any of this to work, and that is we all agree there is an original digital version. By its nature, anything digital can be copied infinitely. The JPEG saved in the location referenced in an NFT may not even be the true original (the artist may have made the art on their computer, sent a copy to their cell phone, and uploaded that copy to IPFS for use in an ERC-721 / ERC-1155 smart contract). This last social agreement may be the most difficult to grasp. Provenance on the chain is evident, but provenance leading up to putting something on chain is less clear.

What is the best way to experience this paradigm shift for yourself? My suggestion is, go to OpenSea and buy an NFT that you like. Once you do so, if you’re like me you will experience “ownership.” Do you remember your first watch, your first car, your first CD, your first home? Do you remember how buying something with your own money gives you a small sense of pride, of satisfaction? Then you know what “ownership” feels like. Materialistic? Maybe. But I sure remember my first watch, my first CD. Ownership is meaningful, and helps connect us to our past. In turn, our past informs our decisions.

The second concept revolves around decisions. We make decisions all day every day, regardless of whether we realize it. The way I believe NFTs factor into this is as follows;

• You are the sum of all the decisions that you have made in your life.

• Decisions can be likes or dislikes, who you choose to associate with, how you choose to invest your money. Ultimately, what you value, prioritize, and champion.

• NFTs are able to capture those decisions to effectively express yourself digitally.

• You carry your history with you in your digital wallet. You are able to prove your experience, but you also have a choice to start over at any time with a new wallet.

This is where blockchain’s capability of establishing provenance comes into full force. Let me go through two examples to illustrate.

Example 1: Proof of taste Imagine you are aspiring to become a record producer. You have a pretty good ear for trends: When you find an artist that you like, nine out of ten times that artist goes on to find popularity with fans of a certain genre. In the current world, you would have to somehow find your way into the music industry, demonstrate your commitment, work your way up to a position of accountability, and then finally start building your reputation as a good producer.

By purchasing and owning NFTs of artists, you are able to build up a history of your music preferences as you go along collecting music. Each purchase is recorded on the blockchain, and serves as proof that you made a decision to support/follow the artist at a certain point of time. Now, there is no need to say that you were a fan of a particular band or singer before they were well known. You will have evidence of your choices and their timing on the blockchain.

Example 2: Proof of experience Now let’s think about work experience. Imagine you are a developer working on a new app, or you are a marketing specialist launching a new brand, or you are an accountant supporting a startup in their financial filings. If you are issued an NFT as proof of your experience in a particular line of work, you are able to build a resume on the blockchain.

In both examples, one thing is clear: NFTs and the blockchain enable you to build your reputation even before you have the job. Your actual experience can be recorded and tracked. You are able to demonstrate your ability of making good decisions (or learn from bad decisions), you are able to demonstrate your tenacity at continuing at things, you are able to demonstrate your fit for a particular role.

There are pros and cons to this. What if there are very bad decisions you are not particularly keen to keep a part of your resume? This is one final benefit I want to highlight: You get to start over if needed. “Pseudonymous economy” is a word that I first heard from @Balajis in a podcast. It describes an economy of creators that are not known by their real names, but contribute and build a reputation using pseudonyms.

https://twitter.com/balajis/status/1418309677163552770?s=20

You and your work are identifiable and traceable to a particular identifier (your wallet), but that identifier does not need to link back to your identity in real life. Pseudonymity is different from anonymity as the former has traceable accountability, while the latter does not. The key point is that you are able to build accountability to an entity that exists online, but cannot be directly traced to your offline self. This is precisely how it gives you the chance to start afresh if needed.

NFTs and blockchain technology still have a long ways to go around usability. There are still legitimate concerns about transactional cost and privacy, but these are topics for another day. There is no doubt in my mind that this will lead to vast innovations that will make our lives better. It all starts with an aha moment for each of us. I hope you’ve had yours already. If not, what are you waiting for?

When you browse through Crypto Twitter you will undoubtedly come across tweets proclaiming that “we are so early.” That if anyone doesn’t “get” NFTs, they’re “ngmi.” This community is clearly confident that NFTs will be part of our future. While I also share this belief, I must admit it is less clear how we arrive at this conclusion. In my mind, you need a personal awakening, an aha moment.

For me, it was the realization that NFTs let you capture ownership and decisions.

First, let me talk about ownership using my Twitter banner as an example. My banner is a photo taken of a calligraphy artwork that reads “施無畏 (semui).” It is hand written, quite old, and irrefutably owned by me. Folks can download my Twitter banner and use it themselves, but I am secure in the knowledge that I own an original edition; it is there on the wall of my study, so how can that not be true?

Now, let’s replace the calligraphy example with a digital artwork.

An NFT is a smart contract on the blockchain that can represent ownership of a given digital item in the form of a token placed in a digital wallet. The digital item itself may not be on the blockchain, but it is tied to the contract through metadata. By having the NFT token in your wallet, you can demonstrate your ownership of a digital item as if it were hanging on your wall at home. Anyone can copy the image as much as they want, but it does not change the fact that you own the original.

Here is where the argument for NFTs usually stops, but I think it is important to acknowledge a couple social agreements that need to exist for this to work.

1. We all agree the blockchain entries (smart contract tokens) represents ownership

2. We all acknowledge that whoever creates NFTs are or represent original creators

3. We all agree that the file referenced in the smart contract is the original

On the first point, we need to agree that a blockchain smart contract represents ownership. There are many articles that go into the fact that NFT ownership and copyright are not the same, but what I raise here is a more basic question: how can a smart contract actually give anyone ownership over a digital item? The answer is blockchain’s ability to cryptographically secure an asset with a private key, and acceptance of this is the first social agreement. Digital ownership is represented by your ability to control it, and you control it with a private key that only you know.

A private key is a digital code that allows you to move an asset from a digital wallet. If you private key is compromised, anyone can transfer your assets out of your digital wallet. If you lose your private key, you lose your ability to control the digital asset, and the wallet is essentially “dead.” This is generally the same as lost Bitcoin fortunes, but with NFTs it goes a step further; unlike Bitcoin which needs to be transferable to have utility, an NFT has value to you because you own it. In the case of lost private keys, you no longer own the digital asset because you no longer control it, even if no one else does either. We must accept how a smart contract token represents digital ownership, how it is maintained, and how it is lost.

On the second point, we need to agree that whoever creates the NFT has a right to do so in the first place. This person may be an artist, or they may be a group of people working with the artist as part of a broader project. In either case, the artwork created must be rightfully created and owned for anyone to establish ownership of it on the blockchain. You can’t (shouldn’t) assert digital ownership of something you don’t actually own, and implications of intellectual property rights must be considered.

It is theoretically possible to create another NFT using the same media file as a source. For example, CryptoPunks are NFTs on the Ethereum blockchain. However, anyone could technically take their image and create new smart contracts that proclaim ownership. CryptoPhunks on Solana is an example of this, albeit the images are flipped to the left. If you own an NFT that was minted where the creator does not have ownership of the original intellectual property, what do you actually own? It will be similar to knock-off copies of designer handbags or accessories in the real world. For an NFT to have legitimacy, it must be rooted in ownership of an original creator, and by giving NFTs value, we implicitly agree this is the case.

The last point is a fundamental social agreement that needs to exist for any of this to work, and that is we all agree there is an original digital version. By its nature, anything digital can be copied infinitely. The JPEG saved in the location referenced in an NFT may not even be the true original (the artist may have made the art on their computer, sent a copy to their cell phone, and uploaded that copy to IPFS for use in an ERC-721 / ERC-1155 smart contract). This last social agreement may be the most difficult to grasp. Provenance on the chain is evident, but provenance leading up to putting something on chain is less clear.

What is the best way to experience this paradigm shift for yourself? My suggestion is, go to OpenSea and buy an NFT that you like. Once you do so, if you’re like me you will experience “ownership.” Do you remember your first watch, your first car, your first CD, your first home? Do you remember how buying something with your own money gives you a small sense of pride, of satisfaction? Then you know what “ownership” feels like. Materialistic? Maybe. But I sure remember my first watch, my first CD. Ownership is meaningful, and helps connect us to our past. In turn, our past informs our decisions.

The second concept revolves around decisions. We make decisions all day every day, regardless of whether we realize it. The way I believe NFTs factor into this is as follows;

• You are the sum of all the decisions that you have made in your life.

• Decisions can be likes or dislikes, who you choose to associate with, how you choose to invest your money. Ultimately, what you value, prioritize, and champion.

• NFTs are able to capture those decisions to effectively express yourself digitally.

• You carry your history with you in your digital wallet. You are able to prove your experience, but you also have a choice to start over at any time with a new wallet.

This is where blockchain’s capability of establishing provenance comes into full force. Let me go through two examples to illustrate.

Example 1: Proof of taste Imagine you are aspiring to become a record producer. You have a pretty good ear for trends: When you find an artist that you like, nine out of ten times that artist goes on to find popularity with fans of a certain genre. In the current world, you would have to somehow find your way into the music industry, demonstrate your commitment, work your way up to a position of accountability, and then finally start building your reputation as a good producer.

By purchasing and owning NFTs of artists, you are able to build up a history of your music preferences as you go along collecting music. Each purchase is recorded on the blockchain, and serves as proof that you made a decision to support/follow the artist at a certain point of time. Now, there is no need to say that you were a fan of a particular band or singer before they were well known. You will have evidence of your choices and their timing on the blockchain.

Example 2: Proof of experience Now let’s think about work experience. Imagine you are a developer working on a new app, or you are a marketing specialist launching a new brand, or you are an accountant supporting a startup in their financial filings. If you are issued an NFT as proof of your experience in a particular line of work, you are able to build a resume on the blockchain.

In both examples, one thing is clear: NFTs and the blockchain enable you to build your reputation even before you have the job. Your actual experience can be recorded and tracked. You are able to demonstrate your ability of making good decisions (or learn from bad decisions), you are able to demonstrate your tenacity at continuing at things, you are able to demonstrate your fit for a particular role.

There are pros and cons to this. What if there are very bad decisions you are not particularly keen to keep a part of your resume? This is one final benefit I want to highlight: You get to start over if needed. “Pseudonymous economy” is a word that I first heard from @Balajis in a podcast. It describes an economy of creators that are not known by their real names, but contribute and build a reputation using pseudonyms.

https://twitter.com/balajis/status/1418309677163552770?s=20

You and your work are identifiable and traceable to a particular identifier (your wallet), but that identifier does not need to link back to your identity in real life. Pseudonymity is different from anonymity as the former has traceable accountability, while the latter does not. The key point is that you are able to build accountability to an entity that exists online, but cannot be directly traced to your offline self. This is precisely how it gives you the chance to start afresh if needed.

NFTs and blockchain technology still have a long ways to go around usability. There are still legitimate concerns about transactional cost and privacy, but these are topics for another day. There is no doubt in my mind that this will lead to vast innovations that will make our lives better. It all starts with an aha moment for each of us. I hope you’ve had yours already. If not, what are you waiting for?