The 5-point Case for NFTs: The Good, the Bad, and the Ugly!
The benefits of NFTs are more good than bad and ugly. Here are my 5 reasons why!
NFTs (non fungible tokens) are digital assets that can be verified on the Blockchain.
Recently, these tokens have seen a rise in interest for both artists and collectors.
One of the main questions in the developing space is what is the real utility of these digital assets.
Is it the artwork? The financial reward of the art? The things the token gives you access to?
The benefits for artists and collectors include:
Artists:
- economic empowerment of artistic journey in perpetuity
- protection of intellectual property
- connection to community of true fans
- finding new forms of expressions and experiences
Collectors:
- empowering up and coming artists
- direct and curated access to artists
- access to unique communities and experiences
- another “communication tool or medium” to signal what you care about
- financial reward from resale of NFTs and collectible
I can keep going on the benefits (which I do below) but I think the biggest benefit of NFTs is the use of the blockchain technology and it’s smart contract capabilities that these tokens sit on.
The fact that, when this use case because more generally acceepted, we will be able to quickly authorize and verify transactions (interactions) from any one on the decentralized ledger is the biggest positive.
This will help individuals build authentic and interest-oriented communities without “a company” in-between monetizing our data and interactions.
The era of the romanticized “starving artist” is in its dawn….You don’t have to be broke nor “sell your soul” to make it.
Smart contract capabilities
NFT is just another use case for the smart contract capabilities of blockchain technology.
It is honestly what got me interested in the space.
I had been ambivalent towards cryptocurrency and blockchain for almost a decade since I started hearing about it (shoutout to friends and colleagues that tried to put me on to it then. I’m here now🙂).
It was the utility and benefits for artists through NFTs that caught my attention.
As an entrepreneur, musician, and writer, NFTs was a combination of technology and commerce useful to liberate artistic expression.
I learned about it. I was hooked.
Using myself as an example, I understand that there has to be a clear benefit for people to get interested in the space. It took me almost 10 years to care about the blockchain until the use case of NFTs came around.
And the more I spend time in the community, I see the pros and cons.
After being in the space for a short amount of time, I want to talk about the main benefits and the good that this technology can bring for us as humans, while sprinkling some bad and ugly too.
The main good is that NFTs can connect multiple communities based on interest, styles, aesthetic, topic, lineage across the world in a way that each person has the governing ability to trace these connections (on an open distributed ledger, owned by the people contributing into it).
That’s the main thing I believe.
The tech companies over the last decade have had the main monopoly on our personal data. Using it, as we become products of their free services, to customize and sell our data and behavior to the highest bidder.
The hope of decentralization is really just cutting out the middle man. Which is also the main reason why it will be challenging.
1. Cutting out the middle man
I can attest to this myself.
Over the last three years of publishing my books, LinkedIn has been one of the main places I talk about my writer’s journey.
I believed I was building and connecting to a community that was interested in my books. I could update them about what’s going on. Where I was with the story. When the book would be published.
I thought I had found an active place to build community, market, and talk directly to people. Until the white screen of death. 😱
“What’s that?” You may ask.
THIS 👇🏾 My account got restricted.
Over the weekend of trying to recover my account, I had to scan and send in verification documents to LinkedIn.
I wasn’t too bothered about it until my sister sent me a message: “Hey, are you no longer on Linkedin. I can’t find you.”
“What do you mean?” I responded.
“I search for you. I can’t find you. I went to your company page and clicked on employees, your profile was white. Even our direct messages have been deleted”
“What? They deleted all my content, contacts, and presence.” 🤬
My illusion that I had found a place to talk directly to people was shattered.
I was reminded that there was a centralized machine in the middle and they could decide whether you stay in or out.
I understand that LinkedIn was just doing their jobs to maintain my security and I do appreciate that. I must say they were also very responsive to the verification process.
Apparently a sprint of my travelings between the US, South Africa, Kenya, and Nigeria were I logged into LinkedIn flagged my account. They thought someone else had a hold on it. They restored it once I verified my account.
Now, I understand blocking access to my account.
What I don’t understand is the need to “ghost” a person’s digital presence on the platform like a kill switch.
This experience is not limited to Linkedin.
I have a similar story of how I was locked out of my indiegogo account. I’ve raised close to $20k on the crowdfunding platform in two separate campaigns for my book.
Before I had success on raising funds on these platforms, my account was disabled without any explanation.
When I contacted the support team, they didn’t give a reason, beyond the facts that they cant share more about it.
I believe these companies have too much power as intermediaries and that’s what excited me about building communities using a decentralized method — the blockchain.
Cutting out the middle man and not having to deal with any gate keepers of data and communities.
The Good: We will have direct access to communities without intermediaries and we’ll all own the data (and metadata) of our interactions online as we can take a detailed look into the distributed ledger at any time.
The Bad: With the blockchain, if you ever get targeted by malicious attacks or your assets get compromised, there is no customer service or company to run to.
NFTs built on the Blockchain can be beneficial for both artists and collectors and that’s how I’ll break it down, looking from the perspective of both the artist and the collector.
2. Empowering artists
NFTs for creators will open up the artistic exploration space.
Just over the last months, I’ve been in twitter space hearing artists from different walks of life, ages, locations, interests, starting projects and expressing themselves in the unique ways.
The era of the romanticized “starving artist” is in its dawn.
Now you can be creative with the possibility of an added means of economic empowerment through the sale of your NFT.
You don’t have to be broke nor “sell your soul” to make it.
Now you can easily connect with your fans (collectors and investors) who can fund your artistic pursuit with the purchase of your NFTs.
For the collector, you get to be part of the process to empower artists and art that you believe in.
Whether you’re collecting art for the immediate experience of enjoying it or you’re looking at art as an investment, with NFTs now you have a “voucher” that communicates your support for art and causes that you care about.
You can also show that you supported an up and coming artist from Day 1.
The artist can build unique experiences for its collectors as the time progresses with the NFT acting as a “communicating tissue” that bonds the artist with fans.
The Good: Artists now have a way to build economic empowerment through funding by true fans.
The Ugly: Art is subjective and besides the big well-known projects, there is still a lot of muddiness in the discoverability of NFT artists and art that will take some time to really build.
It’s important for artists to care about longevity.
Because if you consider your NFT to be a collectible, you want the community to get as much benefit from it that they keep recommending it to others.
With the longevity of a project comes more rewards for the artist and collectors.
3. The benefits of the secondary market
Don’t quote me on this but I heard Mark Manson, author of “The Subtle Art of Not Giving a F*ck” say at Veecon (an NFT conference) that about “40% of books sold are resells.”
Now imagine your favorite author can take a fraction of that 40% resell market.
That’s more money for their art they created and that you enjoyed.
That’s another beauty of NFTs. For instance, with the smart contract, the author of the NFT (the artist) can include a clause in the contract that gives them 10% of every resale of the asset in the secondary market, continuously providing economic gains for the artist’s original work.
They can use those added funds to invest some more into their practice and the community of collectors that helped them get there.
They can become one of the best authors ever in the world and with the digital art, you (the collector) have a token to prove you are a Day 1 supporter (Just a little flex on your friends 😉)
The collector can also benefit tremendously from the secondary market. As the asset is valued more, you can sell and make a profit. This is also why collectors tend to be the biggest marketers of their collection.
According to Market Decipher, “Collectibles market size was estimated at $402 billion in 2021 and is expected to cross $1 Trillion by 2032. Digital NFT Market Collectibles is the fastest-growing segment with a CAGR of 19.2% during the forecast period.”
These collectibles include sports trading cards, old music concert tickets, animation characters and toys, and other memoribilia.
There’s already a market (that’s growing) of people wanting to collect and share memorable pieces and events.
The Good: NFTs provide another avenue to display this “collectible” behavior, one that can eventually be traded in for financial rewards.
The Ugly: With every possibility of financial reward mixed in with hype, excessive greed will be fostered in the developing space preventing new entrants
4. Access and Endless Utility
This is the most interesting aspect about the space, for me at least.
NFTs, I see them as tools.
Something that provides the means to an end.
As we adopt more technological advancements and everything becomes more commoditized, one thing that cannot get commoditized are experiences.
The artist can be more thoughtful about the experience of their work and being connected to their community.
With access to virtual and real life experiences. The access to physical collectibles and tokens. In-person meet and greets. Conferences. Early access to soon-to-be-published books. Concerts. Music festivals.
These are just a few examples where the token can as a ticket, gateway, or access to unique experiences.
For me with my first project — Toffy’s Domes — the tokens provide access to an audiobook, a signed paperback of my next book, and access to our weekly writer’s community.
The Good: Collectors can get rewarded endlessly by holding on to tokens form their favorite artists.
The Bad: There are artists and founders out there promising so much utility from their projects that disappear or fail to follow up on those promises when collectors buy into the project. It’s called rugging — pulling the rug out of a project.
According to Cointelegraph: “In 2021, an estimated $7.7 billion was stolen from investors in rug pull cryptocurrency scams”
Collectors have to be thoughtful about selecting artists and founders who are looking to build long term value for their community.
When the artist is successful in their journey, they can always add more utility to token holders such as:
Early access to collaboration events.
Exclusive access to newer projects.
New merch.
New art.
The possibility is literally endless!!! It’s all up to the creativity of the artist and the community.
5. It’s all about community
What cuts through the NFT and web3 space is the importance of building authentic communities.
So for entrants into the space, even though I started off by talking about the the “down side” of the big tech companies and how they monopolize our data, we still have to utilize them, for the time being, to build community.
The goal is not to be too reliant on them as you build out your community.
As we transition into the web3 space, make sure you own your direct access to the community you’re building: email addresses, phone numbers, newsletters.
Store these contacts on an excel sheet if you have to — your own centralized ledger. So that if you get the white screen of death, you can still access your community.
The hope is that we can build out a decentralized access to our communities with web3 tools and NFTs.
We are still very early in the NFT and web3 space, so things will change.
However that change will be implemented by me and you. People that get involved. Because the beauty of decentralization is to give the power back to the people. To co-create the technology and the experiences we want.
So for artists and collectors, the benefit of this space go from empowering the artist, cutting out data monopolies, building authentic communities, monetary reward for early collectors, and access to unique experiences.
Learn more about my venture into the space and my first NFT project — Toffy’s Domes NFT.
