By J. Ferguson and M. Ferrandi
Posted February 24, 2022
In the fourth and final instalment of our series introducing crypto, we explore a couple trends that offer a hint at how this technology may shape our world in the future.
During 2021 there was a significant increase in the number of articles about “Non-Fungible Tokens” or “NFTs.” But what is an NFT? A “fungible” item is one of many identical items. In the crypto context, Bitcoins are fungible because they can be replaced or exchanged with an identical one of the same value. On the other hand, an NFT transforms digital content into a unique asset which is linked to the blockchain, electronically “signed” by its creator, and ready for trade.
The uniqueness and tradability of NFTs has created real uses in the worlds of art and collectibles, often with stunning results. For example, in March 2021, the auction house Christie’s caused a stir when it sold an NFT created by the artist “Beeple” for an astounding $69 million.
Some other sales which caused headlines were:
- The first tweet ever sent out by Jack Dorsey (co-founder and former CEO of Twitter) sold (as an NFT) for $2.9 million.
- A video clip of a LeBron James slam dunk sold for over $200,000
- In the ever-present internet fascination with cats, a decade-old “Nyan Cat” (which is an image of a flying cat with a Pop Tart for a body) sold for $600,000.
The Internet’s fascination with cats spawned the first ever NFTs to be traded, the so-called “CryptoKitties” in 2018:
While (to us) it was initially hard to understand the attraction of digital collectibles, it may be no different than the traditional world of collecting: people who collect trading cards do it for the joy of collecting, not necessarily for the ability to “share” the physical card. Many art collectors do not collect to display their artwork – they experience great pleasure in the process of choosing and creating their collection.
The evolution of the NFT market has opened new markets for artists and the creative class. Since they do not need intermediaries to sell their art, NFTs offer the promise of a new avenue for everyday artists to make a living off their art. Armed with a digital wallet and access to the blockchain, artists and creators can connect to an NFT marketplace to upload and convert their images into an NFT or crypto art. Some of the most common NFT marketplaces include OpenSea, Mintable, Nifty Gateway and Rarible.
NFT ledgers claim to provide a public certificate of authenticity or proof of ownership, but the legal rights conveyed by an NFT can be uncertain. NFTs do not restrict the sharing or copying of the underlying digital files, do not necessarily convey the copyright of the digital files, and do not prevent the creation of NFTs with identical associated files. In February 2022, a major NFT marketplace suspended sales of many NFTs for fear that sellers and artists were not one and the same, highlighting problems in this space that still need to be overcome.
In October 2021, the company formerly known as Facebook made headlines when it changed its name to Meta. While the motivations for the name change are up for debate, one thing is for certain, the change signaled a new corporate strategy geared towards the metaverse. But what exactly is the metaverse?
While it may sound like a new term, the ideas underpinning the metaverse have been around for decades. Simply put, the metaverse embraces the concept of virtual reality, where users create a second, digital life online that continues in real time even when the user is not logged on.
While fans of the video game the Sims may be asking themselves how the metaverse substantially differs from the online world they have been a part of for the last two decades, the use of blockchain and Web 3.0 technology is what sets this trend apart from other alternate reality video games. It is the use of this technology that underpins crypto that may help to bridge the gap between the metaverse and the real world, potentially expanding the digital economy. For example, in early 2022 a Vancouver-based company completed its first virtual mortgage paid for in cryptocurrency for a plot of land on the metaverse.
While still in its early stages, the possibilities the metaverse offers are vast, as users can create lives, friendships and experiences that may not normally be possible in real life due to their circumstances. Do you want to tour the world during a pandemic, attend a concert from one of your favorite musical acts at 3:00 am, or test out a product before you buy via a 3D virtual tour? Each one of these may soon become possible by simply putting on your augmented reality-virtual reality (AR-VR) headset and entering the metaverse.
Criticisms of the metaverse are numerous, from it being a poor substitute for the real world to it having a problem with sexism and sexual harassment to companies like Meta trying to monopolize the space for monetary gain. Yet despite these and other criticisms, the metaverse presents opportunities for users and entrepreneurs alike beyond simple in-game payments and subscriptions.
As we come to an end our beginner’s exploration of the world of crypto, we hope we have cut through the hype and expanded your knowledge. As with any burgeoning field, there are many possibilities and threats that make it both exciting and cause for concern. It remains to be seen what the future holds for crypto, but one thing is certain: it won’t be going away any time soon.