Disclaimer: I think I’m supposed to say none of this is investment advice so I don’t get sued. So— none of this is investment advice.
NFTs
What are they?
When the blockchain says you own something online. Usually the thing is a piece of digital art, but it doesn’t have to be.
To be slightly technical, the NFT is held in your online wallet. It’s assigned to your personal address. Thanks to the Blockchain, all of this is visible and virtually impossible to hack (in theory).
I know this all sounds ridiculous. The typical retort to NFT art is, I can just right click save image and now don’t I own it?
But that misses the point.
I could pay someone to copy the Mona Lisa, it would look perfect and I could hang it in my house.
Yet no one does this, because we would know it’s not authentic. The block chain allows you to prove the authenticity of the NFT because we can see the chain of ownership back to the original creator.
So you can right click and save an NFT, but it’s not the image that matters, it’s the uniqueness. Further–
NFTs are entry into a community
When you collect traditional hobbies like art, stamps or baseball cards, what one gets is entry into a community. It brings you status among fellow collectors. If I wear a pair of Jordan 4s around, I’m signaling to other sneaker heads that I’m part of their community.
NFTs are actually an improvement on this current collectible based community system. One, they are easily authenticated, everyone can view the chain of ownership on the blockchain. So I can’t counterfeit my way into a community. Two, the communities are more tangible. Most NFT series have an associated Discord group where the owners get together and chat.
NFTs turns Subscribers/Fans into investors
Let’s say I really believe in an artist/musician/content creator. I could donate to them on Patreon or become a supporter on their Kickstarter/GoFundMe. Those are great ways that the internet has enabled direct fan support.
NFTs supercharge this. Let’s say Bob is an up and coming comedy writer and Bob wants to make an animated show. He could issue 100 NFTs to fund the first season. As a fan, let’s say I buy one of the 100 NFTs and the show becomes the next South Park or Rick and Morty. When it becomes a hit show, my NFT becomes more valuable. I could theoretically make a living just supporting writers and musicians I love– if I’m an early adopter and have great taste.
Those early NFT buyers aren’t supporters, they’re investors. They’ll become the advertisers, the proselytizers for the show. Most creators aren’t great self promoters, but chances are one of those initial 100 investors might be, if so the odds of this project’s success just jumped.
But there’s even more, think of all the people who love to brag about how early they were into a band or how they saw X at a small show before they were big. If tickets were NFTs, now they could prove that.
NFTS turn fans into investors and evangelists for the things they love and maybe–
Fans can become creators, too.
I own this NFT–
I could make a cartoon about him and add to the Sketchy Dad NFT universe. I would bring value to the whole project and also my specific NFT. Everyone involved benefits.
Imagine a world where George Lucas financed Star Wars by selling NFT representations of the various characters. Each fan would be incentivized to create content around their NFT. Maybe I own one of the aliens in the Cantina. If I make a really cool short about him, he could become as popular as Boba Fett. Imagine how rich this universe becomes. We still have the canon, the movies created by Lucas. But we get all this fan made stuff that enriches the universe.
And yes I know Star Wars has a lot of cool fan made stuff, but right now, those fans aren’t being compensated for all the value they’re bringing. It’s just Disney that’s getting richer and richer. In this version, all the fans who loved and made fan films would see their NFTs rise in value.
Which brings us to our next point–
NFTs better reward the people who actually create Value
An artist sells their painting for 100 bucks. Later the artist becomes celebrated and the painting is resold for 100,000. In our current scenario, the artist receives nothing.
NFTs use smart contracts which allow creators to set the terms of sale. Usually they make it so every sale of the NFT nets the original creator 2.5% of the sale. This is all automated and built in. Now if I create something wonderful, I can live off the residuals, and I don’t need to trust any accountants to be honest.
CASE STUDY
Let’s go to an actual person I know
I’ll change the name and keep any identifying characteristics to protect her privacy. I’ll call her Liz.
Liz is the best writer I know. Funniest person I’ve ever met. She can’t get a job right now even though she wrote on the first two seasons of one of the most successful comedies on TV.
Why?
Liz is abrasive, doesn’t play politics and doesn’t fit with what Hollywood wants right now from creators.
I am positive a Liz-created show would be phenomenal.
So Liz could issue 100 or 500 NFTs to fund said show, they would be related to characters on the show in some way. I could purchase one or several allowing me to help Liz and benefit from being an early supporter. When that show is a hit, I’ll own these valuable collectibles of that show’s origin.
Further, in a NFT world, Liz wouldn’t have even been broke to start with.
When she wrote on that hit show, it was non-union and her pay was relatively low. In an NFT world, she would have gotten some NFT commemorating her involvement and maybe some special ones for the characters she directly created on top of her salary.
Given the success of that show and its rabid fanbase, those NFTs would mean Liz would already be financially secure.
I’ve focused on the writer case, but the NFT funding model could work for any creative: musician, author, journalist, video game designer, etc.
Prediction: NFTs will be the funding mechanism for a culturally significant movie, series, book, music, video game, and journalism within 3 years.
Confidence: 70%
HOWEVER—
Right now NFTs are mostly art. Art is notoriously fickle and based on smoke and mirrors. Further most of these NFT discords aren’t really communities, they are all about pumping up the value of the NFTs. It’s all very scammy right now.
Most people are just buying these things because they think it’s the next big thing and NFTs will just increase.
The value will be when creators start creating real communities around an NFT collection. It will come when creators who want direct support move from Patreon and Kickstarter to an NFT model.
As with crypto, NFTs are probably 95% people buying just expecting the prices to always increase and 5% things with actual long term value.
My personal experience:
As stated above, I own one NFT, this–
Why? It’s from Adam Malamut. Adam has a long track record of creative success with the show “Game of Zones.” I saw Adam work first hand, and I’m positive that, if given the chance, he could create a great TV show (hell, Game of Zones actually had more viewers than almost all TV/streaming shows, so he’s kinda already done it). So I’m betting Adam will be super successful and this thing made by him will skyrocket in value.
But Hollywood is fickle and decidedly not a meritocracy, so maybe that won’t happen. Well then, my money went to support a friend whose work I admire, not a bad outcome either.
So far we’ve looked at art and money, two scammy spaces, but what I’ve tried to elucidate is it’s not about art or money, it’s about the underlying technology, and the underlying technology has the chance to be truly revolutionary.
On that, let’s move to DAOs–