Subsequent to the covid-19 'black swan' event that saw the bottom fall out of the crypto markets in March 2020, we have seen a huge resurgence across the market generally. Nowhere has this been more evident than within the sublime rise of DeFi - heralded as a 'game-changer' in terms of how the cryptosphere will develop in the future. I concur with this assessment, since DeFi offers a plethora of options to diversify exit strategies rather than simply taking profits and converting them back into fiat.
Hot on the heels of DeFi's unbridled success is the 'new kid on the block' called NFTs, or 'non-fungible tokens'. Unlike cryptocurrencies, non-fungible tokens are not freely reproducible. Rather, each token is issued as an exclusive, or limited edition, with some form of attribute or value associated to it.
The easiest comparison to make between 'real-world' and the cryptosphere in respect of NFTs is something like baseball or Pokemon cards or Top Trumps. These are highly collectable cards that hold a distinct set of attributes, classifying them by rank in accordance to the values of those attributes, perceived popularity of the character, and/or scarcity.
Most people do not need to be reminded just how valuable an original edition Pikachu or Babe Ruth could be, and this for me underpins the justification for the NFT market. I am a fervent believer that this is going to be one of, if not the 'next big thing' in crypto, and this post is a purely subjective narrative as to why.
Put simply, there is something very innate and intrinsic about the human condition to collect and hoard things of value. Whether its cavemen finding ways to preserve meat and store firewood, coin or stamp collectors, baseball card enthusiasts, Pokemon, vintage cars, antiques and art, or indeed anything else.
Within every market that has ever been created by humanity, a secondary 'collectables' sub-market has been borne. Humans have a strong emotional attachment to collecting, observing and showing off their wares. Art galleries and museums globally are some of the most sought-after experiences in tourism.
However, begrudgingly or otherwise, humans also eventually always move with the times. Older generations embrace and interact with modern technology like never before and our general collectivist actions and behaviour as a species generally fits in with an embrace of the digital age, with digital files replacing hard physical copies of arts entertainment such as computer games, music and film.
Blockchain technology and specifically the NFT sector offers an opportunity to easily and instantly immortalise entire collections in digital catalogues, immutable and secure. Whether its the ownership deeds of a 1994 Ferrari F40 LM or a first edition rare mint Machamp holographic Pokemon card, ownership rights can be secured on the blockchain. What is more, it also facilitates an opportunity for people to be able to securely share the joys of their ownership with the rest of the world in a way that is easier and safer than ever.
How many of you have sought to show-off something you cherish to your friends, family and loved ones, only to be deflated by a distinct lack of interest? I'm sure this is an experience not isolated purely to myself! How great would it have been in those moments, for global interest to come to us and admire our wares with interest and a hint of envy?
NFTs offers the opportunity for people to both securely possess rare, vintage, valuable or otherwise collectable items in a way that also allows them to publicly share that collection with the rest of the world.
Granted, most people fall into one of two very broad categories along the lines of 'hoarder' or 'disposable consumer'. The technological progression of recent decades has seen us shift towards a much more disposable consumerist economy, especially in the West.
However, this is now changing. With global interests focused on reducing carbon footprints, nations such as Wales are putting so-called green 'circular economies' into practice, with the aim of reclaiming and re-using as much material as possible, avoiding landfills and essentially using reclamation and recycling as a tactical hedge against the extensive damage covid-19 has done to both national and global economies alike.
Throughout covid-19, performing arts and entertainment industries have been amongst the hardest hit, and NFTs present a great opportunity for these industries to also flourish in another direction.
For example, I see magnificent scope for musicians to counter the digitised industry and the reduction in the sale of physical records by releasing animated music videos or artwork as NFTs to coincide with purchases of their latest single/album.
We have already seen some hip-hop and rap artists get involved in NFTs to a large degree, with some eye-watering figures already paid for NFT art by prominent figures of contemporary art.
NFTs coincide also with another technological advancement in Augmented Reality. I have personally attended some AR art galleries in the past, with the art coming to life via the use of a phone app such as Eye Jack. This offers magnificent opportunities in the NFT space for emerging contemporary artists to take modern art in an entirely new direction. It also offers an opportunity to breath a fresh sense of new life into older artworks, potentially bringing them back into prominence in the modern day.
For sure, we are moving step by step closer to a fully digitised economy. As those steps turn to leaps, few industries are more well positioned to take advantage of this than NFTs.
What are your thoughts on NFTs?
Do they represent huge value for the future, or are they just a fad?
Let me know in the comments!