NFTs and the Digital Future
NFTs are all the rage right now… and we haven’t even touched their true potential.
The Latest Crypto Trend
Over the last few weeks, NFTs have gone viral, trending on social media, setting new art market and crypto price records, and generally confusing everyone who isn’t a crypto insider. Every media outlet, from The Verge to the BBC, has released some sort of NFT explainer article. This article is not about what NFTs are, but rather what NFTs mean when you think about the increasingly virtual world we are all living in today, and the role they will have in our near future.
The rise of NFTs corresponds to a broader acceptance of cryptocurrencies like Bitcoin, Ethereum, and Cardano among mainstream institutions and the broader public in general. For the past decade, crypto was a largely specialized space, the domain of a select group of enthusiasts, tech nerds, and get-rich-quick speculators. No more.
The Critique is Real
Many skeptics challenge the use of NFTs for digital art, since the actual file containing the artwork can be downloaded or copied by anyone. In other words, you don’t have to buy the (usually pricey) NFT in order to download the file and enjoy the art. This criticism is completely valid; if it was just about looking at art, then no one in their right mind should use an NFT.
However, that misses the whole innovative part of NFTs, which become truly revolutionary when we truly merge our digital and physical lives. Virtual worlds are not science fiction any more, whether in the form of an immersive VR video game, or the less immersive but no less digital workplaces that many of us have been inhabiting since the start of lockdowns and remote work last year. If this pace keeps up, we are only a few years away from living, loving, learning, and working in virtual environments.
A Pandemic-Accelerated Virtual Reality
For millions of people around the world, this past year of lockdowns and remote work has drastically altered the shape of their lives and the way they interact with friends, family, and colleagues. It’s also altered the way information and collaboration happens; no more water-cooler brainstorming sessions, or brilliant cocktail-napkin inventions. This helps explain why VR-tech, already one of the fastest growing technology sectors, has exploded during the pandemic as a way to bring remote workers together into a digital space and maintain some sense of human interaction despite the physical limitations.
Even with vaccines rolling out around the world, many companies have already stated that they won’t be going back to normal once this is all over. Many companies have realized that they can maintain productivity without all that pesky overhead for expensive office space. This could radically change location-based industries. The biggest publishing houses, for example, are all based in New York city or London, but many of those jobs could, as they discovered last year, easily be done remotely, thus opening up the candidate pool and improving wage options for workers who no longer have to live in two of the worlds most expensive cities on famously low wages.
What does all this have to do with NFTs? Well, they really only make sense in a truly virtual world. And if the Covid-19 pandemic has shown us anything, it’s that this world is not only possible, it will be here sooner than we think.
Into the Matrix
As each day goes by, our lives become more and more virtual, and it’s here that NFTs are real game changers because they are unique, un-hackable, and indivisible. In other words, they are about as secure as it gets in a digital environment.
A virtual world and society, just like our physical one, needs rules to run smoothly, for example rules about who owns what, and what they can do with it. Remember, we are talking about a digital world, with carryover’s of concepts like “real estate” or other valuable assets. One such rule could be that only the NFT owner may “download” and use the artworks, tools, programs, equipment, land titles, or whatever is tokenized with an NFT, in the virtual space. So while the criticisms against NFTs are valid from a “real-world” standpoint, NFTs make perfect sense in a purely virtual environment.
NFTs offer the opportunity for much more than just selling digital art and collectibles. With NFT’s a whole digital reality can take shape, identifying and uniquely associating items with their owners. They can prove digital ownership more simply, securely, and reliably than any other method.
But of course, at this very moment, as digital as our lives have gotten over the course of the past year, we as yet don’t exist full time in any sort of Second Life environment, let alone a Matrix-like scenario. So what does that mean for NFTs in the meantime? Well, as with all Blockchain and Crypto-related topics over the past few years, greed and exaggerated expectations will probably result in a bubble. But after all the hype dies down, we will doubtless see another wave of interest with more meaningful industrial and VR applications that serve a greater purpose than just collecting crypto kitties or sound bites. Our lives, after all, are only becoming more virtual, not less.
The danger for NFTs at the moment is that the market for them is much more fragmented and fragile than even the crypto market. Bitcoin has been compared to the infamous tulip mania of the 16th century. But NFTs are a more apt comparison because, unlike tulips and NFTs, Bitcoin is fungible, able to be broken up into smaller pieces. But just because something is non-fungible doesn’t necessarily mean it’s valuable or useful. After the tulip bubble burst, all that flower-power value was wiped out. Something similar will likely happen to those NFT collectible cards, clips, and GIFs that don’t fulfill any real purpose, but are just hoarded in expectation of ever increasing prices.
Setting the Stage for our Digital Future
In short, the most exciting thing about NFTs is not that they’re setting new records at auction houses or making Mr. Musk more money. The exciting thing about NFTs is realizing that they overcome one of the fundamental hurdles towards building a virtual, digital future, by making concepts like rarity, scarcity, and uniqueness possible. So when the hype bubble bursts, and everyone realizes they’ve been paying big money for glorified GIFs, remember that in just a few years this same technology will be a fundamental part of your daily, virtual life.
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