Originally published on The Voyage newsletter on January 4, 2022
NFTs are not just links to art pieces and collectibles that are bought and sold for absurd amounts of money. They are a fundamental building block of the next era of the web.
Entrepreneur and investor Chris Dixon lays out how are only beginning to scratch the surface of what NFTs can be just as we were only scratching the surface of what websites could be for over a decade before websites allowed users to generate content. Most of what we see today are art and collectible NFTs leading people to believe these are the only use cases.
He argues that the best analogy to Web2 would be to think of NFTs as websites that are super flexible and can represent almost anything including art, music, code, access, and really anything.
NFTs are boxes on the blockchain
Another analogy I recently heard of NFTs is to think of them as boxes on the blockchain that can contain anything.
The critical difference between Web2 and Web3 is ownership. Web2 doesn’t allow for any sort of internet-based ownership. Web3 has fungible tokens on blockchain networks that can be exchanged for one another or a currency that can be exchanged or anything. NFTs (non-fungible tokens) are a new and unique digital primitive that represents ownership. NFTs allow users to collect objects on their wallets and benefit from the objects if these assets increase in value. A new benefit that was previously reserved for tech companies in Web2. In other words, when purchasing an NFT, you own the box and the contents inside.
In this Tweet thread, Dixon lists 7 types of NFTs.
Chri Dixon's Tweet thread
Access - Tickets that give access to private venues
Redeemables - Exchange for physical or digital goods
Identity - No centralized database to hack and potentially reveal selective aspects of identity like credentials
Web2 databases - Own your data stored on databases and take it with you if you change platforms
Today, artists are doing some interesting experiments with collectors and others who own their artwork. LOGIK an NFT artist and Creative Director at Google, is creating experiences for his collectors. He’s done things like giving away artwork to collectors who have owned his NFTs for a long period of time. Others allow collectors access to a private Discord channel where they can engage with the artist.
But again, while NFTs are growing in popularity through art and art ownership, the true revolution NFTs provide is user ownership of the internet. We see an interesting dynamic emerging with NFTs. Currently, anyone can download the jpeg or gif that is the image protected by the NFT. But no one will pay you millions of dollars for it as they might for the original NFT. The community has agreed that the NFT contains the value and not the file itself. There is no equivalent to this outside of the digital arena and it’s partially what makes it so challenging to wrap our minds around the drastic difference between Web3 and any current system.
The value of an NFTs is not held up by copyright ownership. In fact, you can own an NFT and not own the copyright. That would be handled through legal / governmental processes. I have noticed that NFT marketplaces currently allow NFT creators to designate copyright attributions to their pieces, so that’s something.