There are stories of non-replaceable tokens (NFTs) coming from everywhere. It is not without a somewhat overheated part. But the NFT craze Cultural transformation driven by technologyIt suggests, and in the meantime, I don’t know how much I wanted to write an article explaining it.
Indeed, we live in a digital world, so it is already foreseen that our cultural consumption will also move into the digital space. Especially among the younger generation these days, Experiences you can get from something rather than owning somethingThis is being emphasized.
As I wrote in another article earlier, the younger generation has a significant impact on the concept of investment, and it is also very interesting in itself. However, I think there are many more factors to consider when it comes to NFT.
In this article, I will not only look at one culture or a generation’s point of view, but look at what is going on under the phenomenon of the NFT craze, and explain what this implies for the change in the market. This is very important.
The NFT craze doesn’t just mean the emergence of a new market where digital art, video, music, and tweets are traded. It does not mean only the emergence of new financial assets that can benefit from NFTs, such as tokenized securities and insurance. All of these changes could potentially bring about big innovations, but in fact I’m paying attention to the emergence of another market. It is a market in which’feelings’ that we have not been able to properly price up to now are traded.
This means that beyond the emergence of a new market, the appearance of communication and relationships between individuals can be changed to something completely new. It is possible to completely change the business model of not only culture but also all service fields, and it is also possible to resolve the injustices and weaknesses of the existing web structure.
NFT craze
If you want to know what NFT is, please refer to CoinDesk US’s reporter Olrich Rich for an excellent explanation. I also highly recommend Jeff Wilser’s article on the workings of cultural forces related to the NFT. To put it simply, NFT is a literally non-replaceable token based on a blockchain that can represent anything in digital form while having a peculiar property.
CryptoKitties, which can collect and raise cat characters, have been attracting public attention since 2017. Dapper Labs, the developer of CryptoKitty, has recently attracted media attention for the success of the NBA Topshot, and recently attracted a $250 million investment in a $2 billion enterprise valuation.
Over the past week, athletes, fast food companies, and mainstream media have entered the world of NFTs, expanding the market. On the 11th, Christie’s, a 250-year-old auction company, sold digital artwork for over $69 million.
Many people rate this phenomenon as similar to 2017 when the ICO (Cryptocurrency Disclosure) craze blew. At the time, people expected that crowdsourcing-based token sales would bring a new revolution to the capital market. Even for an idea without a good plan, if the idea alone could attract millions of dollars in investment, stock market or bank loans are no longer necessary.
Along with the recent surge in interest in the NFT, the situation in 2017 resurfaces, and concerns and expectations coexist. However, the bubble now is different from the bubble at that time. At the time of the ICO craze, investors did not fully understand the blockchain, tokens, and functionality. However, the current NFT craze is related to culture. Public interest is also higher than three years ago.
Ownership and pride
Another reason why the recent NFT craze is different from the situation in 2017 is that the targets of tokenization are different. The story becomes more interesting from here.
The types of assets that can become NFTs are very diverse, but until now, attention has been mainly focused on digital artworks, videos, and music. But usually, these things are often available for free on the Internet. Why do you have to pay money to buy it?
No matter how much the original is better, there are only slight differences in terms of resolution and functionality, but not enough to explain the difference in price. The reason NFT is sold to people The desire of’ownership’This is because there is.
This is why art works have been traded for hundreds of years. However, until now, there has not been a liquid market. In addition, the fact that in the physical world you can only appreciate a specific painting or sculpture affects your decision to purchase art.
In the case of NFT, the pride that comes from the fact that it owns something among the elements of monopoly rights is extracted, and transactions are made based on this.
Let me give you an example. Let’s say I bought an NFT representing one of Nick’s tweets, a CoinDesk US colleague. The tweet can be viewed by anyone, not just me. I have a tweet converted to an image, but that doesn’t mean that the image is better than the original tweet. However, I paid the price by converting the pride of making this Tweet into my own money.
Then let’s imagine that one day Nick offended me (it doesn’t seem like a good example, since it doesn’t actually happen). Theoretically, there is a liquid market where you can exchange the pride of owning these tweets for money, so this market makes it possible to dispose of Nick’s tweets at a price different from the original price.
In other words, in theory, you can buy and sell in the market at a price for your emotions. If so, the business model of the platform and service will have to be completely different, and the way the market will operate in the future will be completely different.
Determining the price of an appraisal
In the purest form of the market, prices are determined by consensus among market participants. And so far, we have not had the technology to extract intangible objects and buy and sell them in the global market.
In theory, if we can determine the price for’the pride of ownership’ in the market through NFT, we can soon connect with’the satisfaction of the service,”the feeling that we have learned a lot through the platform,’ and’connect with friends. You may be able to price emotions such as’thank you’.
In this case, the way we value the company is completely different. In addition, it can completely overturn the traditional advertising-based business model of Internet services, which has been flooded with problems related to privacy, incentives, and manipulation.
Take Twitter as an example. Does Twitter’s stock price properly reflect the value the company contributes to society? It is not. It is closer to say that it reflects advertising sales.
Of course, advertising revenue is an indicator of how many people are using Twitter, and indirectly, it can be seen that it reflects the value that people get from using Twitter. However, it is difficult to see that there is a real correlation because there are also many fake connections using bots.
What if we, as Twitter users, could directly assess the value of Twitter? Imagine that people who value learning and connections, communities and memes, and cute and adorable animals set a price in agreement with each other, and the sum of these prices judges the value of Twitter.
Interesting token projects are already under way, based on the idea of market participants directly determining the market price. Imagine that these ideas do not stop at the experimental stage, but emerge in everyday life. Imagine how the business elements a company needs to pursue are completely different.
This is not about a specific device called NFT, but about a new kind of’value’ and a new consensus method that can determine the price, no matter how volatile the price is. It is also related to the growing awareness that it is possible to convert this new kind of value into money.
Shells and kernels
But there is still a long way to go. The NFT itself still has a long way to go, as more markets, assets, services, creativity, and communities need to emerge and establish itself. In the short term, it is expected to affect the existing financial markets in the form of new financial products.
However, it is quite interesting now to look forward through the lens of the new cultural language that the younger generation provides to the existing social and financial structures. In addition, now is the time when concerns about the vulnerability of online connections are growing. As such, we have great expectations for the appearance of a new era of online connections. And, above all, it is encouraging that these changes are already underway.
Looking at the phenomenon that digital artworks whose authenticity and ownership are verified are being traded at high prices, this is also perceived as an overheating phenomenon that will eventually collapse, or that too much money is flowing into the market without a proper foundation. You may have strong concerns, but remember that an empty shell and a full kernel are different.
It was the same in 2017. When the noise of the empty shell subsides due to market fatigue or the intervention of regulatory authorities, the appearance of the kernel becomes more evident. Based on this, we will be able to build new bricks.
Article in English: Joonhyuk Lim Edited by CoinDesk Korea
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