Bored Ape Yacht Club is a JPEG (NFT) series of monkeys wearing various outfits. (Photo: 123RF)
GUEST BLOG. Last January in a blog about tech trends in 2022, I presented several major trends, including the no-code revolution, Web3, and NFTs. In my next articles, I will discuss some of its trends in more detail. Let’s start this week with NFTs (non-fungible tokens).
Unfortunately, I still think a lot of people do not understand the scope of NFTs at all and seem to think that NFTs boil down to being JPEG images that people buy at an overpriced price!
So … what is an NFT?
We could easily compare it to a deed on a house. It is a digital document that identifies a true owner of a digital product. Property deeds are dependent on an ecosystem of paper and electronic documents, legal standards and institutions staffed by experts. This whole ecosystem is worth it because real estate has a great value. NFTs are (theoretically) cheaper than property deeds. They are therefore economically practical for digital goods and less valuable goods. As ownership is at the core of capitalism, and economic activity is increasingly moving online, NFTs can become central to our economy.
NFTs bring something to the digital that did not really exist before, rarity and authenticity. The virtues of authenticity are practical (for example, we like to know where our food comes from) and philosophical (if we buy music, part of the money goes to the artist who did it?).
Do you remember Napster? Document sharing software has totally broken down the scarcity barriers inherent in physical music distribution. Piracy of digital assets of any kind reduces both technological viability and long-term innovation.
Welcome to Blockchain
Bitcoin became what it is today because, despite its digital nature, it managed to guarantee its scarcity (there will never be more than 21 million bitcoins) as well as its authenticity (by being tracked on the chain of blocks).
A dollar bill is worth $ 1 because only the central bank can make it (authenticity), and we trust that the system produces only a limited number (rarity).
NFTs offer the promise of rarity and authenticity for digital goods. However, let’s be transparent, NFTs are not the only way to create scarcity and authenticity online – credible, centralized entities like banks do in their industry. Thus, the current implementation of NFTs may not be the best solution, or even a good solution, as there are many reasons to be skeptical. But they constitute … a means. A potentially widespread and inexpensive way to offer credible rarity and authenticity online, opening up new trading opportunities.
Art in the age of NFT
The general public probably first heard about NFTs a little over a year ago when digital artist Beeple sold an NFT mosaic of his daily creations, ‘Everydays’, at Christie’s for a whopping $ 69 million!
No asset class is more dependent on rarity and authenticity than art. The value of the Mona Lisa is based on our belief that there is only one (rare) and we know that it was created by Leonardo da Vinci (authentic).
As with property deeds, an entire industry of galleries, museums and consultants along with old documents and high-tech gadgets maintain the fine art market. NFTs provide a defense against digital manipulation. Beeple’s Everydays is publicly approved on the blockchain. The cheaper the art, the more it requires a scalable platform to establish rarity and authenticity.
Do you know Bored Ape Yacht Club?
Bored Ape Yacht Club is a JPEG (NFT) series of monkeys wearing various outfits. There are currently 10,000, each unique, and they are, according to Buzzfeed, valued at $ 3 billion in total!
He Bored Ape Yacht Club and “bubble”. It is very likely! This would not be new. You may remember Beanie Babies, each of which was unique. In 1997, eBay sold $ 500 million in a month, or 6% of the company’s annual sales.
There is also a huge market for cheap art and collectibles that could benefit from digital rarity and authenticity. In fact, the “tokenization” of art and collectibles makes their sales and exchanges more efficient, while reducing the likelihood of fraud. NFTs also allow creators to earn royalties every time their art is sold in the secondary market, addressing some of the inequalities in the creative economy.
A world of brands in the NFT era
For brands, rarity and authenticity are paramount. Chanel can sell sunglasses for $ 500 because they are rare and they are Chanel. The counterpart to the client: to be able to present oneself as someone who is successful without having to say it!
The logos of the brands we love so much are “authentic”, despite the availability of knockoffs. A strong ecosystem of intellectual property laws and institutions ensures that fire owners can control scarcity, and NFTs strengthen this system in the digital economy.
Entertainment and memories in NFT
A few months ago, I had a discussion over lunch with a senior group CH player who owns Canadiens. This one told me about all the potential of NFT in sports. For example, when you buy your ticket for a match – you will be able to get an “NFT” version of that ticket. What if something extraordinary happened during this match? This digital memory can therefore increase in value!
At Connect & GO, a customer working on a shoe museum project wants to give people the opportunity to create their own shoes and then be able to download them and have them in NFT. Maybe one of his shoes will be an inspiration for a big brand like Nike or will be sold for $ 2 in a video game, but thousands of times.
Our lives will move online
The metaverset will make our lives move more online. Does it scare me? Safe! But it is a reality that seems more and more clear.
Digital goods are found on the internet but there are not many of them. In Fortnite you can acquire weapons and outfits. At Reddit, you earn badges. The reality is that there are many things on the internet but not a lot of things that belong to you.
Now ask yourself: how many physical things belong to you? Think about all the things in your home: books, paintings, photos, heirlooms, etc. What is the value of all this? As our lives move online, so will our businesses evolve, and we will need the infrastructure that enables us to “truly” own them. This is why NFTs will be useful.
And you, are you ready to buy your first NFT?