The Practical NFT
A better way to think about them…
We’ve all heard the term NFT thrown around randomly. From siblings during dinner, to discord channels, to LinkedIn, it’s all around us and getting more popular as it also gets more difficult to understand. Now, I’m not a web3 wizard or an NFT master (I tried to buy an NFT earlier last week and then bailed since the mining fees were too high), but I know enough from a theoretical and abstract perspective to slowly start talking about them here.
At a high level, NFTs (non-fungible tokens) are unique digital assets that can be traded over the internet (specifically they’re units of data stored on the blockchain). They are “proofs of authenticity” that you own something. You can go to many other places to learn more about them fundamentally, but I want to address a better way of going about how people can and should think about them.
Right now, when someone thinks of an NFT, their mind may go to some 3D animation or graphic art or bit-style images or just trippy, stuff like this:
And this cute astronaut is being sold for .4 ETH (or over $1k at the writing of this post). I think this, right here, is where you lose an average person. Most people won’t get the hype of NFTs when they’re associated with random art that’s being auctioned at a price point that no average person could casually afford. Thus, it’s kind of dismissed as a) a joke on a meme page or b) a new craze that doesn’t make sense.
If we take a step back and look outside of the die-hard web3ers, NFTs are a tough concept to explain to people when we associate it with art collecting and we use these collectables as the main example. If you’re explaining what an NFT means to someone and they respond with “Well, I can just screenshot that,” you’re explaining it wrong.
A better way to think about NFTs is to look at them as something attached to the real world, something that gives them actual utility. At the end of the day, it’s a “unique digital asset” and can be used for literally anything. It’s distinguishable code on the back end, but the front end can be anything. We’ve chosen a kind of confusing asset class (art collecting) as the first use case for NFTs, which can turn people off who don’t see the point in “owning” an image so they can show it off in their gallery on the metaverse (I’m in that boat).
But, let’s look at how it can actually impact your life if used practically. Many people are thinking bigger about how distinct assets online can help the public. A popular space people are trying to crack is in the creator economy generally (not just NFT artists). Singers, DJs, writers, gamers, and content creators can use the power of NFTs to connect more to their specific audience.
For example, if a DJ is streaming a set on Twitch, she could reward fans who have been listening with an NFT. Then, that NFT can represent access to exclusive merchandise (early-access songs, classes on mixing, hangout hours, concerts, etc.) from that artist down the road. As a creator, she could identify who her super fans are by seeing who owns certain NFTs, and then find a way to incentivize followers for holding onto them (or buying them off someone else). Forget what the NFT actually “looks” like here (the visual could be a ticket or whatever). What matters is that it’s a tangible good. Try screenshotting that. This is not a new idea, but one that excites me since I can see the realistic use for NFTs when rewarding communities. It’s also worth noting that for a creator, every purchase and re-sell of an NFT can give them consistent royalties since purchases are publicly tracked. Neat.
Rally, a crypto creator platform, recently added NFTs, saying:
By enabling these utility-based NFT use cases, we open up a world for creators to experiment in their engagements with their fans and focus on offerings that delight their broader fan base rather than a small set of deep-pocketed speculators.
And this can go way, way beyond artists. Sporting events could use them for ticketing (and royalties sent to teams), educational institutions can issue them connected to diplomas, gamers can use them for skins or achievement badges, people can use them to show ownership of IP or real estate, even voter fraud could be eliminated.
Yeah, that’s pretty sick.
If you think of an NFT as a method for identity verification, fan indication, achievement recognition, creative originality, then we can add on to art collecting as a use case and get more serious about how it could shape our world.
