I Don't Know... What Happens Next With NFTs
Peering up out of the rabbit hole
It’s easy to forget that we spend much of our lives – particularly our online lives – in an echo chamber. It’s therefore easy to forget that whatever you are excited about, there are others who are confused, sceptical, or even angry about.
This became particularly evident for me this week when I came across a couple of instances on Twitter of people calling NFTs a “scampede”, “fraudulent” and someone describing their football team releasing a digital collectibles collection as “despicable”. Having spent the last few months learning, engaging, and trying to help others discover the potential and power of NFTs, this gave me a reason to reflect.
I think it is first worth looking at why people might get in to NFTs, and why people have become so bullish on them.
From my experience, people by and large first get in to NFTs in 2 ways – as artists, or fans of digital art, excited and grateful for a medium to finally value digital art in a way it deserves. The other route in is crypto/blockchain enthusiasts, excited by another use case of the blockchain beyond just cryptocurrencies and taken in by the sense of community, fun or status that NFTs can provide.
I am in the second category, having spent a while learning about Crypto and the blockchain and firmly believe in the potential of NFTs and Web3. However, once you remove yourself from the rabbit hole and put yourself in the place of everyone else, it’s easy to see why people would be sceptical.
To start with, as @dharmesh tweeted – at this point, Web3 has a marketing problem. Whenever someone new asks what an NFT is, using words such as “fungible” and talking about blockchains and smart contracts can mean people get lost. When you understand something, you feel as though you control it. When you don’t, it is a threat.
You might say, well how many people understand banking, how email works, how planes stay in the sky? Or as Chris Dixon replied to the above – know what jpeg, gif or url stand for? And the answer is not many, but these things have entered our lives over time, or are things that we see being used by the masses and therefore trust, or in the case of jpeg, gif or url… just really simple to explain!
I believe NFTs, or more specifically digital ownership will become a huge part of life, and in the future it will be odd that the concept of owning things online was ever controversial. However, we need to find better ways of explaining the potential and benefits, to avoid people hearing the term NFT and immediately being turned off or assuming that they are all part of a giant scam.
Looking specifically at explaining the significance of NFTs and digital art, rather than starting with how NFTs work or the use of blockchain technology to enable trust, why not start describing it from the point of view of the creator? More and more of what is created as art generally, is done online and up until the rise of NFTs, there was never a way to attach scarcity or value to digital art. This means that for thousands of creators around the world, they could never earn a living from their craft in the same way physical artists could. NFTs have and will change the lives of many online creators.
By attaching smart contracts to art, the original artist can also benefit from a mechanism enabling a % from any future sale. This is an implication that could also bring great benefit to physical artists.
Imagine an artist sells a piece of work to someone, and then dies a few days later. If the piece of work suddenly goes up in value post the artists death, is it right that the only beneficiary should be the secondary owner, particularly if that is a gallery or trader? The smart contract element of NFTs can enable the original artist to always take a % of onward sales. Once benefits like this are explained, it is more difficult to see how anyone could argue about their validity or purpose.
Having said all that, the applications so far have been extremely limited. As Mark Cuban said in a recent talk “all NFTs have been so far, is proof of concept for smart contracts”. People see NFTs as pictures, and when we try to explain them from this starting point, it is clear why people would become confused and sceptical as to why cartoon monkeys or low resolution “punks” are selling for hundreds of thousands of dollars – this must be money laundering!
Recognising that there is still a long way to go before NFTs begin having real world benefits/applications is part of how we should be talking about them. Rather than explaining them as a finished product that has already delivered X,Y and Z, we need to recognise that this is still a very nascent technology and the true benefits are yet to be uncovered or even conceived! Only from this point will we begin to broaden people’s understanding and highlight the importance and benefits of digital ownership.
The eventual mainstream success will look very different to what we see today, and I believe will become a part of life without anyone really noticing. Soon we will own most of our memberships, tickets and collectibles online and it seems highly likely that this will be in the form of NFTs.
2021 was a crazy year and saw people generate significant financial returns from investing in or trading NFTs. Likely, there will never be a repeat of the NFT “bull-run” we saw in 2021, and as soon as the narrative of NFTs shifts away from that of financial speculation, or of the underlying technology that supports it, the better. The focus can then shift on to the potential benefits and implications for real people and creators, and the likelihood is that NFTs going mainstream will be here before we know it.
In summary, I don’t know what will happen next with NFTs, and I don’t believe anyone truly does. But this is the true beauty of saying “I don’t know”. It allows you to talk about the benefits of something you believe in, whilst opening up to the other side of the discussion, recognising that both are important. One thing I do know is that NFTs are here to stay, and when discussing with those who are sceptical or vehemently opposed to them, it is critical to recognise that the applications so far are simply proof of concept of what is to come, and no one has the answer for what that is.