Non-Fungible Truths: Can an NFT-based society exist? Should we care?
Few of us ever roll out of bed and purchase a 1.2 ETH jpeg of an illustration of a drooling monkey. Last time I checked, neither I nor the lady working in the fruit shop around the corner did.
To outsiders, and even some insiders, the NFT art world seems to be something that “other” people, not ourselves, do. Not unlike its meatspace counterpart.
However, as the NFT mania seems to have everything but died out as we near the end of the year, today I stopped to consider whether there IS something of value that I haven’t acknowledged when it comes to these tokens. I arrived at the conclusion that there are a few things that seem pointed out remarkably little, or not at all, and that I think will be key to the development of the NFT industry beyond illustrations:
Thought #1: In the real world, lots of things are as Non-Fungible as your average NFT. So, why would NFTs NOT be a hit, at least to some people?
There are several ways to look at an (otherwise indistinguishable from the real deal) Gucci bag, which you can tell is fake by the fact that it is being offered to you at an incredibly affordable rate, in a public plaza, by what seems to not be an official Gucci staff member, armed with several pairs of socks and a colorful blanket:
- One of them is to be offended that someone is pirating what, to you, is the hard work of a company to conceptualize a high-end design. To imitate a brand that to you means something.
- Another one is to think that the obvious knock-off is, by all means, entitled to exist, as, to you, the fact that someone dares to charge $1000 for a handbag that costs only a small fraction to produce is outrageous.
- You could also not care either way, on different levels.
These beliefs all exist simultaneously in the real world, and we’ve all stopped trying to see which one is best, so why couldn’t they co-exist in blockchain? You would think that, just as some people don’t mind paying $1000 for a handbag you can replicate, some wouldn’t mind doing $10k for a picture you could theoretically copy and paste without much pushback.
Now, you might object that a Gucci bag is not necessarily non-fungible (after all, Gucci might produce thousands of the same model), and you’d be right. This derives two conclusions:
- That there are plenty of non-NFTs (like NBA Top Shots, which can be 100 copies of the same video) that are being sold as such, and;
- That, just like one-of-a-kind pieces are rare in the real world, for something to be really an NFT, to an extension, there has to be some shade of tangible proof that it won’t be made fungible. This might happen via a legal framework or a through a social contract. For example, by issuing an NFT of a work of art, Beeple is guaranteeing you that he won’t make fungible copies later on. This might suffice in this case (he’s the one person who would suffer the consequences of contradicting himself), but this might not suffice for corporations and institutions.
Which leads us to…
Thought #2: What if you could copy-paste a Ferrari?
The handbag example is easy (in some cases, the knock-offs, while technically fake, are perfect replicas). However, you wouldn’t want a replica for other things, such as a MacBook and a Ferrari.
First of all, because the interaction between the parts tends to matter a lot more in a car than in a handbag. And second of all because, when you think about it, the market immediately eliminates the possibility of having fake Ferrari manufacturers via the fact that it would be prohibitively expensive for them to exist. It IS possible to steal a phone from a factory, however, and sell it for cheap (there is a whole industry based on this) but NFTs (and blockchain tech in general) can eliminate this possibility by streamlining the value chain.
We arrive at a crucial point: At some levels, the market inherently (and exclusively) rewards expertise, creativity, and craft. It prices the options out, as to speak.
However, what happens when you can copy-paste a luxury automobile without security risks? Well, surprisingly, as it happens with the NFTs, and on some levels with the Gucci bag, the primitive social status kicks in. The owner of the original still gets an additional endorphin kick from owning the real thing and being able to prove to others that they do. For them, it is about self-identity.
Without being clinical psychologists, most of us know that if you could copy-paste a Ferrari, it’d be a matter of time until someone else created something you couldn’t, and that thing became the new social status currency. So we arrive at a point where it is possible to point out that intrinsic value, in some notion, does exist.
Thought #3: And so, if originality has inherent value, why not extend it everywhere? This is, after all, a composable ecosystem.
When we think about NFTs, we think about very specific industries that we see could benefit from them, inherently. The obvious examples are art, music, ticketing, asset collateralization (or whatever the yield farming bois are doing these days), fashion, etc.
However, we seldom think of NFTs as a composable thing, which is the main virtue of them being digital. Just as in the real world you can create a high-quality computer by assembling together the highest-quality materials and sell it at a Premium, you could theoretically do the same with other things. Two examples come to mind:
- Engagement programs: It’s possible to have specific memberships, tickets, or passes that compound to give users access to special features when combined. This, among other things, can serve as loyalty and fan-engagement programs. Using NFTs can make it so purchasing a conference ticket, a t-shirt and a special pay-per-view event, over the years, can qualify a fan for new benefits and programs.
- 3D designs and textures: Just like threads, mosaics, and other materials in the real world, digital textures and objects have to be designed by somebody, and they’re difficult to fake. In the case of an artist that wants to create a piece of digital art, a video game character with specific items of clothing or an architect building a digital model, it’s often more efficient to purchase these pre-made textures and designs than to make them themselves. You can see, in this case, a royalty-based marketplace originating for such things, as well.
It’s about originality
After sitting around thinking about applications for NFTs and why they’re valuable, I feel like I’m back to the simplest examples of why these things have value: Deep down, value is not something tangible and rational. We assign it to things in which we see originality, creativity, beauty or sheer utility.
At the bottom line, NFTs, like a number of other things, are vehicles for self-expression. We attach a certain image and value to our profile, creating almost a digital “twin” identity.
And, if our world is going progressively digital… who are we to say that this isn’t valuable in and out of itself? At the very least, there is something incredibly interesting to continue and explore. I think I’ll be posting more articles on the topic of NFTs, if you all are interested in me continuing to explore this subject!
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