In the tech world, the most impactful changes often come from the simplest and most incisive innovations.
Non-Fungible Tokens (NFTs) have a good shot at being one of those.
They derive from ERC-721, a free and open, now de facto standard on the Ethereum blockchain that let’s you mint unique and programmable objects or tokens. They are not cryptocurrencies, but can accrue commercial value, can be sold or traded across any number of venues or exchanges.
Adoption and experimentation with NFTs has been bubbling up since CryptoKitties hatched its first kitten late in 2017, giving this powerful technical construct a visceral, emotional, and metaphorically furry wrapper that in the early months grew explosively, then leveled.
Proving along the way that potentially these objects can be a valuable asset (like a piece of art) that can as well dynamically incentivize communities and potentially create new markets as they grow in popularity.
What’s fascinated me since I first waded into this world early in 2018, working with the Honu the Cryptokitty team was that NFTs power and reach has little to with ETH, or any of the speculative cryptocurrencies.
In fact, besides sharing a common blockchain with ETH they are not driven by the same market forces. Dependent not on the scarcity of currency but on peoples’ beliefs and drives to own and share iconized stories that touch them in some way.
We are in an interesting phase honestly, still very early, still a growing, vibrant and passionate community yet messy and chaotic at the same time.
We are pre vocabulary, figuring out whether NFTs will matriculate as a category in themselves, or will be subsumed as a software standard cross a variety of use cases, cross a multitude of vertical segments that will morph over the coming years.
Experimenting broadly in collectibles, digital art, gaming, and stitching together experiments to see how all this could work, behaviorally and market wise.
Whether collectors as an example, might relate to an object being able to own others as a group subject to the same programmed behaviors (ERC-998). Whether economic theories like Harbinger Tax which seem plausible in a philanthropic approach could work for art collectors where purchase and hold is traditionally a natural response to scarcity.
There is a tendency today though, to reach for market fit before it is a reality. To use the metrics of transactional value from the cryptocurrency markets as the same quotients for market traction which in my opinion are incorrect. This is jumping the gun and exemplifies little except impatience.
I sincerely believe that NFTs are a gateway tool for developers and in some near future incarnation will indeed be an onramp for mass market usage of the blockchain.
Just not quite yet.
I am unabashedly pulled in by the possibilities here.
I see in NFTs what I’ve felt in other simple and powerful data types or protocols from my past companies where we built broad communities and deep markets. What in my career I’ve built with sound and graphics, with uptime on web performance, with connections and shareable scales of value.
Where I’ve won, where community has formed and exploded into markets, there were similar characteristics.
I’m doubling down in a few directions.
Going deeper into the mashup of conservation, gaming, collectibles, and community building in new ways. There is a handful of exceptional new projects in this space, the best moving away from philanthropic giving to an impact business where environmental support can be wrapped in new for-profit models.
Stepping lightly into the economy of digital art and looking at how with NFTs we can insure that the artists can participate in the ongoing value of their work not just at one early point of sale. Using scalable technology to support unscalable artistic pursuits.
Considering whether I can bring value to the broader, all or nothing projects building entire new ecosystems using NFTs to wrap not objects but contracts and data sets to power decentralized hybrid power grids or recalibrate farming with a regenerative value scale.
Search NFTs on my blog to see more of my thinking.
I’m honored to be presenting on these topics at NFT.NYC in February, bringing some exemplary projects to the show.
If you are in the space, considering getting involved, and these ideas touch you in some way, do reach out.
