This is a blog post of various thoughts notes from the past few weeks when diving into NFTs. Those past weeks also were the spark of inspiration to start Clubcard as a side-project.
The main reason for writing this post is to collect and evolve my thoughts on what NFTs are to me and if they serve any use from a broader value-creating sense. I've learned that I cannot judge a new technology before really diving in deep. And judging is especially hard when there are such extreme opinions on the technology from various sides of the interwebs.
So bear with me, as this post will start a little strongly worded, but there's a little twist in the middle!
So let us begin. NFTs are stupid
Yes, first of all, I do think most NFTs are mainly stupid because you can just right-click the image and save it as a JPEG. And the people who own them attribute a lot of value and importance to owning them. Technically, an NFT is just a link to a JSON file that contains some data (and usually an image). Based on the conversation on Twitter, it seems most NFTs holders of colorful semi-generated apes, lions, monkeys, and punks are tapping each other on their backs they hold an NFT.
"Ok, but you're not getting the point.", the common response. "It's not about the pixels or just about having an image. It's what owning the image on the blockchain REPRESENTS. It's about the community AROUND the NFT." And for a subset of NFT holders: It's a way to capture value early and make some easy money down the road.
Ok, so well congrats, you just bought yourself into some rich people club on a Discord while you could have helped 10 families out of poverty for a year. (Judging on the cost of purchasing an NFT and the accompanying transaction costs) Congrats! You now have privileged access to some Discord with other rich people. Congrats on participating in the biggest new online Casino there is if your only reason to buy the NFT is to sell it at a profit a little later.
So that summarises my current opinion on some (most popular) art-like NFT projects out there. Or at least, it seems to be the prominent vibe radiating from people holding those NFTs. And I don't judge you from spending your $50k on an expensive image with access to a Discord channel. But yeah, maybe I kind of am.
But then you dive in a little deeper... You look beyond the image. You figure out the inner workings of an NFT and how other more niche projects are approaching things.
And that's when a whole new world opens up.
For me, it started with learning the logic around royalties with most NFT smart contracts. Because every time an NFT is sold and traded, doesn't the original author get some kind of royalty? So NFTs can actually be used to appreciate the origin of the product behind the NFT. And more so, keep rewarding the original artist in some kind of way. Something that wouldn't happen if full ownership was always transferred in the real world with physical pieces of art.
So I don't think your reason for buying an NFT should be that you can make a quick buck down the road. But I do very much appreciate someone purchasing an NFT for giving back appreciation to the original artist. Something you aren't doing when pirating a piece of art by right-clicking and saving it as JPEG.
The last thing about NFT is that there's no custodian or gatekeeper to trade NFTs. Ownership can switch to something or someone else without the original artist being aware and without some kind of gatekeeper limiting the options on how, for what price, and to whom an NFT is sold.
This led me to think even further about the potential use cases of NFTs. And here's a few ideas that I came up with about how I think NFTs can serve some significant value beyond the image.
How I think NFTs will get more and more awesome
This last part of the post only lists a few samples that were in my notes up to writing this post. But I think while I continue my deep-dive into NFTs a lot more samples and use cases will open up.
I intend to open up a Use Cases page on the Clubcard website to collect existing and possible future use cases for NFTs.
Tarantino movie stills sample
So there's this larger interview panel with all kinds of NFT people in the following video. And one part of the video stood out. In this part where Tarantino is in discussion with another panelist on the triviality of "just having a movie still as NFT" and the "It's just right-click, save" argument.
The thing that hit me was the line about "there's some code inside the NFT. And only if you have the real Tarantino NFT of a movie still, you can have a yearly dinner with Tarantino on the movie launch date".
NFTs as access. The image is only the representation.
Gary Vaynerchuck's VeeFriends
The VeeFriends NFT project by Gary Vaynerchuck is interesting as it combines two things:
- He has a lot of superfans. And VeeFriends has this typical "trading cards" feeling to it. By buying one of the VeeFriends you can feel like you own a part of Gary Vaynerchuck. So Vaynerchuck gives his fans a device to feel being part of his world a little bit.
- The VeeFriends are not just nice trading cards. They also grant you access to his future conferences. So if you own the NFT you get a free access pass. I'd imagine Gary's community and conferences will be perceived as increasingly valuable. So, tired of going to his conferences as VeeFriends owner? Sell the NFT to someone else at a profit. Gary helps you make money.
Rareblocks TailwindCSS component library
Now, this is where it gets interesting. Rareblocks is a project that provides TailwindCSS UI components with beautiful designs.
If you buy the Rareblocks Access Pass NFT you get lifetime access to all new designs and tools coming out of the project and the community.
On top of it, you can participate in the community and vote on designs, get help on the Discord, build community tools, etc.
So not only does the NFT serve as a way of paying for access to a premium product. It also allows you to increase the project's value by actively participating in its community. And the good thing is that the value doesn't just increase because you make the NFT itself popular (Read: Cyberpunks, Apes, etc.) - you actually create value with the other members of the community just like in an open-source software project. But now you can get paid by the value increase of the NFT you own.
Mixing with the physical world
A few things that you can imagine if we bridge NFTs to the physical world (did someone say Metaverse?):
- Give someone an NFT because they bought a thing in your physical store. Other partners, stores, service providers can use the NFT to also grant access to their services. No need to do some kind of authorization with the original seller. The NFT is enough to provide proof of ownership without the administrative overhead of having the original seller as the custodian.
- Use an NFT to grant someone a reproduction license. If you have the "Print Reproduction NFT" of a piece of art, you are allowed to create copies and physical reproductions. The NFT to reproduce will get more valuable as the original piece of art gets well known.
So besides the obvious things (trade NFTs, royalties to the author, etc.) I think NFTs serve a great use in "scaling" community value creation. A business doesn't have to exist anymore of just people "from the business". Anyone can use an NFT that the business created to participate in creating the value of said services or products, and also get rewarded for them.
It's like an open-source project but with the added benefit of being able to reward people for their participation over time with actual currency.
One worry I have is that virtual scarcity around NFT projects results in an even more capitalistic view around NFTs than there currently are. We need to drop the "rich people club" mechanic that seems to be natural to NFT projects at this moment.
I mean, why would you limit access to your ever-increasingly valued services to only a limited group just so you can be a billionaire instead of a millionaire. I hope NFT creators will open up their services to a wide group of people, instead of playing the exclusivity game, if there's no cost or scalability reason to do so.
I like the Rareblocks project for this. While purchasing the Access Pass NFT gives you access to a lot of value. They also sell the TailwindCSS UI kits for $20/piece.