Bored Ape Yacht Club is a JPEG (NFT) series of monkeys wearing different outfits. (Photo: 123RF)
GUEST BLOG. Last January in a blog on the tech trends of 2022, I presented several major trends, including the no-code revolution, Web3 and NFTs. In my next articles, I will discuss some of its trends in more detail. Let’s start this week with NFTs (non-fungible tokens).
Unfortunately, I still believe that many people don’t understand the scope of NFTs at all and seem to believe that NFTs boil down to being JPEG images that people buy at a premium!
So… what is an NFT?
We could easily compare it to a deed of ownership of a house. It is a digital document that identifies a true owner of a digital product. Real estate deeds rely on an ecosystem of paper and electronic documents, legal standards and institutions staffed with experts. This whole ecosystem is worth it, because real estate has a great value. NFTs are (theoretically) less expensive than real estate deeds. They are therefore economically practical for digital items and less valuable goods. As ownership is at the heart of capitalism and economic activity increasingly moves online, NFTs could become central to our economy.
NFTs bring something to digital that didn’t really exist before, rarity and authenticity. The virtues of authenticity are practical (for example, we like to know where our food comes from) and philosophical (if we buy music, does part of the money go to the artist who did?).
Do you remember Napster? Document sharing software has totally broken down the scarcity barriers inherent in physical music distribution. The piracy of digital assets of all kinds reduces both technological profitability and long-term innovation.
Welcome to Blockchain
Bitcoin became what it is today, because despite its digital nature, it succeeded in guaranteeing its scarcity (there will never be more than 21 million bitcoins) as well as its authenticity (being tracked on the chain of block).
A dollar bill is worth $1 because only the central bank can make it (authenticity) and we trust the system to produce only a limited number (rarity).
NFTs offer the promise of rarity and authenticity for digital goods. Let’s be transparent though, NFTs aren’t the only way to create scarcity and authenticity online – trustworthy, centralized entities like banks do in their industry. Thus, the current implementation of NFTs may not be the best solution, or even a good solution, as there are many reasons to be skeptical. But they constitute… a means. A potentially widespread and inexpensive way to offer credible rarity and authenticity online, opening up new avenues of commerce.
Art in the Age of NFTs
The general public probably first heard about NFTs just over a year ago, when digital artist Beeple sold an NFT mosaic of his daily creations, ‘Everydays’, at Christie’s for a whopping sum. of $69 million!
No asset class is more dependent on rarity and authenticity than art. The value of the Mona Lisa is based on our belief that there is only one (rare) and we know it was created by Leonardo da Vinci (authentic).
As with real estate deeds, an entire industry of galleries, museums and consultants, along with old documents and high-tech gadgetry sustain the fine art market. NFTs provide a defense against digital tampering. Beeple’s Everydays is publicly authenticated, on the blockchain. The cheaper the art, the more it requires a scalable platform to establish rarity and authenticity.
Do you know the Bored Ape Yacht Club?
Bored Ape Yacht Club is a JPEG (NFT) series of monkeys wearing different outfits. There are currently 10,000, each unique, and they are, according to Buzzfeed, collectively valued at $3 billion!
Is the Bored Ape Yacht Club a “bubble”. It’s very likely! This would not be new. You may remember the Beanie Babies, each of which was unique. In 1997, eBay sold $500 million in one month, or 6% of the company’s annual sales.
There is also a huge market for low-cost art and collectibles that could benefit from digital rarity and authenticity. Indeed, the “tokenization” of art and collectibles makes their sale and exchange more efficient while reducing the likelihood of fraud. NFTs also provide the opportunity for creators to earn royalties every time their art is sold in the secondary market, addressing some of the inequities of the creative economy.
The world of brands in the NFT era
For brands, rarity and authenticity are paramount. Chanel can sell sunglasses for $500 because they’re rare and they’re Chanel. The counterpart for the client: being able to present himself as someone who is successful, without having to say so!
The logos of the brands we love so much are “authentic”, despite the availability of knockoffs. A strong ecosystem of intellectual property laws and institutions ensures that brand owners can control scarcity, and NFTs reinforce this system in the digital economy.
Entertainment and Memories in NFT
A few months ago, I had a discussion over lunch with a high-ranking Group CH player, who owns the Canadiens. This one told me about all the potential of NFT in the field of sport. For example, when you buy your ticket for a match – you will be able to get an “NFT” version of that ticket. What if during this match something extraordinary happened? This digital memory could therefore increase in value!
At Connect&GO, a client working on a shoe museum project wants to allow people to create their own shoes and then be able to download them and have them in NFT. Maybe one of his shoes will become an inspiration for a big brand like Nike or will be sold for $2 in a video game, but thousands of times.
Our lives will move online
The metaverse will make our life move more online. Does this scare me? Certainly! But it is a reality that seems increasingly clear.
Digital goods exist on the Internet, but there are not many of them. In Fortnite, you can acquire weapons and outfits. On Reddit, you earn badges. The reality is that there’s a lot of stuff on the internet, but not a lot of stuff that belongs to you.
Now ask yourself: how many physical things belong to you? Think about every item in your home: books, paintings, photos, heirlooms, etc. What is the value of all this? As our lives move online, our businesses will also evolve, and we will need the infrastructure that will allow us to “really” own them. This is why NFTs will be useful.
And you, are you ready to buy your first NFT?
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Tech trends 2022: NFTs!
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