Getting Started with Crypto in 2021 — #6
NFTs Are So Much More than Art
Opening the door to the tokenization of everything.
The highest-paid living artist in world history sold his art as NFTs — Mike Winkelmann, aka Beeple, sold a collage of his digital art as a single NFT for a whopping $69M worth of $ETH in March this year. This is obviously insane, for a lot of reasons, but this news (and the news of every artist who makes six or seven figures on the sale of an NFT) belies the real power of NFTs. Like most first applications of new technology, applying NFT technology to art is just the first, not the most impactful, way this technology will change the world.
To clear up some common confusion, the .jpg or .mp4 or whatever file is not the NFT. The NFT is the cryptographically-secure and unique identifying string attached to that file that can only be reproduced by the wallet that owns that NFT. What this means is the NFT is the ownership, not the thing being owned, so in that way, NFTs can represent ownership of literally anything. NFTs will one day secure things like your personal information, sensitive data like medical data, property deeds and government records, access passes to places or events, and so much more.
What Exactly Is an NFT?
So before we get into the future of NFTs, let’s establish an accurate and complete definition. NFT stands for Non-Fungible Token, so let’s break those terms up.
Fungible is an adjective that means something that has a standardized value. Currency, for instance, is fungible: one dollar is always equal to another dollar.
A Token, if you recall the first story in this series, is a cryptographically-secured asset that represents something, like an investment in a blockchain project, a real asset like gold, a stock, or really anything in real or digital life.
So a *non-fungible* token would be a cryptographically-secured asset that represents something that is not divisible or tradable like a currency. This is in direct contrast to the other assets tracked by blockchains which are fungible currencies or assets.
What Can We Do with NFTs?
As I mentioned at the top of this story, NFTs have a lot of potential applications. Because an NFT represents ownership over something, we can use NFTs to represent ownership of many things in our lives, and it’s just a matter of developers building the tooling.
NFTs are going to be a key component of the future Crypto Consumer Economy (story on this coming tomorrow), as we move more assets and their management onto the blockchain to reduce costs and improve efficiency of property ownership. This has the potential to disrupt huge markets in insurance, escrow, and property deed management. Here are some potential use-cases for NFTs (some of these are being worked on by intrepid entrepreneurs):
Medical (And Other Sensitive) Data
In the future, you might never need to fill out a doctor’s office form again. Instead, your medical data would be held in a crypto wallet on a specialized blockchain where your unique key would unlock NFTs that can be forwarded to your doctor’s office, the ER, a specialist’s office, etc. Those NFTs can contain your personal info, medical history, insurance info, etc.
Combine this seamless access to medical data with machine learning and artificial intelligence programs designed to improve medical interventions for patients, and we could finally achieve our dreams of futuristic medicine. Most importantly, these advancements in technology should also *reduce* the costs to deliver medical care, helping to reduce healthcare costs for everyone.
Property Deeds and Records
Did you know that it currently costs hundreds or even thousands of dollars just to transfer and insure the title for a home when you purchase/sell one? It doesn’t have to be this way. Crypto technology and NFTs specifically can enable us to store property titles and deeds on the blockchain, making it trivially easy to query the blockchain for the complete history of a title. This means that instances where titles come under scrutiny for an old lien or something will eventually become basically non-existent and the need for insurance for those titles will drop dramatically.
In this way, we can not only guarantee our title ownership digitally, far cheaper and more efficiently than current systems allow, but we can cut out predatory title insurance companies from the home-buying process, lowering closing costs for home buyers and sellers.
And this same principle can also be applied to car titles and any other title for a valuable asset.
Subscriptions and Access Passes
NFTs can be used to manage access to, well, anything. From employee access to a corporate office, to access to a concert or event, to subscription access (ala, Patreon or OnlyFans). By removing the need for a centralized body to manage access to these things, we can again, improve efficiency and accuracy of access.
Speaking of subscription sites, I’m going to let you all in on a business idea I had. Imagine a place where you can subscribe to your favorite content creators and not only get access to their content with your membership NFT but even get access to exclusive NFT drops from those same creators, such that you can keep access to those NFTs they sent out even when your subscription is over. And those NFTs become a limited-edition thing simply by the nature of the creator only creating them and giving them out at a single point in time for everyone who had a membership NFT at that moment.
Government Services
The secure nature of blockchain technology and NFTs could power a new generation of government services that enable governments around the world to deliver critical services, security infrastructure, and even universal basic income to name just a few things. This next-generation government infrastructure could help drive trust in our government again, improving decades of decaying trust between our institutions and the citizens they serve.
Imagine being able to access government programs and services using your unique government crypto wallet/NFT, where citizens can then access economic development programs/welfare programs, get identifying documents like passports and driver’s licenses, access government healthcare insurance, and more. This would dramatically reduce the amount of overhead needed within government. We could even, for instance, reduce the need for security at airports and other terminals, as our photo id cross-referenced with our government id crypto wallet would be extremely secure by default.
This technology could also revolutionize voting and democracy, allowing citizens to submit votes on the blockchain and allowing nearly-instant tabulation of results even with the most complex of voting methods. This could even open up the opportunity for more direct citizen involvement in democracy, allowing citizens to actually cast votes for specific legislation or issues, in addition to electing candidates.
Gaming and Media
While we see NFT technology applied to collectibles today, in the future, we’ll see this technology applied to far more in the digital media space. Imagine having video game characters that are stored on the blockchain and can be used in multiple different games. Or in-game currency that can be used across multiple gaming ecosystems.
Beyond video games, NFT technology could also power next-generation media streaming services where creators can be closer to their fans with no centralized bodies in the middle. These platforms can use NFTs to manage licensing of this content, meaning you can have a library of music NFTs representing your ownership of all that music or the same for videos/movies/shows/etc. By holding that library of content NFTs in your wallet, you would get access to be able to stream that content whenever you want, and those who don’t have the content NFTs would need to acquire them before partaking.
Creators could even mint limited edition runs of specific content, or early adopters of a creator’s content (who get the first few of a content NFT) would see their NFTs increase in value as that creator blows up and their early NFTs become valuable to collectors. Think owning the first mint of an album NFT from a small electronic music artist who later blows up, and after they’ve gained thousands and thousands of followers, people start offering you thousands of dollars for that first mint.
These content platforms could even integrate with additional NFTs for access passes to events or loyalty content. In other words, creators could reward their customers with concert pass drops, exclusive collectibles, and more, all using secure and reliable blockchain data, being able to reward people for being early adopters or bulk customers or whatever other criteria they want.
Basically, the point I’m trying to make is that there’s a lot more room even for innovations on NFTs as collectibles.
What’s Next?
There’s really so much this technology can do, and I don’t have space to get much deeper into it here. But if you’re wondering what’s next and how you can get in on this technology, well, to be honest, there aren’t many of these opportunities available yet. Much of what I’ve discussed is still stuff that hasn’t come to fruition yet, but I am personally on the look-out for projects like this and will be sure to write about them if I find any.
If you’d like to collect NFTs, you can do that on OpenSea and other NFT marketplaces today, but obviously keep in mind that most of the NFTs available on there today aren’t going to be worth anything in the future, so these are very, very risky investments. Still, if there’s an artist or musician or some other creator that you love that is selling work as NFTs, it might be worth considering buying something both to support them and because their work might appreciate in the future if more people come around to them like you have.
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As I am not a registered fiduciary agent, none of my advice is legally binding in any way, and choosing to follow or not follow it is a responsibility that lies squarely on your shoulders. Crypto is a volatile market, and a significant crash in values is a normal event in this space, just as a significant increase in values is. Treat the market as an irrational actor (which is what it is), buy the proverbial dip when possible, take some profits along the way, and enjoy the ride.
