Obviously the JPEG collectors utter that NFTs are the future of everything. The first time I heard the claim that every business will implement NFTs it sounded oddly familiar to BTC maximalist narratives. Here is a new technology that is magically going to solve all our problems and transform society.

But I’ve converted. NFTs are actually the future. Let me explain.

Blockchains are a phenomenal invention. Bitcoin solved the problem of how to get complete strangers to agree on something as valuable as money. An underrated consequence of Bitcoin’s success is popularizing the concept of digital scarcity.

Ethereum extended the capabilities of the blockchain. Now the entire economy can be represented on-chain. Indeed, we are seeing marketplaces, loans, stocks and options all being put on-chain. Our newfound capabilities to represent these financial instruments on-chain led to a DeFi wave that minted many nouveau riche.

But that is simply what they are, financial instruments. They are not the things everyday people use in their daily life. If we are to represent the entire economy on-chain we need an additional piece of infrastructure: NFTs.

NFTs can represent anything scarce. Almost the entire world is non-fungible, only financial instruments are not. To have on-chain representations of our possessions like cars, watches, houses and intangibles such as music and in-game items, we need NFTs. Tokens that represent something unique.

The fact that NFTs can represent intangibles enables them to also eat culture. NFTs are a way to own culture, and to represent it financially. The market size of culture is in the trillions. Currently, some of the most valuable NFTs are special CryptoPunks, Bored Apes, and generative art works. You can argue that most of their value is attributable to culture rather than ‘utility’. Much in the same way that people pay thousands extra for a Rolex compared to a watch from a less established brand.

https://twitter.com/punk6529/status/1430281972920770560

NFTs are also bringing people together in a new way: digital-first, exclusive, and financialized. We are now seeing NFT communities align around a goal, such as buying a golf course, a vacation manor, or adopting a football team. NFTs have removed a lot of friction to start communities like these.

It will be interesting whether NFTs will lead to new types of communities and coordination in the long run. Since the value of the community is marked to market 24/7, NFTs make communities hypercapitalistic.

By representing real-world assets and culture, NFTs could become something bigger than the fungible tokens we have seen dominate the crypto space so far. They are already the most promising avenue for mainstream crypto adoption. @punk6529 calls NFTs crypto’s consumer moment: people stopped talking about the technology and instead started talking about which ape or bird they have.

https://twitter.com/udiWertheimer/status/1488423680543801344?s=20&t=59nXwndyDt7BLxOyG15JVA

So, NFTs could be a big deal. That is, IF we are going to tokenize intangibles and put our possessions on-chain. In the next post we will dig exactly into that question: Is everything going on-chain?

- Wesley

Obviously the JPEG collectors utter that NFTs are the future of everything. The first time I heard the claim that every business will implement NFTs it sounded oddly familiar to BTC maximalist narratives. Here is a new technology that is magically going to solve all our problems and transform society.

But I’ve converted. NFTs are actually the future. Let me explain.

Blockchains are a phenomenal invention. Bitcoin solved the problem of how to get complete strangers to agree on something as valuable as money. An underrated consequence of Bitcoin’s success is popularizing the concept of digital scarcity.

Ethereum extended the capabilities of the blockchain. Now the entire economy can be represented on-chain. Indeed, we are seeing marketplaces, loans, stocks and options all being put on-chain. Our newfound capabilities to represent these financial instruments on-chain led to a DeFi wave that minted many nouveau riche.

But that is simply what they are, financial instruments. They are not the things everyday people use in their daily life. If we are to represent the entire economy on-chain we need an additional piece of infrastructure: NFTs.

NFTs can represent anything scarce. Almost the entire world is non-fungible, only financial instruments are not. To have on-chain representations of our possessions like cars, watches, houses and intangibles such as music and in-game items, we need NFTs. Tokens that represent something unique.

The fact that NFTs can represent intangibles enables them to also eat culture. NFTs are a way to own culture, and to represent it financially. The market size of culture is in the trillions. Currently, some of the most valuable NFTs are special CryptoPunks, Bored Apes, and generative art works. You can argue that most of their value is attributable to culture rather than ‘utility’. Much in the same way that people pay thousands extra for a Rolex compared to a watch from a less established brand.

https://twitter.com/punk6529/status/1430281972920770560

NFTs are also bringing people together in a new way: digital-first, exclusive, and financialized. We are now seeing NFT communities align around a goal, such as buying a golf course, a vacation manor, or adopting a football team. NFTs have removed a lot of friction to start communities like these.

It will be interesting whether NFTs will lead to new types of communities and coordination in the long run. Since the value of the community is marked to market 24/7, NFTs make communities hypercapitalistic.

By representing real-world assets and culture, NFTs could become something bigger than the fungible tokens we have seen dominate the crypto space so far. They are already the most promising avenue for mainstream crypto adoption. @punk6529 calls NFTs crypto’s consumer moment: people stopped talking about the technology and instead started talking about which ape or bird they have.

https://twitter.com/udiWertheimer/status/1488423680543801344?s=20&t=59nXwndyDt7BLxOyG15JVA

So, NFTs could be a big deal. That is, IF we are going to tokenize intangibles and put our possessions on-chain. In the next post we will dig exactly into that question: Is everything going on-chain?

- Wesley