While the crypto world runs on hype, institutional money, and distrust in financial agencies, the ideas are here to stay. Even if the current hype dies down, the technology will continue to evolve and contribute to our daily life.
Jack Dorsey auctioned his first tweet on Valuables earlier this month, and the highest bidder has already pledged $2,5 million. Valuable is a marketplace that can automatically mint your Tweets into Non-fungible tokens.
Dorsey’s action has ten more days to run its course, where the price will probably continue to soar, judging by the current trend.
What’s crazy about all this?
You can still read all of Jack’s tweets on twttr together with any other tweet on the platform. What’s the fuss all about then? Jack Dorsey's first tweet is going nowhere, but it’s changing ownership.
Justin Sun and Sina Estavi are the two highest bidders. Estavi is currently in the lead. Justin’s last offer clocked in at $2 million, and maybe we could see more of Justin if the hype continues.
This is where all of it starts making sense.
1. NFTs are the only way a creator can continually earn without hassle
Transparent automation is one of Blockchain’s greatest assets.
After Artists sell NFTs, they can opt in to continue earning from every future sale. Artists can also choose where the money goes after each transaction is finalized, and they don’t need a legal team, judicial system, expensive lawyers, bookkeepers, and trademark registrations.
Painters that sell their art to galleries usually receive a fixed advance. The money seems reasonable at first. However, if the gallery sells the painting, the original author doesn’t receive more than attribution, at best. The sales team, art dealers, and business makers naturally take a cut as well. The painting makes rounds and round, and the original artist can forget about ever creating that piece. The process can be draining and unsustainable.
Attribution is cool, and it can compound to better deals over time, but it’s not money to spend. You can hardly pay rent, groceries, and student loans with attribution and rounds of applause. NFT’s make sure the original artist gets commission from every transaction, and the best thing is that nobody has to think twice about it. Non-fungible tokens automatically embed the author's fee with every transaction.
2. Non-fungible tokens could save starving artists
I’ve been hearing about starving artists since I could crawl. Apparently, the art world was for the misfits that don’t fit into the society, and they’re all hungry.
I’ve never met a starving artist, although I live in an artist community in Dalston (a hyper-gentrified artsy neighborhood in London.) Artists around me are buying over-priced apartments and live their lives like CEO managers.
What I realized is that being an artist is almost exactly the same as being an entrepreneur. I’m a digital entrepreneur. I can’t paint or sing, but I can create stuff other people want to consume. Both artists and entrepreneurs sell parts of themselves in risky transactions for potentially life-changing upside.
Non-Fungible Tokens smooth the transactional part of being an artist. Creators can invest more time in their creations, possibly creating more art. If a painter sells just one NFT that goes on the be resold 100 times through the next ten years, earning a commission on every transaction. We’d eradicate the term “starving artist” from our cultural vocabulary.
NFTs bring many “ifs” and “buts,” but that comes with every new technology that goes on to change the world.
3. The institutional adoption of cryptocurrencies is underway
Without Etherium and Bitcoin, NFTs would even exist, let alone sell for millions of dollars. To put things in perspective, 99% of NTFS don’t make the pretty penny, and half of the NFTs on the market are dodgy. Criminals, scammers, and other not-so-nice folk will try to take advantage of Non-fungible tokens.
The sad reality goes for fiat cash, smartphones, the internet, social media, cars, and everything else that people can abuse. However, not everybody wants to cheat and steal for a living. As a matter of fact, illegal transactions make for 0,34% of the total crypto activity, according to Chainalysis’s analysis and a Forbes’ report.
Do you know a system that caters to more criminals every day? United States Dollar comes to mind. More criminals use USD than Bitcoin. However, more people use USD, so the comparison is not the hill to die on, even though it outlines why the “cryptocurrencies-mostly-for-criminals” argument makes no sense. (Even though Donald Trump’s Attorney General loved to blame Bitcoin for national security threats. Disregarding that Donald Trump was probably the worst thing that happened to American national security since 9/11.)
Institutional individuals, including Elon Musk, Jack Dorsey, Wilkenwoss brothers, Gary V, and countless other whales, trust blockchain with their money. Hedge funds are taking positions in Bitcoin. Venture capital firms are raising IPOs for Crypto companies, and the price is soaring.
Self-made often reach that god-like status with smart investments and knowing their way around the market needs and wants. If big players and companies bet on blockchain’s future, who am I to say it’s a fad?
When institutional players adopt new technology, that usually means one thing — Blockchain has a future, and this is probably just a beginning.
4. Coinbase reached a $100 billion in pre-IPO valuation
IPO’s are initial public offerings a company makes when it wants to raise capital on the stock markets. Coinbase, with the help of venture capital firm Anderson Horowitz, is planning to go public later this month.
Coinbase is one of the largest, most practical, and legal cryptocurrency exchange markets on the internet. The market value of the Coin base is speculated to be around $100 billion, according to Axio’s report. The enthusiasts believe the valuation could potentially reach $200 billion before the IPO launches in late March 2021.
The IPO will propel founders Brian Armstrong and Fred Ehrsam, together with the board of directors and early employees, to the top of the food chain, as they’ll become the wealthiest people on the planet.
Kathryn Haun — an ex-federal prosecutor with the US Department of Justice, who focused on fraud, cybercrime, and corporate crime, working alongside the SEC, FBI, and Treasury — is sitting on Coinbase’s board of directors and actively spearheads the IPO.
If a federal prosecutor and ex-government heavy-weight official supports the future of blockchain and Non-fungible Tokens, then surely it’s not a fraudulent scam. Here’s a Tim Ferriss interview with Kathryn. You’re in for a mind-shifting hour if this is your first time listening to Kathryn speak.
5. Welcome digital sentimental value
Gary Vaynerchuck asks this fan one question every time the NFT debate comes up, “do you or your kid value your in-game items? Would they pay money for them?”
If you’ve ever played a video game, you know that some in-game items, usually including skins, collectible items, and rare actions, cost money. In the days of World of Worcfrat, you could buy weapons, gear, and other expensive items on the in-game market. Players would sell their characters and other rare valuables for thousands of dollars.
The stakes are higher today. Fortnite players can splurge $2,935 to buy every item on the shelves. Entropia Universe, the largest online game you’ve never heard of, has recently witnessed a $6 million transaction for a virtual planet.
So why would people buy all this? Most of the time, it’s about sentimental value and feelings. We do a lot of things to preserve and cement the good memories of when we felt safe, happy, and comfortable. NFT’s are everything but crazy in that regard. You can store your pictures, music, videos, and other sentimental valuables on the blockchain virtually forever.
Here’s how Valuable explains why people throw crazy money at Tweet NFTs.
The tweet itself will continue to live on Twitter. What you are purchasing is a digital certificate of the tweet, unique because it has been signed and verified by the creator.
“Why would I pay to own a tweet?
Owning any digital content can be a financial investment, hold sentimental value, and create a relationship between collector and creator. Like an autograph on a baseball card, the NFT itself is the creator’s autograph on the content, making it scarce, unique, and valuable.”
— Writes Valuable in FAQ doc.
6. Everything was a fad until it wasn't.
Internet was a fad in the 90s.
Many companies went underwater in the early 2000s with the dot com crash. The bubble was real. If you’ve been an economy major, then you’ve probably read that recession and bursts usually happen to purge the economy of bad business. If nobody needs landline phones anymore, maybe we don’t need 10,000 companies trying to sell us telephones.
The economy has a Darwinistic way of purging the foul business, but somehow it's a natural occurrence. Many people will get hurt in the NFT market. I assume we’re about to see a massive expansion and swift contractions. The snake-oil companies will go underwater, and we’ll get the Amazon, Google, and Apple of the crypto world.
Please, don’t gamble your house and kids on the NFT markets just yet (even if you have a world-changing idea.) The reason why the market is so exciting is that everything can happen. You can wake up a millionaire tomorrow, or you can burn a hole in your wallet. Approach with care. (Also, this is not investment advice, quite the contrary, don’t gamble with more than you’re comfortable losing.)
However, enough attention to solutions to real-life problems will bring ideas into the mainstream sooner than later. The journey, however, is probably going to be bumpy.
7. NFTs are not Tulips from 15th-century Dutch bubble
I loved using Tullip Mania as an example to discredit Bitcoin in its early days.
The price of a single tulip peaked in 1637 and came to roughly $700,000 (adjusted for centuries of inflation). Tulips are lovely flowers, don’t get me wrong. However, paying 15x the average annual income for a flower bud was mental. Tulips are planted, and holding value in something that can easily die and root doesn’t make much sense. The whole tulip market came crashing down the same year, erasing billions in value.
NFTs are not tulips for several reasons.
- You can prove your ownership over a digital asset at any time in the future.
- Creators record contribution and ownership over an asset forever.
- The original author can receive payment perpetuated through his whole life without a legal team or blood-thirsty battle with shady agents, accountants, and paginators.
- Blockchain is tackling more than 30 daily problems, and technology is becoming a central focus for many governments around the globe.
I can continue, but you get the gist of it.
NFTs are more than pretty pictures on a computer screen.
Image credit: author