Fortune takes a deep dive into the world of non-fungible tokens.

NFTs: Past, Present, and Future

Photograph by NICOLAS ASFOURI—AFP/Getty Images

Fortune_Crypto

NFTs: Past, Present, and Future


a lot of digital art has been undervalued for decades, There's just so much going on in this space right now. The punks of purple hat for my favorite, we are looking at a very frothy investment market overall if you're buying FTS that are representing pieces of art, Sotheby's will sell it to you increasingly the younger generations are very comfortable purchasing and spending money on things that they cannot hold in their hands were just seeing everyone get excited about it and use it and price it when in reality it is just the technology, it is just a tool. Mhm. In N. F. T. Is basically a new kind of file type except instead of encoding some like video information or imagery, What you're basically doing is you are logging a particular item onto a Blockchain and basically announces your ownership of that thing to the world. So in order to buy your created an FT, you essentially need to first have some kind of Cryptocurrency wallet that usually comes in the form of a theory. Um So in order to actually then buy or sell said artwork or deed you have to go on, then a marketplace like open C. To trade it. So NFC stands for non fungible token fungible basically means that you have an asset that is swappable for any other thing. It's a commodity like a dollar or an ounce of gold. If I give you this dollar and take another one, it's the same thing right? It doesn't matter which dollar I have. But when something non fungible is one of a kind, it's a piece of art that can't be replicated, it's something unique to you. Ethereum has a Cryptocurrency called ether associated with it. But within a theory in one thing that makes it such a special system is that you can build new currencies new tokens on top of them. But the N. F. T. Was an innovation beyond this that said okay now we have a token that you can't swap for any other token. It is a unique token and your possession of this one token is special in some way it represents something individual. So the concept is when someone releases their NFC their token that represents whatever it is, that a krypto kitty or maybe an NBA highlight or a piece of art, then there's the exchange the re exchange value where people start auctioning it off and that's when you see the value really go up in FCS have more recently been associated with artwork. But the reality is it can represent anything. And so its proponents and it's bowls really see it as a symbol of what all of the centralized finance could potentially be. So we see the concept of the N. F. T. You know as far back as 2012 but it didn't get very popular until 2017. And that's when people really started building these tokens and exchanging them. When NFC really had their viral moment. It was a thing called crypto Kitties. Again these little cartoons these cartoons cats that you could breed. They were one of a kind and then resold and some of those ended up killing for hundreds of thousands of dollars. And that's when this concept really took off. Around the same time. There was an early N. F. T. Project called crypto Punks where there were these sorts of pixelated images of faces that were generated and people started buying and selling them. And now if you own a crypto punk, I mean you're basically a millionaire. Uh these are selling for outrageous sums of money. But really The sort of sonic boom event was when people sold his $69 million dollar sketchbook called every days through the Christie's auction house. This was something that everybody noticed that remains the highest selling N. F. T. Artwork to date. A lot of consumers see it as this get rich quick scheme and it is for a lot of folks. But unfortunately you can make as much as $69 million or you can make absolutely nothing and lose your money because you have to pay transaction fees and you can buy either to actually create the N. F. T. In the first place. A particular NLP is only as valuable as somebody else is willing to pay for it. And so by nature these things are going to happen in fads in waves waves of interest. The thing about digital content before digital scarcity was really you couldn't truly own it. Take for example if I bought a book on a Kindle, I could use it on the amazon platform. But when I was done with that Kindle book or that piece of digital content, I couldn't do what I could do with it. If I owned a book like I owned in the physical role I couldn't give it to a friend, I couldn't lend it out to someone, I couldn't sell it second hand. Now all of a sudden I could have content um in the form of its digital book that actually I own really anything that is collectable and that can be digitized now that you have digital scarcity. You can really own it for the first time. In a way that you couldn't before, when you think about N. F. T. S. When you hear about them in the press, you really hear about these huge pieces of art that have been folds right for 60 plus million dollars. But there are a lot of smaller N. F. T. S. You can buy. So with NBA top shots, you can buy some sort of highlight for you know, a few $100 if you want to and then exchange it for however much. But you can also buy a Lebron James uh you know, winning basket uh For upwards of $300,000. So there's really quite a range, fortunate put together a list of the top 50 N. F. T. Influencers. We're calling it the nifty 50 you've got Mark Cuban. He has been out there constantly talking up N. F. T. S and their potential. You also have people like grimes, the musical artists and a lot of electronic musicians and DJs including Justin Lao Blau. I was really fascinated with how N. F. T. S. Could apply to music. So I teamed up with my art director Slime Sunday. We created an alias called Ssx Blau. And we began to just issue audio visual art with music that I hadn't released to the public. So it was like exclusive audio visual content that we took it. Um and the response was insane. We did over a million in sales in 2020 alone. So enter 2021 after the success of the single, I was like well what happens if we do it for an album and let's experiment with all these other things. And we somehow were able to generate $11.7 million dollars in the sale of um my first debut album in tokenize for I was like whoa there's something here that no one has really explored yet. Mhm. Differences in intellectual property that has the ambition to one day be named in the same breath as transformers and power rangers and hello kitty. So I think of it that way but I just view it as N. F. T. S. Being my launching pad, the way harry potter Saipi was launched through books or the way Angry Birds was launched through an iphone game. The friends are a series of 268 currently characters. So it's a marvel Disney like universe, very vast. But I love that my origin comes from N. F. T. You know, you think back to those Disney cells right that are collectible or the first sketches of Bart Simpson. It's um really really cool. So they came out on May 12 and they started off between 10 and three Ethereum and then Dutch auction down to a floor Somewhere a week or two in. They were all sold out I think 31 million in revenue in the original sales. Very substantially successful right now on the secondary market it's been extremely active. Um and so if you go to crypto slam right now over the last 30 days There has been $7.4 million dollars worth of secondary sales of the bread. So it is establish itself as one of the more significant um projects in the space which I'm incredibly humbled by. You also have lots of artists now. These are people who have been making graphic designs, have been posting their artwork, their digital art online for a very long time and they've built followings, they've built devoted fans who have tracked their work on places like instagram but you know up until now they haven't been getting compensated for that work. Now N. F. T. S for the first time are giving these digital artists a way to make money off of their hard work. Oftentimes an artist will sell their piece for let's say $2000 and then something happens they become more famous. Uh The work ends up being $2 million. They don't get any of that extra money. The way that the industry works now with N. F. T. S. They can keep collecting a 5% fee or or whatever it might be. Each time that piece of art resells, my partner had just started getting into three D. Artwork and they were meeting all these three D. Artists and all of that community was just talking about N. F. T. S. And what they were, what they were going to make. And it was really intriguing. But I was seeing it through the lens of the three D. Art community. So I didn't see many photographers. I didn't see many block artists when I joined the space. So I wasn't sure that it was the type of community for me. I just wasn't sure yet until I met my friend. It sell yard also known as eggshells and she was just this powerful black woman and generative artists who really pushed me to take the leap and make space for myself in a space where I didn't I didn't see myself represented at all. I am 17, I'm 17 years old right now. My my price my my floor for my one of ones is about 1.8 east and that's pretty high that several $1000. But there are a lot of people who would like to sell to that cannot afford that right now. So it's what a lot of artists do is they make these big edition pieces which will be priced at um 100 $100 U. S. Dollars. Or something similar so that many people can purchase them and have it in their collections. Lot of what's missing is education. I mean a lot of this stuff is still very obscure and to get started you need to have some sort of awareness about tech and crypto in general. So I spent a lot of my time trying to educate other black folks, mostly black women. And um I started chiefly with black women photographers. And since then a lot have entered the space thankfully. And they've also been rarely successful. So we spent some months creating an exhibition juneteenth and if t. Exhibition which had a public art shows while it's super cheap gallery N. F. T. In new york city. But it was this room of beautiful afro futuristic block art shown on these big screens and projectors. And it was my debut as a curator which made me one of the youngest curator in the N. F. T. Space. And we also auctioned off the work and all of the work sold. It was a really great moment and I think a beacon of hope for these artists who thought that maybe they couldn't succeed in space. Almost everybody collects something or buy something to show themselves. The fact that that's all going digital no different than all the information in the world. Like digital no different than the way we communicate with each other was forever changed because of digital. The buying of things and the collecting of things Is about to be very understood over the next 20 years. And this is the beginning of it. The public will begin to wrap their head around what it means to own something digital. And start to consider those things special because you're starting to see major influencers of culture, accept this idea of digital scarcity and value it. So whether LFTs are fat or if they're here to stay is really the billion dollar question, right? And when you think about it, we're already living in this world, right? We're already talking to people over slack and zoom constantly. And younger people are really living it through games like Fortnite where that is their social life. That is the way they interact with the world. To this kind of aim where you purchased these digital entities to keep on going. What a lot of crypto investors are banking on is that N. F. T. S are going to become a sort of natural part of this decentralized financial world. They're going to become a way to signify your fandom to show that you're a part of a certain community, a certain tribe. It is going to be validation proof that you belong in a particular community. So many different things can be n f t s and yes, while aspects of it will be faddish, no doubt some of it will be here to stay. Mhm. Oh no.