We are on the brink of a (r)evolution regarding another step of communication between people and the ability to express ourselves as individuals or members of a particular community.
The Introduction
The following is a summary of the great interview I had the pleasure to listen to. The podcast hosted by Raoul Pal provided the listener with a deep dive into the idea of NFTs lectured by one of the greatest minds in the space — Punk 6529. Let us grasp the OG level of understanding of the world we live in and the changes that are about to happen.
Let us embrace and build the future.
The following article is solely based on the interview with Punk 6529. All the ideas and examples are based on the interview unless otherwise specified.
The examples and additions written by the author are marked with an asterisk sign ‘*’.
TL;DR
Throughout history, humanity has seen times of great leaps in technology and significant transformations within society. The development of transportation, the spread of mass media or the inception of the Internet; all of those events changed the world and societies significantly.
We are on the brink of a (r)evolution regarding another step of communication between people and the ability to express ourselves as individuals or members of a particular community.
The technology of Non-Fungible Tokens (NFT) is something far greater than just profile pictures and collectibles of questionable quality. We have barely scratched the surface of what is possible with the use of NFTs, and only a handful of individuals are experienced and devoted enough to see the prospects it may bring.
The Bitcoin
*Imagine living in a world where all the financial transfers between individuals cannot be made during weekends. How does it sound? It might not seem so taxing at first, but when you think of it, about 30% of the time — weekends and bank holidays — you are unable to transfer the funds even in dire need.
*It seems there is a limit to how you would like to use and transfer your funds after all.
One of the first moments of realization what Bitcoin can become happened on a Saturday afternoon when 6529 made a transaction with his friend from another continent using Bitcoin. The transaction took minutes to reach the recipient, cost a fraction of the bank’s transfer fee, and was made on Saturday afternoon.
Some people claim Bitcoin is the hedge against inflation, hence its popularity and growth. It is a common narrative one can often hear when discussing Bitcoin’s purpose, especially during the last Bull Run. In fact, there are other inflation hedges being far less volatile, thus preferable as an investment.
There is something more to Bitcoin, both technically and socially.
It is claimed Bitcoin has solved the Byzantine General problem which stems from the field of game theory and distributed systems. In short, the Byzantine General problem describes the scenario in which all of the involved parties have to agree on a single strategy in order to avoid failure or defeat. The whole problem revolves around the issue of limited trust or unconfirmed reliability between involved parties.
*The Byzantine General problem in Bitcoin involves validation and passing on the information that is not stored in a centralized database. It is a decentralized network of miners and validators who are ensuring the functionality of the blockchain via the Proof of Work mechanism. The individuals do not have to know each other; the trust is established via their commitment to the network and gaining rewards in return.
The Database
The life of every citizen nowadays is organized by thousands of databases. The banking system, hospitals, hotels, and even taxis you use have their own database to run the entire infrastructure needed to provide all the necessary services.
It was not an overnight change. It has been slowly and gradually built with the use of the new infrastructure, like the Internet — it is a very important piece to bear in mind. In the world before the inception of the Internet, databases were not a big thing in society, not in the form we have it today. All the information has been stored in files, on paper sheets or other means of storing records.
Nowadays, databases have become inseparable from society.
The world lives and thrives on databases.
One of the most significant features of using databases is the need to trust someone with the provided information. There are thousands of TTP — Trusted Third Parties — we are entrusting our data to on daily basis. How can we be sure no future data leaks will happen or that the entrusted data will not be misused? We cannot, it is the harsh truth which has to be embraced. Yet in order to be a member of modern society, we have to trust some counterparties.
The basic examples of running databases and shared trust might be found in everyday life in a form of money we are using every day, the privileges of citizenship or the right to a given property.
All those databases run in centralized systems, which is not a bad solution as everything has been working decently due to provided security.
*Just a short note to all the acolytes of total decentralization; not everything is meant to be decentralized. Both centralized and decentralized systems have their advantages and disadvantages. In fact, quite often, centralized systems might be a far better solution than decentralized ones when considering the needs of present societies.
The early problem in crypto was — and still might be — the widespread belief and custom to trust and use centralized databases for their higher security profile. The common notion of running things on Amazon Web Services and being astounded by the number of transactions per second is missing one significant point; the question of what are the social implications of this.
The social implication of running things on AWS is you have to trust someone with your data.
The more digital we become as a society, the fewer large entities we trust with our data, becoming more and more centralized and dependent.
The New Medium
The inception of the Internet broke the barriers impossible to overcome for people before; the barrier of physical presence or the barrier of distribution, once broken, allowed a number of individuals to elevate their skills and ideas to another level. All of a sudden, people have realized you do not have to be New York Times to publish online, and you do not have to be Walmart to sell things via the Internet.
The change of mediums led to the immense growth of small businesses across the developed world. The sheer fact of gaining access to the Internet opened the doors only a few imagined to ever exist.
However, the Power Law Distribution applies to everything and so the Internet, at its core, tends to be centralizing. That is a fact some people might not agree with or might not be aware of. Yet we see huge oligopolies of the digital world being built and expanded thanks to the Internet. A similar tendency applies to technologies like Big Data or Machine Learning which also might become centralized in the near future.
Economies of scale, economies of data, and economies of scope; all lead to centralization.
At some point, a new invention has entered the stage — Bitcoin.
As with every new technology, we will finally see a group of visionaries seeing possibilities no one else will be able to comprehend at the very beginning. The revolution takes time. That is why Bitcoin is not an overnight evolution, nor is it a quick-rich scheme. Bitcoin is the idea that, over the next 30–40 years, might re-architect vast chunks of society if used properly.
The Consumerization
When does new technology become consumerized?
Does it happen while trying to explain how many transactions per second (TPS) can be performed on Solana and how many on Ethereum? I doubt that.
How about discussing the security measures? Not even close.
Do people discuss Instagram through the lens of technology?
Oh, look! That’s some nice Python script that just got released, let’s try it.
The technology becomes consumerized once we stop talking about the technology per se.
The DeFi Summer of 2020 led to the surge in valuations of tokens connected with decentralized finance. People were talking about projects, implementations, and cashflows; they were talking about the technology and numbers while the core problems and ideas were left behind or barely mentioned.
DeFi did not yet hit the core societal problems with its implementation. It needs time to grow and evolve to address the needs and become widely consumerized.
The fun and ease of using NFTs allowed the consumerization of crypto without talking about technology.
The Beginning of Punk 6529
What was the initial view of the NFTs, even by the true OGs in the space, when Punk 6529 decided to explore the area and see if there is any potential to grow?
That is some goofy thing. Let’s go back to real work; building projects, writing smart contracts or whatever.
Towards the end of 2020, the spidey sense made Punk 6529 dig deeper into the world of NFTs despite initial views of crypto OGs he spoke with. The hunch turned out to be the spark that led to unravelling the possibilities of the NFT technology.
One cannot understand something without doing it, as the best learning is through practice. That is why Punk 6529 decided to roam OpenSea and buy cheap NFTs just to get the feeling of playing and owning them. Exploration of the space and playing with it turned out to be fun so the further investigation began.
The next step was getting his friends to own and play with NFTs by sending them to different wallets and checking what else can be done with them at that point.
The feeling of using and owning NFTs began to grow, not only in Punk 6529 but also across the crypto community as well leading to the growth of a trend which can change the crypto world forever.
The Distorted Image
Consumerization of crypto through NFTs has at least one major point of failure — centralization.
The moment we do not care about technology, we do not care whether the infrastructure is centralized or decentralized. The end-user cares about the nice look of the application, decent UX and low transaction fees. It does not matter whether the NFT is stored in a centralized and custodial wallet or not.
The bold guess might be that most people in Silicon Valley and Crypto Twitter have the majority of their crypto stored in Coinbase’s custody or other centralized entity. One of the reasons for such behaviour might be the fact that most of them treat Bitcoin as a financial investment and not as a way to organize things; to build the society anew.
The distorted image of Bitcoin, Web3 and NFTs comes from trying to understand it via theory and not by practice. Therefore, let me repeat the words of Punk 6529.
One cannot understand something without doing it.
The Incentive
Imagine being a well-known company with an established position on the market. What might be your incentive to mint NFTs?
The answer is monetization.
DolceGabbana is a world-renowned brand known for luxurious clothing and cosmetics. Relevant position, customer base, social intangibles and the lifestyle or social position tied to wearing DolceGabbana; everything is out there, waiting to be monetized.
The largest brands, especially in the fashion and lifestyle industries, have already begun building their position in the digital space and their influence will only grow in the following months and years. The recent purchase of RTFKT by Nike only proves the thesis. *Another example might be the recent Prada announcement to enter the world of NFTs via the Ethereum blockchain. It is a gradual process, but everyone is slowly coming with their own NFTs. Sports teams will distribute NFTs for their fans, Universities for their alumni base; the number of possible examples is astounding.
*The incentive to mint NFTs is not only limited to the producer brands like DG or Nike. The significance of personal branding has been booming in recent years, creating “big names” in the social media space such as MrBeast or Peter McKinnon. However, people who got into the “big names” league through social media are neither the only nor the first ones to partner with crypto brands. The Sandbox entered the partnership with Snoop Dogg almost a year ago, enriching the space with a well-known personal brand from the “traditional” world. Just recently, Binance secured a deal with Cristiano Ronaldo bringing another highly recognizable individual to the game. In the upcoming years, we will see a number of strong personal brands entering the space either by creating their own NFTs or by engaging in partnerships with crypto brands.
NFT technology gives us the possibility to represent ideas, granular ideas.
Minting NFTs by large companies does not have to be in a form of PFPs and, with utmost certainty, will not. How can they use NFTs then? The only limitation is creativity. NFTs used as pre-sale tickets, redeemable goods in the real world, social position signifiers, QR codes with redeemable NFTs, emblems presenting how avid users of the brand we are, etc. The possibilities are countless.
The Aggregate Level
A publicly readable and writable database is a significant factor in building a community interested in establishing its own position in the space, not as individuals but as a unique group.
Taking a look into the psycho-demographics of already well-established communities like Punk holders, we might see particular traits on the individual level that can be applied to the majority of members. Moreover, we might look at Azuki’s or BAYC (Bored Ape Yacht Club) and also spot common traits on the individual level.
Each community differs from the other. Punks are different from Azuki’s, BAYC holders are different from Punks, and Catholic Church members are different from the members of the Lutheran Church.
Everyone belongs to some community.
On the individual level, we might be very similar as members of two different or even opposing communities. Yet the differences will be clearly visible if we look at the aggregate level.
Azuki holders will share a common set of traits on the aggregate level, just as any other community built around an NFT project. Therefore, it is possible to label a certain group with a set of particular traits. On the individual level, though, the differences between a member of the Azuki community and a BAYC holder can be indistinguishable.
We might be similar as individuals, but we differ as a group.
The Distribution
Thesis — NFTs will flip fine art distribution.
Living in SoHo, Manhattan, for almost 20 years might contribute to developing a taste for fine arts. Wandering through museums, art galleries, and similar places where you can find yourself immersed in the art is one of a kind experience that adds up over time. All of a sudden, you might see yourself dreaming of buying one of Andy Warhol’s Soup Cans.
Once you begin pondering about purchasing fine arts, what are your options? Common sense tells us to make a visit to an art gallery.
Everything is fine if the desired piece of art is there. However, what if not?
The distribution and selling process of art is unsatisfactory, to say the least. In the beginning, you have to visit the place and enquire about particular works of art as well as their availability. If the desired painting is not available at the moment, you have to make sure to be notified once the painting is within the reach of the art gallery you spoke with. However, how can you be sure no one is going to outbid you? In such a case, you will end up losing your time while waiting in eternity for an availability notification.
What about the process of verifying the painting? How can you be sure the piece you are buying is not a forgery? You might get a couple of responses like “Here is the signature of the author”, “We are going to give you the certificate of authenticity”, and afterwards you are seeing the certificate being printed in front of you. What kind of confirmation is this? Definitely not the one you expect from a notable art gallery where you are purchasing a painting worth a significant amount of money.
What happens when you want to buy e.g. Punks? Let’s go once again through the process.
No need to physically visit the place; you do not have to make a visit to an art gallery or similar places. The only thing you need is an internet connection and a Metamask wallet.
How can you be sure the price is fair? At any moment, you can access the global orderbook and see every transfer, every sale, bid price, and ask price that has been made for the desired piece since its inception. You can bid on any piece you would like to, even if it is not for sale. Full transparency is the standard.
The art distribution is making a transition from the pre-internet to the post-internet business model right now. Some will say you could have bought artworks on websites a long time ago. Indeed, however, the cost of shipping, ordering procedure, and time needed to finalize the purchase is daunting to a great number of potential customers.
eBay was not a substitute for a small antique shop in Pennsylvania; it became the global marketplace for such goods.
The fine art galleries are not going to disappear or become replaced. The sheer pleasure of going to an art gallery and purchasing a work of art is a priceless experience. However, things will evolve and change over time.
Democratizing the Technology
Would you buy one of Damien Hirst’s The Currency paintings if you had to travel to Geneva, Miami, New York or London? What if you could purchase it from your couch within seconds?
The truth is Damien Hirst will be fine in both cases. He would just have to wait a little longer to sell his collection of ten thousand artworks. The most significant change takes place on the other end of the spectrum, and that is where we should focus our attention.
Being a passionate butterfly photographer from Knoxville, Tennessee gives you little chance to monetize your work or gain significant recognition. Let’s be realistic, you have zero chances of making a living off your photos. Assuming you will find a place where you can sell your photographs, how many of them will you be able to sell on a monthly basis?
Things change if we take NFTs into consideration. It is far easier to go out to the public and sell your photographs. The wider range of audience gives you higher chances of finding a group of people who will truly like your style and will buy your photographs.
You will not have equal opportunities as Damien Hirst, let’s be realistic. The distribution advantage will more or less disappear, however other advantages like worldwide recognition will not be so easy to make even; but that is a good place to start.
Gaining access to the global market and global audience is a gamechanger for all the people working in creative professions. The moment we, as a society, will acquire decent technology to transfer intangibles, the spread of art and creativity will accelerate immensely.
The Lifestyle NFTs
Almost every NFT existing today can be assigned to one of three main categories: art, collectibles or PFPs. Among all of the collections, there are some which are not so easy to assign. One of those is the Bored Ape Yacht Club collection.
Is BAYC art? Is it a collectible? It might be a PFP, but it is not its desired usage. What is BAYC then?
The answer is — Lifestyle.
If you want to enter the McDonald’s franchise, you have to earn it. Spend time and money to get educated in one of McDonald’s educational sites and be graciously granted the license to use the franchise in accordance with the standards and regulations.
Is it the same with BAYC? Not at all; by being a holder of a BAYC NFT, you are allowed to freely use the franchise or even create your own brand based on the Ape you own. It is a game-changing idea as you are not solely responsible for growing your brand.
Imagine being one of 10k BAYC holders who create their own brands with the use of their Apes. The more one grows their brand the more popular BAYC becomes as a collection. The same thing happens in reverse; the more popular the BAYC franchise becomes the more recognized and valuable individual brands are. Now let us assume a half of the owners decide to create their own brands with the use of the BAYC franchise. It gives us 5 thousand unique business ideas across the whole spectrum of services and goods.
This is how communities can scale globally.
In the following 3 to 5 years, we will see global brands built from NFT collections, and along with it, new business models will emerge. One of the two things for creators to consider will be either granting holder’s commercial rights to the franchise or issuing CC0 (Creative Commons Zero) approach.
To illustrate how significant the business model is, we should look at what happened to Punks. To put it bluntly, the moment Yuga bought Punks IP and took it over to BAYC commercial model, it was over for Punks. You cannot make a project competitive if you can do nothing with it.
Nowadays, we see different approaches to the use of the franchise. BAYC holders are following the way similar to the idea of Web3, whereas the mfers are free to use their NFTs however they like.
*Determining the better approach might be short-sighted and unwise as not much time has passed since the beginning of the trend to build communities off NFT collections. The space has to grow, the experience has to be gained, and things have to evolve over time.
The Visual Arts
What has been more culturally important across the decades, music or visual arts?
The concluding answer might be rather subjective, but according to Punk 6529, societies and cultures have been influenced mainly by music, leaving visual arts behind.
The NFTs today are primary visual arts, but there are a variety of things that can and almost certainly will happen with music as well. Creating a hybrid between off-chain and on-chain music is just a matter of time. The introduction of music NFTs will lead to a similar phenomenon of creating collections, communities and niches with a direct connection to the author which, from the aesthetic point of view, will create a completely different experience for the consumers.
The next step will be the gaming world. Present games have been shifting towards the online experience and multiplayer gameplay in recent years. *Not to mention the phenomenon of the e-sport industry and its influence on the whole gaming world. The games, just as any other business, are evolving over time, with each epoch having its identifiable features and traits. That is why the assumption of having the next generation of games in the following years does not seem irrational.
Although we see approaches to creating blockchain games, those are idle efforts aimed at monetizing the trend rather than building a game to last. The business model where you have everyone creating their own 10k NFT collections and merging it with some half-baked game for the holders is neither a model that will last for years nor a model that will attract players.
Building really good games is like making a movie. The process takes time and money, as well as extremely talented people. It is way more complicated than just putting a random NFT collection into some low-quality game.
The Societal Intangibles
As mentioned before, once the technology allows transferring social intangibles, a vast chunk of society will change as well.
But what are social intangibles? Well… those are the things we can grasp with our minds but not with our hands. The United States, the Statue of Liberty, the US flag, the land of free and the home to the brave, the American Dream; all those are social intangibles. How can we even ascribe value to it? What would be the fair price?
*Once we talk about prices and valuing things there will be voices claiming it is just another step of world financialization. The greedy capitalists just want to make more money. However, let us look at it from a different perspective. Let us take into account how the world is changing and where we are headed as a society.
*Automated infrastructure supersedes people in different branches of various industries. The unlocked workforce has to find a new place in the world and stay productive in order for the society to grow. The number of people going along the way of creative expression will be greater than any of us assume.
The technology industry has absorbed most of the people’s potential in the last two decades because it was useful and financially rewarding. It has favoured a certain type of person with a particular set of traits, just as any other industry favours different types of people. The question worth asking is what type of people, what kind of skills and traits will be in demand once the creative industry will begin to gain even more attention?
The Human Rights, General Motors, the US. None of these things exists. Those are just frameworks allowing us to organize people and resources in a coherent manner. It is how you go from societies of 150 people to millions.
The idea of Nike can be presented in three simple words — Just do it. How much value do those three words add to the company? Will it be possible for Nike to reach the same sales targets and prices without the intangible idea and narrative that has been baked in overtime?
Humankind is designed to live and think in narratives. It is how individuals and societies organize themselves. What we are seeing is the shift of narratives from the centralized parties into the hands of the individuals. The narratives are gradually being communitized.
A random company cannot compete with Nike by having a nice logo and high-quality goods. It needs to create its own narrative and intangibles people can identify with. The very moment intangibles will be distributed on the rails between people in a permissionless system, Nike will lose the advantage of intangibles. However, there are other advantages Nike will still possess, such as marketing advantage or world recognition.
There are always going to be advantages of some sort that cannot be made equal.
The starving artist is a bug, not a feature. In a world where more and more things get automatized each year, intangible culture providers should be highly paid.
The Medium
Medium is a message.
The message changes with the medium; and the medium has changed dramatically over the recent years.
There is a finite period when you can set new cultural and societal standards. This period is now, and within the next 10 years, it is going to solidify. In the next 20 years, there will be something else, another change of mediums, and another evolution.
*The process of constant renewal and change is embedded into our existence.
A society with TV is different from the one without TV, just as a society with the Internet is dramatically different from the one without it.
All of the mediums have changed society in some way. Everything having the aspect of human interaction within itself is changing society. The introduction and broad consumerization of the Internet has changed society. After that, other forms of mass media like Twitter, Facebook and Instagram have been introduced. However, not only mass media have shaped society. The idea of modernizing the system of taxis and delivery infrastructure by Uber, utilizing the accommodation space introduced by AirBnB or *the recent trend of TikTok has influenced and shaped the society in a significant way.
Each time new technology or service got consumerized we ended up with a slightly different society.
The Social Construct
Isn’t it just a social construct, one may ask?
Tell me then, what is not a social construct?
Is the title deed to your house not a social construct? What about the fiat money you use every day? The Castle Doctrine gives you the right to shoot anyone coming to your property with ill intentions, isn’t it a social construct? The sole reason paper means something is because we, as a society, have agreed upon it a long time ago. Over the course of the decades and centuries, it has solidified so much we are not even aware of the underlying social agreements anymore.
Is it any different with NFTs? If you own the token 6529 in the ERC-721 standard we all agree you are the owner of the Punk 6529. It is not in any way different from agreeing you own a house or a property. The only difference might be found in additional laws established over the years to ossify the social agreement. It is all equally made up.
The house itself is very tangible, but the right to live in it is not; now, we are slowly developing the technology allowing us to move intangibles. Calling it a huge change might be an understatement as we have not explored it much.
The surface of what is possible has barely been scratched.
The Real Metaverse
Most of us associate the idea of metaverse with some kind of an application resembling Second Life which you can access with the use of VR glasses.
This might be fun, but it is not the metaverse.
The real metaverse is the Internet we will see in the near future. The quality of visuals will get much better, presenting users with a wide array of new possibilities. Conference calls might be a good example as nowadays most of us have Zoom calls where we see each other through camera lenses. The improvement of visuals will allow us to use holograms and engage in conversations as if we were in the room with our interlocutor.
The Augmented Reality will be with us permanently. During our conversation, we will talk about something and have it displayed in front of us. The glasses and other accessories enabling AR access will become very handy and user-friendly, thus becoming almost inseparable from other daily life items.
The contrarian argument might be that people are not going to wear glasses or similar accessories all the time. Yet, aren’t we having our smartphones with us 24/7? How many of us claimed not to carry mobiles in pockets or bags all the time?
The next step, after the improvement of visuals, is going to be the innovation of scalability and transferability of data. The Internet is filled to the brim with data. Every application and every platform is abundant with a variety of data; Twitter or Instagram is uploading and processing enormous amounts of data every minute. One key point is nowadays we need some kind of an API key to access the desired information and this might become a significant obstacle on the path to smoothening the user experience in the metaverse.
*It does not mean API will be gone forever and access will be granted without any verification procedure. What it means is that the sheer procedure will be smoothened to the point where the user will be able to access or display the data almost instantaneously while having a conversation with the use of AR technology.
The Problem with Web2
*The rebranding of Facebook into Meta has intrigued many and worried even more.
The creation of Facebook’s own metaverse is the opposite of the dream of a decentralized metaverse. A centralized company like Facebook has no intention or incentive to build a decentralized infrastructure for its own metaverse. On the other hand, running the created metaverse on centralized servers provides the control and agency over the direction and regulations of the new metaverse.
Integrated ecosystems are limited to the will of the creator companies.
The case of Meta and its vision of a centralized platform is not the only example of how the creator’s will can be decisive. Taking the political affections aside and sticking to the sheer facts, we have seen the removal of a quite recognizable person, the president of the United States, from Twitter. The First Amendment does not apply to private companies; however, what if a company’s platform has become a global messaging tool, a place for geopolitical debates, and the creator of trends in politics? How powerful the will of the creators can be in such a scenario?
Twitter might not want someone to use its platform, and it is a completely sensible business decision. No biased opinion or affections, sheer business. The issue is, once you are banned from a platform like Twitter, you are cut off from the global short messaging centre. That is something far more significant than just a business decision.
Who should be responsible for making such judgments? Who is not biased and competent enough to bear the responsibility of making the right decision?
The Modern Exiles
What if we wanted to apply the feature of revoking access to the e-mail protocols? What about public companies? What if one day you will be revoked the access to use the taxi in a given city or do shopping in a particular chain of stores?
Fast forward 10 years from now, and we have the metaverse far larger and even more rooted within the society than Twitter today. *It will include every aspect of our lives, from shopping to medical care. It will become inseparable.
What if someone decided you should not be allowed to use the metaverse and revoked your access? You are not just going to be cut off from social media as you might be today; you are cut off from the whole society and all the services it provides. The act of cutting someone off the metaverse is equal to being locked in a digital prison.
We are not going to be able to live in a modern society without the use of even small parts of the metaverse. Socializing with friends, getting a job, and using the basic services is going to become unavailable once we get banned from the metaverse.
*We will become ghosts of the society, unwanted, struggling with the basic needs. We will have nothing and still be responsible for living according to the rules society has established.
The Endgame
Thesis — The Endgame is Augmented Reality.
*How does Augmented Reality work? It scans the environment in your field of vision or the field of vision of the used accessory. The scan has to be performed continuously as it has to update what you see with an overlay of digital data. Imagine going into a restaurant and just by looking at the table, you can see the whole menu displayed in front of you along with additional visuals of every course and beverage you want to try. Sounds amazing, doesn’t it?
Every coin has two sides.
Having accessories constantly scanning our field of vision might lead to a suspicious, yet sensible, assumption that there is a company having God’s eye view of our whole life. Everything we look at, every activity we perform, and every word we speak is constantly monitored, analyzed and recorded. All the people we meet, our family, children, fiancée, all of them are constantly recorded and analyzed.
The company might introduce strict privacy policies and assure everyone nothing will be leaked and everything will be performed under strict supervision. Yet the possibility of using the data in any way the company wants remains.
*Blessed are the ones who have never been a part of a data leak in the world of plentiful cyber attacks ranging from data leaks to identity thefts. Feel free to believe the assurances but take care of your privacy with utmost diligence. Worry not if you have nothing to hide, or so they claim.
The problem here is not the individuals and their will as mentioned before. It is the flaw of the system it can be built on. Any system capable of having God’s eye view on people will not be tolerated by the state as it would be too influential and powerful to exist on its own. At some point, the company is going to be either shut down or controlled by some kind of governmental agency.
The social credit system being built and used in China is strangely similar to what metaverse might look like. Leaving the visuals aside, the mechanics and possibilities of usage are astoundingly similar. The ability to monitor the lives of citizens, analyze their behaviours and grant or revoke privileges if needed resembles the backbone of the future AR metaverse.
The cruelty of the system in China is what people often talk about, yet they do not seem to perceive the foundations of the system being built in front of their eyes. Punk 6529 does not claim the system is being built to serve to purpose of controlling the citizens, what he means is we are building a system capable of such procedures.
The Power of CBDC
Should there be national sovereign currencies available online in a form of CBDCs? Should the implementation of CBDCs be followed by abolishing cash thus creating cashless societies?
How can you stop a person from taking a taxi in New York? You have to arrest the person; otherwise, you have neither the authority nor the possibility to lawfully stop someone from taking a taxi. The moment we introduce and spread the metaverse with the use of CBDCs, within seconds, we will be able to flip a switch and revoke the access to use taxis in a given region or the service as a whole. It will be the cheapest way to deprive people of their constitutional rights. *The parts of the infrastructure have already been implemented, and we have seen some similar precedents taking place in some countries of the Northern Hemisphere.
*The Bank of International Settlements, the European Bank, the Federal Reserve and many other banks are already discussing and slowly implementing rails to introduce CBDCs. Their ideas and visions of the endgame might differ, but what ties them together is the creation of a monetary system where every transaction will be supervised and any undesirable ones censored or revoked.
What will happen if some aspiring totalitarian, with connections to the Central Bank, will decide to increase the odds of winning and begin to revoke his opponents’ basic privileges like buying a rotten tomato or renting certain places to gather?
Even the most totalitarian regimes we have seen across history have not been able to effectively prevent their opponents from buying and doing certain things in other parts of the country. It is very hard to prevent people from making transactions in cash. It is even harder to track and supervise their transactions. However, once the CBDC will be implemented, and cash abolished, all you will need to do to limit your opponents will be running a particular algorithm.
Every decision regarding law and order is a trade-off between private and public crime. That is why we have constitutional democracies. If we had a state that is always right, we would not need any civil rights as the state, by definition, would be infallible in its doings.
100 Million People of NFTs
As said before, brands like DolceGabbana or Nike and institutions like Universities will issue NFTs. All they have to do is to digitize their intangibles. The moment they issue 100 million NFTs, the network of users will begin to spread, creating the snowball effect; fast forward a couple of years, and we will see 1 billion people using NFTs, some of them even not aware of it.
Within the next couple of years, we will see more and more brands and institutions issuing NFTs. Even nowadays we see examples of Adidas launching NFTs on OpenSea and Meta creating their own metaverse platform.
The danger lies within the infrastructure. Will people care if their NFTs are stored on a centralized wallet or a decentralized one?
*People follow the trends and the ease of usage. What if Meta creates NFTs with astoundingly great user experience while decentralized platforms will focus on bringing safety to the decentralized infrastructure and will neglect the UX? Will people follow the technology or the experience and fun of using the platform? I suppose the answer is obvious.
The main quest of the crypto world is to make the user experience the best possible within the shortest amount of time. Why does it matter now, when NFTs became a thing and it did not matter as much in the times of Bitcoin’s media dominance? The following statement is the answer.
The default thing to do with NFT is to use it; whereas the default thing to do with Bitcoin is nothing.
The UX — We’re hiring!
The rapid changes and growth in the NFT space during the last two years have made UX developers in high demand. The number of mistakes and disasters that have occurred took its toll on the community and the overall view of the crypto space by leaving the mark of being insecure and not suited to the customer’s needs.
Over the past decades, a significant shift in the car industry has led to a change in the narrative of responsibility. Car producers went from claiming “accidents are users’ error” to “accidents are our fault”, which then translated to a noteworthy increase in the safety of car usage.
Without a similar shift in the NFT space, we cannot expect the growth and consumerization of the technology. The user has to be sure his funds and NFTs are secure even when his knowledge of the technology is limited. Transactions have to be easy to make, and every potential user’s mistake identified and prevented. In the world of multiple blockchains, common standards have to be set in order to reduce or even remove the boundaries separating users.
*We are slowly seeing the change being made when it comes to the UX, UI and to some extent security. What we also might spot is centralized platforms have been taking care of their users for a long time before NFTs showed up. Therefore, time is of great significance as those who will take better care of the users and establish themselves in the space will win in the long run.
The Game with Institutions
The governments are working against us, not with us.
The European Union has lost to Americans the battle of Web2 and now became a digital vassal to the digital empire of the United States. There is a chance for the EU to turn the tables by focusing on the development and embracement of Web3. A move like that would greatly limit the power of technical oligopolies in the US and grant the EU the right to be the decisive player in the future world of Web3.
If we were to maintain the same attitude towards the Internet in the early 90s as we are having towards Web3 nowadays, the Internet would have never become what it is today.
The space of Decentralized Finance (DeFi) has the flaw, from the regulator’s point of view, of not exactly knowing the counterparty. Therefore, DeFi will probably become very hard to implement, at least for US citizens.
The difference between DeFi and NFTs is having a personal counterparty, which makes NFT implementation a lot easier from the legal and regulator’s point of view. It is highly probable we will end up with KYC (Know Your Customer) procedures on large marketplaces, but at least the growth will not be limited by making the purchase and use of NFTs illegal.
Zero-Knowledge
*The recent years of cryptographic development have brought up the concept of Zero-Knowledge Proofs which may revolutionize not only crypto space but also the world we know today. In short, ZK Proof is a mathematical technique to verify the truth of provided information without revealing the information itself.
*It might be a far-fetched idea to some, but definitely the concept of Zero-Knowledge Proofs, once implemented, would bring substantial benefits across the wide spectrum of industries and could be another milestone in the history of humanity.
Nowadays, various institutions gather enormous amounts of user data. Utility bills, ID cards, driving licenses the list seem to have no end; the amount of data collected not only slows down the process of getting things done but also endangers users by processing excessive data with a risk of leaking the data when attacked or by accident. The implementation of ZK Proofs in the administrational and institutional domains would significantly reduce the risks connected with mishandling or misuse of the provided information.
*Zero-Knowledge proofs are the solution to many of the problems the crypto space is suffering from today, especially from the institutional point of view, as it would greatly limit the risk of making a mistake or being unable to provide a meaningful proof of our actions and financial gains within the space.
*You cannot tax what you cannot see. The following statement is a double-edged sword providing some market participants with ways to avoid taxation of their financial gains. On the other hand, avoiding taxation and actively finding new ways to hide profits from the IRS only makes it more difficult for the crypto space to establish itself as a reliable place for investment.
The Impact
Some people in the space, like Punk 6529, are old enough to remember the old days of the Internet allowing them to spot and analyze the emerging patterns.
In the early days of Twitter, there was a discussion about whether Twitter should be a protocol or a service. What seemed like a normal business decision at that time has shaped a significant part of society and the world in the following years. The decisions of the past which turned out to have a huge impact on the present cannot be easily reversed or changed.
The impact we can do today might set the rails for future generations and the technology of NFT. Therefore, we cannot play games on our own within small communities; otherwise, we will end up being a niche community which will become forgotten and neglected.
*Gather and make a change the space needs because the momentum, once lost, is very hard to rebuild.
We have seen different approaches to business models in the space, from land-based platforms to BAYC’s way of experimenting with ideas. It is worth noting Yuga Labs went from 0 to a multimillion-dollar community in about 12 months. *We have also had different experiments like puzzle NFTs that did not succeed in their vision and the ones that were too small to make any significant change. Nevertheless, we need multiple communities and projects like BAYC to experiment and create new things, to discover and re-discover ideas.
Another step is moving cultural icons into decentralized spaces and having true ownership over them. We need multiple NFT and crypto natives to make the impact, run different funds, Venture Capitals, as well as create and shape the space.
At some point, things like billboards, stadium sponsorships or even hotel rooms will become NFTs.
Imagine working at an office in New York the whole year. When you finally get a week of vacation, you might want to go to the Mediterranean, but all of the places and hotels have already been booked. Are you going to wait another year for such an opportunity to occur? You can call hotels, beg for vacant rooms or attempt to make some shifts among the booked rooms, but the hotel’s databases are too scattered between different chains and facilities to make any changes. Eventually, you will end up spending your vacation in a nice place but still haunted by the vision of yourself lying on a beach by the Mediterranean Sea.
The scenario in which hotel rooms are NFTs looks far better.
The moment you call the hotel to make a reservation, the receptionist can check if there are any rooms left or might inform you about the possibility of verifying the availability of rooms on our own via their website. The site allows you to see which rooms are booked and reach the person who booked the room. You spot the room that has been booked by an elderly couple who, quite probably is already retired, and they would not mind moving their holidays by a week or two. Without any second thought, you offer them 700$ for a room worth 300$ and they seem to be happy to accept the offer.
It is a win-win situation for both of you, and all we needed was the possibility to reach the other person.
Hotels, art galleries and many other goods and service providers have databases scattered across the whole world. Bridging them via NFT technology will be a gamechanger for a number of industries as we will be able to apply similar solutions to almost any off-chain businesses.
NFTs can represent any off-chain asset that is non-fungible and move it to the metaverse. Therefore, we can build bridges between the off-chain and on-chain world.
The Simplest Strategy
If I only knew about Bitcoin in 2013, I would have been a millionaire today.
*With a very high probability, you would not. People claiming “if they only knew” do not seem to take into account the fact they would still not know, at the given moment, what will happen in the future. Let us assume there is a project today that will increase x1000 in the next couple of years. Why aren’t you investing your money into it right now? What holds you back? Uncertainty?
It is easy to pick the winners if we look at the past. Anyone can do it. The real brilliance is choosing the winners of the tomorrow.
Thousands of people investing in Bitcoin back in 2013 still managed to lose most or all of their money. *Why? Because they were not here long-term, they were mere passers-by without any knowledge or experience of being active on the markets and price swings of crypto assets can swipe off even the most experienced players. The second reason was the lack of vision and apprehension of Bitcoin as a technology and investment.
*One key note is that investing in Bitcoin and investing in altcoins is not the same game. One of the crypto natives I greatly value once said “The goal of buying an altcoin is to sell it”. The simplicity of the sentence is what differs between being in the space long-term while sticking to high-conviction assets and being here simply to experience huge gains followed by precipitous losses caused by the lack of knowledge and experience.
What we are seeing nowadays with NFTs seems familiar to the altcoin market in its early days. A number of projects are experiencing high valuations, even those being substandard or ridiculous. Therefore, most of the NFT collections will go to zero. It is a harsh truth, but we all have to bear it in our minds.
On the other hand, by choosing the right NFTs we will experience incredible growth of our portfolio and being a part of a community that is here to stay for a long time.
Buy a coin or NFT and assume it will go to zero.
The following attitude will allow you to stay cool-headed in the harsh times of the market and will hold you back from making decisions you will later regret.
Devote your time to education and experiencing the space step by step. The more you do in the space, the better and smarter you become.
Wisdom comes from experience. You cannot short-circuit it.
If you cannot find enough time to educate yourself, focus on dollar-cost-averaging (DCA) into major projects like Bitcoin and Ethereum by setting a prior strategy. In addition, you can buy some NFTs for fun and build your experience in the space.
*Doing DCA without setting up a strategy beforehand is not any different from gambling on the market as you do not have any boundaries as to what and when to buy or sell. Set up a strategy and make sure you will stick to it, then enter the market.
The crypto space is short of people but abundant with ideas. If you can transfer or modify the skills you already have, in order to be useful in the space, your billing rate is going to grow significantly.
There is nothing more painful than working in an industry that is slowly shrinking. You worked as hard as anyone else, but you cannot win against the whole market. The economy constantly gives signals, and all we have to do is to stay alert, observe the world and make the change when the time comes.
*The Bounded Soul
*The following two paragraphs are not a part of the interview with Punk 6529.
World of Warcraft is undoubtedly a global phenomenon with a variety of different in-game features influencing the game and its mechanics. One of the ideas implemented in the game is the concept of the Soulbound token, which is deeply rooted within the community, and as the name suggests, is bounded to the soul, i.e. the player’s character.
How does it work though? The mechanic behind the soulbound item is very simple, once obtained, cannot be sold or transferred to anyone else. The item is forever bounded to the character who obtained it.
Most of the Soulbound items require completing rather demanding and difficult quests or killing powerful monsters in order to get the bounded item as a reward. In other words, you cannot obtain the Soulbound item without overcoming significant obstacles along your way. Aside from granting you particular bonuses, it might also signify the experience of a player or his devotion to the game and undergone challenges.
What if we combine the idea of soulbound items and NFTs?
Imagine going to an Ethereum conference and gaining a soulbound token, proving you have been an active participant in the event. On the other hand, those who were just passive participants would be rewarded with a soulbound token providing their attendance at the event. Either way, your effort of going to the conference as an active participant or just a listener will be rewarded. After gaining the soulbound token, anyone will be able to see what kind of events you have been to, how dedicated you are as an Ethereum aficionado or just verify whether your claim of supporting the Ethereum in its early days.
Imagine graduating from the University with a soulbound NFT added to your profile, confirming your graduation and all of the achievements you have been able to complete along the way.
How about collecting soulbound NFTs as an active member of a community; anyone can check your profile at any given time and see e.g. your achievements, events you have been to, badges of honour given by other players and many others.
The idea of Soulbound NFTs will soon become widely discussed all across the various communities, not only crypto. Mark my words.
As additional reading, I highly encourage you to read the following article presenting the idea of Soulbound tokens written by Vitalik Buterin.
*The Finishing Touches
The simplified process of spreading the NFT technology might look as follows:
- Stage one — get 100 million people to use NFTs of any kind.
- Stage two — spread the idea of the possibilities NFTs will bring while creating a network effect.
- Stage three — start social debates considering the idea of modern society and its digital future.
- Stage four — revolutionize the world with JPEGs in the metaverse.
Let the following quote summarize the article you have just read. Let it sink in. Let us remember and focus on the idea and not the projects that will come and go, rise and fall. Follow the idea and build the world upon it.
We are told to remember the idea, not the man because a man can fail. He can be caught, he can be killed and forgotten, but 400 years later, an idea can still change the world.
~V for Vendetta
Till next time!
~M.E.
This story was also published here.