The latest trend in crypto. Get in while you can!
The last year and a half have been revolutionary for crypto. Bitcoin has gained endorsements from Microstrategy CEO; Michael Saylor, Twitter CEO; Jack Dorsey, Hedge Fund managers like Raoul Pal, Paul Tudor Jones and most recently also been endorsed by the future president of humanity/Lord of the Internet/Tesla & SpaceX CEO; Elon Musk. All this is great. Bitcoin has grown from just being something that internet weebs participated in, to a legitimate bet against the US Dollar.
Bitcoin is now a trillion dollar asset. But what if you missed that wave? Or what if you are looking for the next revolution in this fast moving world of cryptocurrencies. I present to you NFT’s. NFT’s are non-fungible tokens, which is a fancy way of saying that unlike Bitcoin where 1 bitcoin is equal to another Bitcoin, NFT’s are unique pieces of digital art tokenised on a blockchain. NFT’s don’t always need to be art but right now, Art does seem to be the most common use case and are easy to explain this way. 1 NFT can be a painting made by me worth $1 and another one can be by a world class artist worth millions of dollars.
But unlike most articles on the internet that simply explain what “fungibility” is and what NFT’s are. I will go deeper in this blogpost and explain to you why it will revolutionise this decade. But first let me hype you up some more. Remember that chill ex-Facebook billionaire dude — Chamath? This is what he thinks about any other crypto except Bitcoin:
Or at least, this is what he thought until recently, where he confessed that he has started to diversify from Bitcoin and also go into NFT’s! Here’s a short clip that shows that:
Digital art and virtual trading cards, that’ what one of the smartest investors in the world is buying right now. If you’re a bit like me you must be thinking; what the hell is he talking about? He wants to buy digital baseball cards? Yu-Gi-Oh cards? Pictures of Picasso paintings?
This sounds insane to put it mildly. Nonetheless, let me shoot my best shot at explaining what is at play here and why NFT’s are valuable.
Do you know about the recent trend of people trading Pokémon cards? Yeah, it’s crazy. Rare collector’s edition Charizards are being sold for up to $1000 and a Pikachu illustrator card was sold for $100,000! If you don’t believe me, look it up! Here’s a guy asking $3 million for it on ebay:
I’m not a Pokémon aficionado, so I can’t fairly value this card. But there is clearly demand for Pokémon cards and it doesn’t seem to be going away. Now imagine a digital Pokémon trading card game, where you could buy such cards and then even use them virtually in the game as you play. Now imagine you have a digital Pikachu card in the form of an NFT. In addition to the in-game use/utility of the card, you also prove on the blockchain that it is yours. You have it in your digital wallet, nobody can take it from you as long as you keep your private keys safe. You can flex to your friends that you have it by showing them on the blockchain instead of carrying your 200 card collection with you. You can send it instantly to a friend if you feel sorry for their collection. Or you can sell it for Ethereum or any other ERC-20 token if you find a buyer and negotiate a good price. You can also put it up for auction on websites like OpenSea and Rarible. Once you agree on a price the transaction is within seconds, you get however much crypto you agreed on within seconds and the buyer gets the digital Pikachu card NFT within seconds as well. I hope I made a good case for why NFT’s are just like the real thing but with more utility.
Let’s say you are a talented musician with lack of funds and not signed by a multi-million dollar record label. You do have your Soundcloud account though which has many followers. You have been struggling for years trying to get access to a record label but with no success. However, your fans love your music. You live off their donations but it is not enough money to survive in the long term. Until now, you could not have done anything about it. You would be at the mercy of the oligopoly of the music industry.
But now you can tokenise your songs into NFT’s and sell the rights to your songs to your fans if you wish and receive funds in the form of cryptocurrencies within seconds! You can also add into the smart contract that you receive a percentage of any resale revenue. For e.g. you can add a 10% fees to the creator (you). So if a fan of yours buys your song for $500 but sells it to a record label for $500,000. You will also receive $50,000 again when the label buys it. And guess what? You don’t need to chase up anyone or take anyone to court — your cryptocurrency wallet address will automatically be funded whenever any resale occurs!
Ok Art and Trading card games are cool. They look good, their NFT versions enable using them for smart contracts and they are easier to trade. But is that all there is to NFT’s? No. There are many other use cases for NFT’s. One such case is that they allow us to commoditise unique digital pieces of our internet space.
If you could get your hands on the first iPhone ever manufactured, how valuable do you think that would be? Or one of the first typewriters? Or the first Tweet ever on Twitter? Wait. The first 2 seem pretty hard, you would have to search through the Earth to find these items and then take longer to validate their authenticity from an expert. But the first tweet ever? A simple google search can give that to you. In fact I just did it and this is the Tweet that popped up:
A simple check on Wikipedia shows that Twitter was founded on March 21, 2006. So the date matches. The tweet was also by Jack Dorsey, the founder. Which also makes sense and so far this data matches. Maybe you are crypto-savvy and you are bubbling with excitement right now. Because this Tweet was officially tokenised by Jack and is available for sale. The highest bidder currently as of 7th of March 2021? $2.5 million. Yes, you read that right.
An NFT can hold sentimental value. It can be like a basketball signed by a player. With an NFT, the creator’s autograph on the content, is digital and marked on the blockchain. A signature on a basketball can fade away or the physical product can be damaged. With an NFT this data will live forever on the blockchain, is erasable and the NFT itself is incorruptible.
This makes an NFT authentic. And thus can be deemed as scarce, unique or valuable, if there is demand for it.
Ever since the 90’s, our world is becoming increasingly digital and internet connected. SMS’s are now connected to the internet and exist as Whatsapp/Telegram messages. Paperback books are becoming digital or audiobooks. Letters are being replaced by emails. Public speeches are being replaced by public Tweets and Youtube videos. Acoustic music is being replaced by electronic music and paintings are being replaced by digital art. All of these things can be turned into NFT’s. We spend so much of our days online and interacting with digital things. NFT’s enable us to place monetary worth on these digital things that we always valued but never had a way to express our appreciation for. Now finally it is easier for musicians to sell rights to their music and earn money without being backed by million dollar record labels. Same goes for indie graphic artists or any other digital creators. This is beautiful.
There are many other reasons for why I love NFT’s, own some and am looking to buy more. However, I don’t want this blogpost to become too long so follow me along on here, as I reveal more about the wonderful world of NFT’s in later posts. I’m also quite excited about the DeFi and Oracle space in crypto. I wrote about a new DeFi coin that I predict will do really well quite recently. You can read about it here: https://medium.com/swlh/100x-your-money-with-this-cryptocurrency-3cab1c76f1db.