How to view NFTs as more than just a trend

This week we have begun to see the incredible surge in the general public’s interest in NFTs (Non Fungible Tokens). This has given many people their first impression into this new method of monetisation for artists that is also a platform for individuals who see the value in digital assets. It also allows them to start compiling them for their own personal collections.

Beeple’s collage. Sold in NFT form for $69.3M. Image: Beeple

This has resulted so far as of March the 11th 2021 as what can only be described as a monolithic movement of discovery by the internet as a collective on what the crypto space has been developing further for the last few years while Bitcoin has taken its time to rise back into popularity again. Celebrities, influencers, powerful individuals and entities of all kinds are beginning to either jump on the craze with a variety of combinations ranging from total acceptance to disgruntled displeasure. They have been opened up to the unique prospects that NFTs bring to the table to not just have an impact on the internet but the real world as well, and it has been very intriguing to watch from a far to say the least.

To establish some light context for the rest of this article, I am someone who has seen the growth of crypto and NFTs almost every day since November 2017 when I was exposed to Bitcoin once again when it hit the price point of $10,000 per Bitcoin for the first time, a major milestone for the digital currency that seems so long ago now. Since then I have seen it rise and fall only to then rise again into what we see it as today and the steps that the industry has taken to get it to this stage has been nothing short of an intense amount of perseverance, motivation and belief beyond anything I’ve seen in my young professional life.

To give additional context for those who are still unsure, NFTs or Non Fungible Tokens simply put in English are a special type of Cryptographic token that can be submitted and tracked on a blockchain which can virtually represent anything you can think of, but it mostly consists of digital art at the moment [1]. These unique NFTs can range from still images to videos to 3D models and beyond, all with the perceived value attached to it typically in either Ethereum or Bitcoin. Individuals post their work on one of these blockchains and if the public like what they see or they think the value of those postings will increase in value over time, they will bid for them or purchase them to hold within their ‘wallets’ and own for as long as they see fit until they either lose interest or sell them back to the market completely.

SuperRare NFT marketplace. Image: SuperRare

On the surface level it isn’t impossible to understand how this is similar to established methods of selling artworks at this moment in human society, both digitally and physically which is to say if you like something you see for sale you should be allowed to purchase it and own it. The greater general public has only begun to scratch the surface of their potential for application, which I believe is a good thing despite the flood of half-hearted NFTs being created based on this recent surge in popularity by people wanting to cash in on the craze quickly. What you can see right now though on websites like OpenSea[2] and Nifty Gateway[3] is a broad bird’s-eye view of the kinds of assets that you can find on the blockchain that anyone can own from still images to pieces of virtual land, which for example is the equivalent to a strip of shops within a vibrant shopping mall. If you wanted to look further into the specific store fronts in this virtual mall strip, you can look to places like SuperRare[4] or the Decentraland Marketplace[5] for examples of niche contemporary art or virtual real estate being placed up for auction.

Decentraland virtual real estate marketplace. Image: CoinGecko

What positives are there to find in this sea of information about NFTs that is being tossed and turned every direction based on who is writing about the subject? The immediate benefit to this typical surge in popularity is that the people coming in range anywhere from the previously unaware enthusiasts to the informed apathetic naysayers, thereby striking a balance between the people who get it and the ones who don’t. A community like this that is already dividing people down moral or economic lines in a purely digital landscape can only be described as the most fascinating playground to watch those who tumble through it, find their place and their reasons for standing their ground.

With this theme being our guiding principle, lets have an overview of the positives and negatives that have presented themselves either through passive observation or outspoken preaching from one side or the other.

The potentials with a more positive view point:

  • The further blending of the value perceived of real world and digital assets (and the opportunity of a complete transfer of their wealth across into the digital one). [6]
  • The ability for those not deeply involved in crypto to still ride the wave of potential profit that currently exists within this Bitcoin bull run cycle.[7]
  • The massive potential of people wanting to buy and own digital assets that have perceived monetary value completely within the digital realm itself and not because of traditional rules or external factors.[8]
  • The new digital ‘real estate’ that has been begun to be crafted and take form from the worn and established internet we already have available to us, giving people a new starting point to build their identities.[9]
  • The ability for artists creating works of art to sell it by themselves and the public assigning their value to those pieces of art in a marketplace that is yet to be colonised by big budget advertisers and corporations.[10]

The potentials with a more negative view point:

  • The current cost of putting your artwork on the blockchain and the artists looking to be compensated for the fees they have to pay just to get their work on there in the first place, and then the speculation of hope that they one day make a profit on top of that.[11]
  • The potential backlash that will be felt once this Bitcoin bull run loses its steam and the new version of potential losses that we will see in people’s wallets, that instead of holding pointless tokens they will be holding useless ‘artworks’.[12]
  • The tremendous amount of environmentally conscious people who have alerted the public to the dangers that adopting this medium could be worse for the environment as computing power is needed to help sustain the platforms and as a whole it is not worth the long term risk.[13]
  • Traditional outlets still proclaiming that they see cryptocurrencies as still a fad that will fade as time goes on and NFT’s will become the next collateral move in their inevitable demise.[14]
  • How savvier individuals and influencers begin to cash in on the hype and get out leaving their fans with more to ‘hodl’ than they can afford, assuming the things they are buying will maintain their value based on the personality behind them will retain their perceived or inflated value.[15]

You may be thinking ‘Do I really need to understand the value of these assets being sold and bought on the blockchain and why people value them so much in order to benefit from it?’ Not necessarily at the moment but now is as good a time as any to do so if you are even the slightest bit intrigued about the subject matter as we are still in the very early stages of its existence. It is important however to understand that the phrase ‘NFT’ simply isn’t just meant to refer to still image JPEGs with a price tag being slapped on them for fun. The best way to understand this is to look at NFTs the way people in the late 90’s looked at selling products through the internet as ‘digital goods’.

Adoption rates of Blockchain wallets vs the internet. Image: Cryptopotato

Can you imagine trying to explain to people from the 90’s how we stream music for essentially free and the artists get paid for their work? Or that streaming videos through the internet is more profitable and comfortable than the experience of watching it in a cinema? Back then the internet was getting ready to do just about everything we use it for today and it was really starting to take off as we saw in the Dot-com bubble, but its visual appeal and technical understanding could only be appreciated for its potential from the programmers who were building it at the time, the investors ploughing their capital into any project they could get in on or my generation that grew up with this tech and would learn from it during its ongoing evolution into the new millennium.

Internet adoption in US house holds. Image: Statista

The very nature of how we experience our products and how they are delivered to us is evolving so fast that NFTs will become so standard and accepted as the likes of Youtube, Facebook, Amazon and the ocean of streaming services and how their products are maintaining their value today. You don’t question the value of a video online because there is now a system set in place online to help you start earning revenue from whatever you post online, as long as you can get people to watch it. NFTs will suffer the same fate of acceptance so long as people are willing to buy them, and the celebrities and influencers that are dog pilling on this ‘trend’ are exactly the kind of people that are needed to engrain this on the world and more importantly, the next generation of internet users who are watching what they do closely.

Internet adoption vs. Bitcoin price. Image: FXStreet

Unfortunately for me, like many others out there who have had an interest in this field of computer science, I have not had the pleasure of completely understanding the finer details of what has gone on behind the scenes to create this next evolution of the cryptocurrency space. I have only had the honour of being a passenger on this journey and I would like to start sharing or at the very least start cataloguing my thoughts on the whole process with the world and what I feel we are in store for in the next coming years and following decade.

Contact: @AlexMcCunn on Twitter

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