The NFT (R)evolution
Why non-fungible tokens are the future now of autonomous asset creation and redistribution.
An NFT (non-fungible token) is a special cryptographically-generated token that uses blockchains or ledgers to link with a unique digital asset that cannot be replicated.
It is intended to provide scarcity in that uniquely verifiable asset so the risks to the owner’s digital rights, or that owner’s ability to share it, are not greater than they need to be.
In economics, it is historically proven that real, physical assets are the greatest hedge against flationary risk (inflationary, deflationary, reflationary and disinflationary).
Physical assets would be resources like land, food, energy, water or precious metals.
We all need resources, so the constant demand on these goods, with a manageable supply, is essentially a guarantee on economic health.
The risks to economic health come with a lack of transparency, and provenance (proof of ownership), such that goods and services are often priced out of the market, or simply made unavailable to more people.
In cryptoeconomics, it is generally thought that the networks themselves — such as blockchains or ledgers — are a hedge against this risk.
In both cases, there are fundamental truths behind this, albeit with nuances we need to observe going forward.
Now with NFTs, we can responsibly establish the rights people have to access valuable resources, while giving them the ability to redistribute those resources on their own terms.
THE DISTINCTION BETWEEN NFTs & BITCOIN
While Bitcoin is a fantastic invention and has enabled the world to rethink its uses of money, it is also traded as a speculative commodity.
This poses significant challenges to its claims that it is a viable replacement for a global currency. Or any currency, for that matter.
This author has written about these challenges as a designer and developer of encrypted systems.
Solving the Bitcoin Problem
Deconstructing non-deterministic math to get to the real promise of the blockchain.
The key thing to realize with NFTs is that they are not just about “digitizing everything”, but that their functions, when well designed, can provide the proper security and equitable revenue-sharing in the distribution of assets.
In other words, unlike Bitcoin, with NFTs there is far more value in the representation of goods and services that are autonomously managed as real world utilities.
For example, if you self-publish a book or an academic paper, someone can pay for it with Bitcoin.
Yet, neither Bitcoin, nor the Bitcoin blockchain (SHA-256), allows you or the purchaser of that book or paper to share it and share in the revenue seamlessly — there are many synthetic identities (fakes) behind pseudo-anonymous transactions, high exchanges fees, difficulties with payment, difficulties liquidating within or across wallets, and so on.
Deep fakes are a more recent example of how synthetic identities tied to a lack of provenance and properly verified crypto payments exacerbate the problem of non-autonomous content generation and sharing.
Tom Cruise, Obama, Elon Musk, Mark Zuckerberg and more: Deepfake videos raise alarm
Fans of Hollywood actor Tom Cruise were going gaga over his TikTok videos until they realised the videos were all fake…
So, true self-sovereign identity verification is a critical component to the success of NFTs. This author has written about what is being done to ledger real SSI verification.
True Self-Sovereign Identity
Using the blockchain and distributed systems to liberate individual data across the digital landscape.
Also unlike Bitcoin, NFTs can be minted without mining, and they do not require exchanges to prove their value, even while they can be traded on them.
In the example of the book or academic paper, its utility is not just determined by the unit of account used to purchase it (the Bitcoin), but in your ability to share it with whomever you want, and for anyone to share that revenue with you, with each copy uniquely demarcated and accounted for.
This is all possible because the node itself is the network.
Nodes can also be configured without unnecessary dependencies on blockchains, ledgers or any number of highly centralized cloud networks, such as Amazon’s AWS or QLDB (quantum ledger database).
This is the boon in our new economic equation.
PROVIDING SCARCITY IN A WORLD OF ILL-MANAGED ABUNDANCE
At first blush, the reader might think: How can something that is non-fungible represent something that is fungible and sustain its value?
This is a reasonable question.
The short answer is that anything of value must be represented for its uses without overspeculation or improper hedging for purely financial gains.
If you think about how physical assets like land, food, energy or water are gamed for their inflated value as commodities in the financial markets, and how cryptocurrencies like Bitcoin are gamed for their inflated value as networked commodities, you begin to see the problem in full breadth.
As mentioned earlier, when we can only speculate on value, rather than determining value in 1:1 capacities, we create all sorts of systemic risks.
In an idealistic world that does not require money, there is an abundance of resources to regenerate and share.
Unfortunately, we don’t live in that world just yet, and the exceptions to this are few and far between.
With outside forces determining the value of the goods and services we produce, we need our own markers for value with which we can share those goods and services and from which we can profit on our own terms without the need for banks or unwieldy payment rail systems.
Therefore, digital scarcity provides us with this capability in the form of NFTs.
MAKING INDUSTRIES & MICROMARKETS AUTONOMOUS
Because NFTs are a hedge on monetary inflation, and when designed properly, a hedge on asset hyperinflation, every industry on the planet is headed for total transformation.
We are already working with companies disrupting sectors in real estate, finance, healthcare, energy, agriculture, logistics and media, as well as numerous technology domains, just to name a few.
With a new form of managed scarcity, each individual creator and producer of goods and services is in the driver’s seat economically.
Collectibles like fine or rare art are going for premiums, so unlike Bitcoin, it will take a bit of time (not long) for the market to “even out”.
As such, micromarkets are emerging that have nothing to do with financial middlemen, nor nefarious financial schemes.
In other words, NFTs aren’t just traded as wildly inflated speculative commodities, but used as real utilities in the real world.
Some of that has to do with fractionalization (parsing out pieces or fractions of ownership), and a lot of it has to do with autonomous nodes becoming the new networks, and the new operating systems behind autonomous transactions.
Put more simply, your NFT is your bank, your cloud, your store of value and your unit of account all wrapped into one functioning utility.
Imagine: You have a work of art, a piece of music, a movie, an eBook, a code set, an academic whitepaper, an investigative journal, an energy unit or a plot of land, that can be protected, shared and managed by you.
Now imagine that you manage your own data and your own identity attached to it.
You determine its scarcity and what to redistribute in terms of revenue.
No more gatekeepers. No more fakes. No more predatory nonsense.
Power goes back to you, the Creator.
New platform uses NFTs as a gateway for digital rights management | ZDNet
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