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Return of the planet of the Apes🐵 | WTFs an NFT?
Welcome to Wisdom Letter #105.
Today we are talking about Non-Fungible Tokens.
You know, stuff like these Ape avatars -
But first, if you’re new, sign up -
We have structured today’s post like a mini-course on NFTs.
So you start from a very basic definition and work your way up the ladder.
And if you’re already several steps in, you can skip the initial rungs.
The Amateur Stuff
Before we get to the Ape, we must go back to the Monalisa.
You know Leonardo Da Vinci’s 16th-century masterpiece.
The lady with the mysterious smile (or smirk!)
Why do you think this one painting gets so much attention?
There can be hundreds of copycats painting the same thing without getting an ounce of attention.
Why is that?
It’s because Da Vinci said this is the one. And everyone believed him.
And even if hundreds of people owned copies of the Monalisa, only one person could own the main ONE painting by Da Vinci.
There can be a billion paintings from a million artists, but there can only ever be ONE Monalisa by Da Vinci.
Da Vinci’s signature gives non-fungibility to that ONE painting.
Da Vinci’s death gives scarcity to that ONE painting.
Non-fungibility and scarcity give exclusivity to that ONE painting.
Exclusivity gives it Value.
But we don’t live in the 1600s anymore.
We live in the internet age.
And how do we replicate the same exclusivity on the internet?
A JPEG file is the internet version of a painting.
But you can replicate a JPEG a million times, how do you know which is the original?
You put it on the Blockchain.
You create a hash of the original jpeg and put it in a distributed ledger (mostly ethereum) and get an address to it.
And now there can only be one version of the original file, and you(the creator) certifies that.
I know it’s getting a bit hazy😅
Probably a different format would help.
I talked about NFTs in this nifty 9-minute audio.
This is a new platform I tried this week - Racket.
It only lets you make 9-minute audios, so it’s great to listen to value-packed content in less time.
I explain the very basics of NFTs to a friend who had no idea what they are.
Try it out👇
The “Journalisty” Stuff
So instead of an amateur like me try to explain such a complex topic, I leave it up to the experts to dish it out to you.
Watch this video by Johnny Harris -
An artist called “Beeple” sold a $69M dollar NFT earlier this year.
His story is a good lens to understand the concept as well.
Listen to this planet money podcast to find out about Beeple’s story -
And don’t miss Beeple on Instagram.
He has been putting one picture on the internet every day for 14 years straight now.
The Deep Dives
Okay, let’s talk about the monkey business now🐒
So we understand how creators create NFTs - it’s basically a modern version of Da Vinci painting the Monalisa.
Now, think how exclusive communities used to run back in the day?
Or even today?
How did people prove membership to a club?
They held some sort of token that was handed out only to the members.
Something as simple as a certificate can work for that.
Like a club membership.
Or a degree?
Think about your college degree - it’s a token that an exclusive list of people holds.
It takes time, money, and effort to get it, and you can use it to signal prestige.
We will talk about the tokenism of a university degree some other time.
But you get the idea.
Tokens in “the real world” are used to signal membership to an exclusive community.
And the higher the exclusivity, the higher the prestige and the value of the token.
And how do you replicate that in a digital world?
You issue Non-Fungible Tokens🤷♂️
They can be pixelated monkey images or even just gray rocks -
Okay, again, let’s get some experts to understand this.
Read these pieces to go deep into the topic (arranged in order of complexity & time to read) -
So should you put your money into NFTs?
Or should you mint your own?
Don’t know, I think we are too early in the hype cycle for now.
As always, Twitter is the best place to find the most important arguments on both sides, so it makes sense to see what people are saying on Twitter -
But first, did you know that this is the first-ever Tweet on the platform, from the CEO of Twitter.
And it was sold as an NFT🙃
Now, let’s look at the chatter, try and go in the replies of these Tweets to watch the show😉 -
Joe explains it well, at least better than me🙈
Thank you for reading🙏
We tried a new format today, let us know what you think of it.
We want to dive deep into complex topics like these more often.
Hit the like button and let us know.
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See you next week.
Ayush & Aditi
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