In the first installment of a four-part series on NFTs (non fungible tokens) and their place in today’s world, we look at what exactly these tokens do and why Dave Chappelle can help us understand them better.
Maybe it all started with Comedy Central.
Think back to the time when Chappelle’s Show was still the best thing on TV. The channel spotted performers with potential and bet on them. Some bets paid off, some didn’t. But the millions Chappelle raked in offset the hundreds of thousands they sunk into failed acts.
And that was fine. As long as the Chappelles outnumbered the fails, Comedy Central would stay afloat.
But that was ‘04.
NFTs: A fool’s game?
Since then, times have been a-changing. Exit Chappelle’s show. Enter NFTs. (For the people under the rock, Chappelle’s back and is still as fresh as he once was.) But the idea is the same — bet on the potential you think there is.
You get to do it without a compromise on creative legitimacy or proof of ownership. Ripping off is impossible and copyright infringement is a forgotten nightmare at best.
Such is the magic of non-fungible tokens (yours truly, NFTs).
Some call it a fool’s game. Others call it a boon. Everybody, however, swears by its novelty and legitimacy. Fungible means anything that can be replaced by another identical thing.
A $1 bill is fungible because it can be replaced by another $1 bill. But NFTs are more fussy. Way more fussy. They cannot be replaced by anything else i.e. they are not mutually interchangeable.
But what are they?
NFTs are tokens on a blockchain. Each token can represent art, music, gaming assets, videos, and images for starters. But the list is endless. Even real world assets can be tokenized and sold as an NFT.
A helpful analogy would be to consider them as a sale deed or a real estate title. They convey proof of ownership. And this proof lives with its historic record on the blockchain. So every time you purchase an NFT, you can unfailingly trace ownership right back to its point of origin.
Unerasable proof: NFTs and the blockchain
NFTs confirm provenance and scarcity — precisely the two things that keep the mills of high fashion and art churning. And one cannot be traded for the other.
Your NFT becomes your proof of ownership and the blockchain it uses verifies your identity. Together, they prove that what you own is authentic and rare.
Some even work like temporary passes or tickets. Consider the case of Alphonse Davies. When fans bought the NFTs he issued, he gifted them a signed Champions League shirt along with a golden ticket to meet him in person. In such cases, they blur the lines between the physical and the virtual.
How their valuation works
Despite how popular NFTs have become, there still isn’t a precise system in place to measure their value. So players in the game use a balance between rarity, utility, and tangibility to price them.
The harder it is to get, the (you guessed it!) pricier it is. Usually, these pieces are first of its kind artworks by digital artists or exclusives from celebrities. What excites buyers here is the intrinsic value these goods hold. Buying an NFT for them gives them irrefutable proof of ownership in the blockchain.
Examples of the unique effects rare NFTs have can be CryptoKitties (the world’s first blockchain game where you can collect and breed cats) and Everydays - The First 5000 Days — the record-shattering painting by Beeple that sold for $69 million in a Christie’s auction.
But NFTs needn’t always be collectibles. Some are tokens for items with utility, like in-game spells or rare cards. In fact, popular projects that develop these cards see massive upticks in the value their NFTs accrue over time.
But some tokens can just be tickets. They come with expiry dates and are usually tied to real world events. The usual suspects here are limited edition watches and sneakers. Buyers who hold the NFTs to these items begin to see profits when the supply dwindles — making them tamper-proof instruments of investment.
Win win: Why the creator economy has embraced NFTs
Most buyers see an NFT like a bet on their favorite creator — think a Super Like but with money. They give their creations a stamp of authenticity and turn them into luxurious and exclusive collectibles.
Every NFT is essentially a token with a few bytes of smart contract programming. Smart contracts are self-executing agreements on the blockchain. They protect works of art and fashion and give creators a chance at unfettered expression. NFTs also nip their biggest threat in the bud: forgery.
Creators’ ownership rights get cemented and gives them the space to focus solely on what they do best: creating. The blockchain and NFT keep the copycats away and ensure they get paid every time their work gets sold and resold (creators can choose to get paid royalties — opening the scope for long-term income).
Buying and selling NFTs
NFTs are how creators have chosen to respond to piracy. Their authenticity is never violated but at the same time, buyers get the chance to buy something that isn’t available anywhere else. This, and sellers have the added bonus of accessing an audience of millions of people at once.
However, buying an NFT can be a tricky affair. If you’re considering investing in one — we recommend you quickly (but surely) check for
- Authenticity — is it by a creator you can trust?
- Usability — is it a collectible or can you use it? What is the story behind it and why do you need it?
- Resale — is it rare, tangible, or usable?
Weigh your answers and see how clear you feel about buying an NFT. Even if it is a collectible, as long as the story behind it is solid, it is a purchase that will hold its own against time in the digital realm.
Metarift by PAK, sold for $904,413
LeBron James, the Gucci Gang, and NFTs
NBA, Gucci, and NFTs have a very real connection. But there’s so much more to non-fungible tokens. In this series of four blogs, we will explore every aspect of NFTs, their real-world use cases, their link to the boom of the creator economy, and their place in today’s metaverse. By the time you’re through, you’ll know everything there is to know about non-fungible tokens and why they should matter to you.
Ever since the dawn of the smartphone era, Mutual Mobile has grappled with the latest in technology to create value and open up unprecedented channels of revenue for our clients. Nothing excites us more than solving tomorrow’s problem today.
And with NFTs, we believe we are seeing the tip of the iceberg’s tip right now. Almost the entirety of its potential is unexplored today. For instance, financial companies alone can save around $12 billion every year by adopting blockchains. Making a planned move to this tech could be the silver bullet your business needed all along.
So if you’re looking to add non-fungible value to your business — hit us up here. Our team would love to hear from you and bounce ideas off together. Perhaps the next big thing is just one conversation between you and us away?