Why Would Anyone Buy an NFT?
Back in early 2017, I got super excited about Blockchain technology. I started as an altcoin hustler using Treeview’s virtual reality development rigs to mine shitcoins after work hours. My hype in the value of blockchain technology started slowly migrating into becoming a Bitcoin maximalist, which became clear to me after the 2017 crypto crash.
My thought process was that Blockchain is a generational defining technology, but the only real use case of the true value for a decentralized ledger is to decentralize the world’s standard for an economic store of value. It became clear to me… Bitcoin was Gold 2.0.
Living in Uruguay in my youth, it was common knowledge that the Uruguayan Peso was used for day-to-day spending, but not for saving. You would always convert your Pesos to USD if you were going to save that money for later. As a reference, a McDonald’s Big Mac cost around 80 Pesos in my early teens. Now it costs about 350 Pesos.
The US dollar has played the role of an economic store of value for almost every country in Latin America and many other world regions. In LATAM, the concept of a local currency for spending and a different currency for saving is general knowledge.
As the US continues to leverage inflation as a macroeconomic tool, it will become more evident that the US dollar is transforming into a local spending currency, losing its global status as the reserve currency.
In 2009, Satoshi Nakamoto gave us Bitcoin, the disruption of the Gold standard. In my mind, every other crypto project was just noise. In no other use case could I find a true justification for the need for Blockchain when a database could work just as fine. Bitcoin still has a long way to go to becoming the next global reserve currency, but in my maximalist opinion, this is inevitable.
When the NFT economy boomed earlier this year, at first, I couldn’t see the true value. The big selling point was that digital artists could leverage NFTs to create unique original versions of their digital art, which sounds like a game-changing idea. After talking with members of the digital art community, this use case could technically already be done on several existing content gallery platforms, making Blockchain not truly necessary.
What I came to realize when meditating on the future of the Metaverse was that the current state of the Internet is dominated and controlled by a handful of organizations. Amazon alone currently powers around 1/3rd of the Internet. The current state of the Internet is controlled by a collection of privately owned giant Internet castles, all communicating between themselves mainly via REST/JSON.
Many Ethereum maximalists state that the next chapter of the Internet will be full decentralization. At this date, this vision might be a bit far-fetched as centralization makes most aspects of the Internet more efficient.
What I do believe is the need for a new communication protocol to handle true ownership on the Internet, independent of any Internet castle or entity of power. To guarantee true decentralization, this Internet ownership protocol will need to be Blockchain-based, the second true use case of blockchain technology. This protocol could be Ethereum based if they solve scalability or possibly a collection of different blockchains.
NFTs may become the primary communication protocol for digital ownership in the next chapter of the Internet. A globally distributed protocol that all Internet castles can agree on communicating with but cannot control.
The next chapter of the Internet will have two key technological components:
- Humans will no longer be limited to interacting with the computing world via the concept of a screen. Mobile and Desktop screens are windows that separate the “real world” from the Internet. Augmented Reality will enable us to bring the computing world into our base reality, and Virtual Reality, to travel inside the computational world.
- Digital ownership will be a vital component of the next chapter of the Internet. The current trend of Millennials and Zoomers not interested in buying homes, cars, or expensive watches will be translated into purchasing digital assets. Today, many humans spend more than half their waking hours connected to the Internet, which may explain the lack of interest in worldly possessions.
The big question is: why buy an NFT? I believe NFT technology will become the standard communication protocol for digital ownership in the next chapter of the Internet. But what we’re still lacking today are lasting use cases. These will be built over the next few years. A handful of today’s leading NFT communities will be the drivers of this innovation.
As living in Silicon Valley was key for technology companies during Internet 2.0, I believe NFT communities will become the Silicon Valley of the Internet 3.0. Today’s NFT communities are the equivalent to 17th-century Parisian cafés where minds fused, giving birth to the ideas that defined the Age of Enlightenment or the Haight-Ashbury neighborhood that started the 60s hippie revolution transforming society into a freer world. I believe these communities will be the next hotbed for human progress. The next frontier.
History’s tectonic plates are moving. The future is now.
