Ever buy a piece of digital content—a cool outfit or “skin” in a video game, a movie through a video-streaming service, a musical album via an audio-streaming site—and later realize that if you stop paying your monthly subscription fee, you effectively lose access to that content? You might even wonder: Did you ever really possess that digital thingamajig in the first place?
It’s a conundrum that typifies the current state of the Big Tech–dominated web, says Kathryn Haun, general partner at the crypto fund of Andreessen Horowitz, the Silicon Valley venture capital firm. People dish out many billions of dollars on so-called digital goods annually and, all too frequently, she suggests, the tradeoff is a fundamentally unfair one.
“Those are digital goods that you don’t really own,” said Haun, who raised a third crypto fund worth $2.2 billion in June. “The platform owns it—you do not own it. When you’re finished with it, you can’t go trade it. You can’t go sell it. You’re locked into a Big Tech platform.”
Haun’s answer—as one might surmise, given the nature of her investment focus—is crypto. Specifically, she highlights a newly buzzy technology related to blockchains, the public ledgers that underpin crypto coins: so-called non-fungible tokens.
“Everyone in this room should definitely care what an NFT is,” Haun told the audience of executives at Fortune’s Most Powerful Women Summit in Washington, D.C., using a popular acronym for the technology. At one point during the session, a number of audience members raised their hands to indicate that they already own NFTs.
What are they? NFTs are effectively a new kind of computer file type that enables people to make digital content—such as artwork, electronic tickets, or in-game items—trackable and tradable on a blockchain. Fortune, for example, recently sold animated versions of a recent crypto-themed magazine cover as NFTs.
“Until today, the Internet was just one ginormous copy machine—cut and paste, cut and paste—that’s the function of the Internet,” Haun said. Blockchain-powered NFTs, in contrast, enable digital scarcity; they allow people to lay claim to digital content that can be stashed in personal digital wallets, much like the cryptocurrencies Bitcoin and Ether.
The new technology will reduce “some of these huge tech platforms’ power, because now people don’t need those” gatekeepers and middlemen, Haun said. “Crypto is an answer, in many ways, to Big Tech platforms and to centralized tech platforms, and a lot of centralized Big Tech companies are starting to wake up to that.”
Andreessen Horowitz has been pouring millions of dollars of investment into OpenSea, an NFT marketplace privately valued at $1.5 billion as of July. (Fortune hosted its own recent NFT sales on OpenSea.) Meanwhile, big centralized crypto exchanges are getting in on the act. FTX.US, an American affiliate of fast-growing FTX, and most recently, as of Tuesday, Coinbase, have said they will soon debut NFT marketplaces of their own.
“Crypto is about much more than just currency,” Haun said. “It’s about digital goods ownership and how people will own things digitally in the future.”