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What Seth Godin got wrong about NFTs

Seth Godin wrote a blog post about how NFTs are a dangerous trap. Phae, from our Metablox Discord, asked me to respond to it, so let’s analyze what Seth got wrong about NFTs.

NFTs represent decentralized ownership

If you somehow owned the Mona Lisa, it wouldn’t mean that you own the woman who is portrayed in it, or any part of DaVinci, it would simply mean you own a canvas, one that others also want to own.

Seth is trying to state the obvious here, but I believe he misses a big point. Society is made up of contracts. For example, a landlord owns a rental property, but how does society at large know that she owns that rental property? Well, she owns a deed that states that the property is hers. And society as a whole, along with our government, has agreed to respect this contract.

If society and government were to fall apart, and anarchy prevailed, then how would that landlord prove that she owns the home? Without societal norms and government, the landlord would have to own that property by force, likely living inside with a shotgun to protect it from others.

So it follows that anything can represent ownership of something else. In the case of NFTs, the NFT itself is a contract, a symbol of ownership for something that the owner has deemed valuable.

Furthermore, the smart contract is independent and doesn’t have to be enforced by an outside entity. The smart contract is able to execute without external dependencies.

Not just about prestige, but about utility too

People can look at images of the Mona Lisa all day long without compensating you, because you simply own the original trophy, not the idea…

But having it on your wall gives you a feeling, and telling other people you own it gives you another, slightly different feeling.

True. When you own a piece of art, you feel the prestige of owning it. But with an NFT, not only can you feel the prestige, but the NFT can also give you some value: access to benefits and perks is a common theme across many NFTs. Gary Vaynerchuk for example is offering access to his events and conferences for owning his NFTs.

Yu-kai and I are also discussing further benefits from owning Tier-4 and Tier-5 Blox on Metablox — for example, access to Octalysis Prime, a gamified platform to learn how to apply Gamification to your personal and professional life.

NFTs are a step above any other collectors item, because it’s not just about prestige, but about what the NFT can unlock for you.

NFTs unlock collectible potential

And so the trap:

CREATORS may rush to start minting NFTs as a way to get paid for what they’ve created. Unlike alternative digital currencies which are relatively complicated to invent and sell, it’s recently become super easy to ‘mint’ an NFT. I could, for example, turn each of the 8,500 posts on this blog into a token and sell them on the open market.

Yes, this is very true. Seth, you could turn anything into an NFT, but that doesn’t mean people would buy it — though, I’m sure with your following, you will definitely have buyers.

But the larger point is this: When a new economic engine is created, there is going to be a mad rush of people trying to take advantage of the technology. Right now as you pointed out, it’s relatively easy to create a set of 10,000 NFTs and many people are going to fall for scams, rug pools, or they may buy into projects that are genuine, but ultimately fail because the founders couldn’t execute the vision.

What’s key is that we are all building on top of this new technology and trying to figure it out. Right now, owning an NFT can provide you with the benefits of getting access to exclusive areas or organizations.

For creators, they can set up a smart contract to get paid on every future trade — this is huge for creators, allowing them to get paid more than once for their work.

Most of all, I see NFTs as a way for anyone to maximize the potential of a collectible. Imagine turning tickets from events into collectibles that can be resold in the future. Imagine turning the memories of creators into collectibles that their followers can own and gain perks from the creators.

For example, we have a creator on Metablox right now, Natalia, who is offering free dance classes to whomever owns her memories.

This is just the beginning. What’s wonderful is that all of us are working hard to unlock this potential.

How to spot the scams

The more time and passion that creators devote to chasing the NFT, the more time they’ll spend trying to create the appearance of scarcity and hustling people to believe that the tokens will go up in value. They’ll become promoters of digital tokens more than they are creators. Because that’s the only reason that someone is likely to buy one–like a stock, they hope it will go up in value. Unlike some stocks, it doesn’t pay dividends or come with any other rights. And unlike actual works of art, NFTs aren’t usually aesthetically beautiful on their own, they simply represent something that is.

Seth here is solely focused on the people that are trying to take advantage of the frenzy and the speculators that are trying to find the next moon coin or NFT. Don’t get me wrong, these people exist and there are a lot of these people, but just because they exist it doesn’t mean that the entire industry is a scam.

Ticket scalpers exist — it doesn’t mean that we should completely get rid of concert tickets.

So the question is, how can you minimize the risk of scams or the risk of an NFT going to $0, and maximize your potential?

Look at the founders

The first answer is to look at the founders. Have the founders demonstrated who they are to their community? Or, do they hide behind a fake avatar and fake username? This is a critical signal. If they’re hiding behind an avatar, then what’s to stop them from pulling the rug under you?

Execution over promises

The second answer is to check if they’re executing on their roadmap. Are they fully focused on getting their token to the moon, or are they actually building product and delivering to users? If they’re just hyping the token and not building product, then there’s a risk that the product is all talk, but no walk.

How to find the NFT project that’s right for you

BUYERS of NFTs may be blind to the fact that there’s no limit on the supply. In the case of baseball cards, there are only so many rookies a year. In the case of art, there’s a limited number of famous paintings and a limited amount of shelf space at Sotheby’s. NFTs are going to be more like Kindle books and YouTube videos. The vast majority are going to have ten views, not a billion. It’s an unregulated, non-transparent hustle with ‘bubble’ written all over it.

I mean, this is pretty obvious. There’s only 1 Kanye; there’s only one Beyonce. There’s only one Elon.

I’ll leave you with this — when you’re choosing an NFT to invest in, don’t follow the hype. Look for a project that can stand on its own two feet — that has a 1 player mode.

Take that NFT project, strip away the community, strip away the hype, strip away the big names that back it, and what are you left with? If you are the only person using this NFT, is it still useful? If not, then that can be a big warning sign.

You may ask, what NFT is useful on its own?

I’ll give you two examples.

1. Block Stars — For sure, like any product, Block Stars benefits from network effects and a thriving community. But the beauty in Block Stars comes from the creativity in forming a band and creating music. Even if there isn’t a community, a player can find joy in forming a band and expressing their creativity through music.

2. Metablox — Yes, this is my product. If you were the sole person in the world using Metablox, you would still find value in it because you can root your memories to the blockchain forever, knowing that you’ll be able to pass it on to your future generations.

That’s it. Let me know in the comments about what you think about Seth’s word about NFTs.

Metablox is the bridge between the real world and the virtual world. We believe real life memories matter and that they should be preserved forever on the blockchain. http://metablox.co/

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Jun Loayza

Jun Loayza

Founder of Metablox — own real world places as NFTs, powered by real life memories. http://metablox.co/

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