Why NFTs Will Change Everything
Why NFTs Will Change Everything
Hey everyone,
Over the last decade, cryptocurrencies have fused money with the Internet, shaking the foundations of the global financial system.
Now, a related blockchain technology is reshaping property, community, and the creative process: non-fungible tokens, or NFTs.
NFT sales have been booming lately, but adoption is still in its earliest stages. Most people are learning, and only a few have direct experience.
What gives NFTs their power? How far will they go? And what do they have to do with Dogecoin?
The NFT Revolution is happening right before our eyes. Let’s explore why it will change everything.
Digital Scarcity
Bitcoin has ignited a revolution in money by introducing the concept of digital scarcity.
While there is no limit to the number of dollars that can be printed, there will only ever be 21 million Bitcoins on the blockchain.
Much of Bitcoin's value comes from its finity.
Like cryptocurrencies, NFTs are digital tokens on a blockchain, but they are capable of being even scarcer than Bitcoin.
NFTs use blockchain-based digital scarcity to represent ownership of truly unique assets.
Each Bitcoin is one of 21 million. NFTs can be one of one.
This added dimension of scarcity is captured by the term non-fungible.
Cryptocurrencies like Dogecoin have the property of fungibility: any Dogecoin can be swapped for another Dogecoin because they are essentially identical.
By definition, NFTs lack the property of fungibility. An NFT can't be traded for an identical token because none exist.
This additional level of scarcity brings advantages and disadvantages.
On the downside, NFTs can be less liquid than cryptocurrencies because sometimes there are just no buyers for a particular artwork or object. This makes them riskier investments.
At the same time, their extreme scarcity can lead to sky-high valuations.
Bidding wars for highly sought-after NFTs have driven some prices through the roof.
Democratizing Art
So far, NFTs have had their biggest impact on digital art: individual tokens prove ownership of 1-of-1 jpeg files minted by artists.
The allure of owning a one-of-a-kind object has caused some buyers to bid astronomical sums for NFTs with historical significance like CryptoPunks and EtherRocks.
Investing in art used to be the exclusive province of well-connected elites.
By merging public, decentralize blockchain technology with art, NFT have democratized the art market.
Suddenly, NFTs have made it possible for anyone to buy and sell digital art. All it takes is an internet connection and a few hundred bucks worth of Ethereum.
NFTs have also made it easier for artists to break into public awareness.
A new generation of creators is eschewing the traditional blueprint for success and marketing directly to the public on platforms like OpenSea.
In the world of NFT-based digital art, credentials count for less. What matters is merit.
NFTs are changing the art game before our eyes, but that's still just scratching the surface of what's possible.
The Tokambrian Explosion
The potential of NFTs extends far beyond digital art.
We could be in the very early stages of the tokenization of everything, also called the Tokambrian Explosion.
Digital tokens can be used to establish blockchain-certified ownership of anything: real estate, wine, sports highlights, physical artworks, and even tweets and Snapchat filters.
The programmable nature of digital tokens has the potential to enhance creation and ownership of the things the tokens represent.
One benefit of NFTs is that they cut out middlemen and give creators the ability to market work directly to the public.
In the legacy system, athletes (agents), musicians (record labels), artists (galleries), and other makers are used to sacrificing some of the value they create to third parties as the cost of doing business.
NFTs put power back in the hands of creators because the cost to mint and sell them on the open market is infinitesimal compared to third-party marketing. Makers get to keep the value they create for themselves.
Mega-stars like Steph Curry, Paris Hilton, Logan Paul, and Odell Beckham Jr. have flocked to NFTs because they recognize the advantages blockchain offers for creators. As others follow in their footsteps and market themselves through NFTs, the lines between creator and entrepreneur could begin to blur.
Another benefit for creators is that tokens can be programmed to pay royalties for sales on the secondary market.
The legacy system makes no guarantee of future profit from secondary sales. Once a creator sells his work, it's gone for good.
NFTs can be programmed to kick off a certain percentage of every sale to their maker in perpetuity.
An unknown artist who sells an NFT for a couple hundred bucks can still be rewarded fairly if her work later fetches millions.
A third benefit of NFTs is that they allow creations to be fractionalized.
While NFTs represent ownership of unique objects, there's no limit to the amount tokens themselves can be divided.
Fractionalization means that full digital ownership isn't limited to single individuals. NFTs simplify group ownership by allowing each member to record partial ownership stake on the blockchain.
Similarly, communities can band together and crowd-fund aspiring artists by investing in NFTs of early work. If the creator is successful down the road, the whole community can share in his success.
It's still early, but it looks like there's huge upside and limited downside to tokenizing ownership.
Is the Tokambrian Explosion upon us?
Kabosu: Monetizing a Meme
A great example of the benefits of tokenization is found in the story of the iconic meme of Kabosu, the original Doge.
In 2008, Kabosu was rescued by Atsuko Sato, a Japanese kindergarten teacher, who posted photos of her dog to a blog to raise awareness of poor conditions at puppy mills.
Over time, Atsuko's photo was picked up by various internet communities, transcending its original purpose to become a viral meme.
In 2013, one of Atsuko's photos of Kabosu sporting a perpetually amused smile inspired the creation of Dogecoin.
An internet community sprung up around the coin, possibly the first of its kind, with the collective goal of monetizing the meme.
When Dogecoin roared to life at the beginning of 2021, it started to look as if the experiment had a real chance at success.
The monetization of the Doge meme took another step forward this summer when Atsuko minted her original photos as NFTs and auctioned them off to the public.
An NFT of the viral photo was acquired by the art collective PleasrDAO for $4 million worth of Ethereum.
PleasrDAO has fractionalized the NFT into 16,969,696,969 pieces, available on Uniswap and Sushiswap as the ERC-20 token $DOG.
Now anyone can acquire a token representing partial ownership of the original Doge NFT for less than a dollar and own a piece of the Dogecoin history forever.
What does the future HODL?
The future of NFTs is exciting but unknown. The recent past hints at a few possibilities.
NFTs enable new kinds of communities based around digital ownership.
So far, membership in these communities has been a niche pursuit among early adopters, but that could change quickly
Budweiser and Visa have started to dip their toes into NFTs. What happens when tokenized membership programs become the corporate norm?
While companies are playing catch-up, smaller, grassroots community projects are breaking new ground.
NFT communities like Bored Ape Yacht Club and The Doge Pound are creating immersive tokenized membership experiences. Member-owners can take part in constantly evolving storylines featuring airdrops, spinoffs, IRL meetups, exclusive merch, and membership tiers.
The sum total of these NFT-based communities is the Metaverse: a new, emergent layer of digital reality populated by unique, tokenized objects.
Until recently, "digital" was roughly synonymous with reproducible: nearly everything taking place in the digital world could be duplicated, with limited distinctions between one copy and another.
Tokenization changes this. It's as if the Internet is upgrading from a world of mass-produced junk to bespoke digital objects with unique properties and histories.
Virtual reality museums with NFTs on the walls could be closer than you think.
The Doge-Ethereum bridge is another potential catalyst for NFTs.
The bridge will allow Dogecoin holders to swap their coins for equally valuable DogeTokens, which will be able to operate as a currency within the ETH ecosystem.
The #DogeArmy is clamoring for places to spend their Dogecoin, and NFT marketplaces could become a prime venue.
An NFT platform which integrates Dogecoin and DogeTokens could invite a new wave of NFT investors from the Doge community while supercharging the market's capabilities.
The combination of Dogecoin and Ethereum could shake-up NFTs to the benefit of both.
Ethereum creator and Dogecoin Foundation advisor Vitalik Buterin has already hinted that he hopes Doge becomes more Ethereum-like.
Are the two destined to join forces as a supercrypto and rule the NFT space?
The NFT Revolution is Here
NFTs are an emerging asset class with the power to revolutionize property, community, and the creative process.
Crypto and NFTs complement each other in the new digital economy. Like with crypto, it pays to think big and keep an open mind about NFTs while exercising a good deal of caution and a long time horizon.
Dogecoin provides as an early model for NFTs because both are based on monetizing memes and building community around digital assets.
The NFT Revolution is here. Don't get left behind.
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Dogey Treats: News Bites
Dogecoin APY dropped again on Gemini, signaling possible decreased interest from short-sellers
Elon tweeted that the release of Dogecoin core 1.14.4 indicated "good progress" and said adoption of the update was "important."
A poll revealed that 56% of Australians think Elon Musk invented Bitcoin.
Chile is the first Latin American country with access to Starlink Internet. Starlink also provided emergency access Internet to St. Charles Parish in Louisiana after Hurricane Ida.
Southeby's auction house started selling NFTs on September 2nd. The announcement featured an animation of a Bored Ape walking a Shiba Inu.
Bodybuilder and Dogecoin advocate Nick Balazs was profiled in Benzinga.
Venture capitalist and Wall Street vet Jenny Q. Ta was featured in Decrypt for her involvement with Dogecoin.
The Dogecoin Foundation released a statement about so-called Dogecoin 2.0 requesting that it find a new name.
Mr. Beast and Coinbase are teaming up for a giveaway involving Dogecoin.
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Disclaimer: This is not financial advice and I am not a financial advisor. The article above references an opinion for entertainment purposes only and it is not investment advice. Do your own research and consult with a licensed financial adviser before making any investment decision. Do not treat any opinion expressed in this newsletter as a specific inducement to make a particular investment. Content, news, research, tools, and securities symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or cryptocurrency or to engage in any particular investment strategy. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, are not guaranteed for accuracy or completeness, do not reflect actual investment results and are not guarantees of future results. All investments involve risk, losses may exceed the principal invested, and the past performance of a security, industry, sector, market, cryptocurrency, or financial product does not guarantee future results or returns. Dogecoin is a speculative and highly volatile asset susceptible to pump-and-dump schemes.
Disclosure: I currently own some Dogecoin, Bitcoin, and Ethereum. At the time of publication, Dogecoin is around $0.25 per coin.