NFT is not only a collector’s item, but also a programmable asset that can be mixed by any developer.
Original title: “a16z former partner: NFT makes the Internet “Ownable””
Written by: Jesse Walden, founder of Variant Fund
The author of this article, Jesse Walden, was a partner of a16z crypto fund and has ten years of work experience in the field of art and media. In May 2020, he left a16z and established his own venture capital fund Variant, focusing on investments in the blockchain field and ownership economy.
Jesse has an insightful understanding of the NFT field. In this article he proposes:
“Encryption technology is opening up a completely different path. This is a broader narrative: the next generation of Internet platforms will be directly constructed, operated and owned by users. In the media industry, NFT (non-homogeneous tokens) can allow Creators “retain” content ownership without restricting the distribution of their files on the Internet. This means that NFT is likely to subvert the ownership model of media content and provide services to creators, content audiences, and related developers. This is also a viable alternative based on platform-driven, monetization.
Through NFT, the image on the Internet no longer needs to be a “two-dimensional frame” with only “X-axis” and “Y-axis”. On the contrary, it can have “Z-Axis”, which can be found by third parties. All the history and background of a work, thereby increasing its cultural and financial value. “
This article is worth intensive reading for investors and entrepreneurs who want to know more about the NFT field. The following is the original text:
Why does NFT become the “entrance” of all Internet media?
Before entering the technology industry, I was an artist manager in the music industry. When I started the company, I was very convinced that there was an indisputable fact in the music industry: ownership gives power. Usually, the record company owns the music, so it has the right to “control” the artist.
Our goal is to use technology to directly contact fans to help artists retain ownership of their works and run their own businesses independently. But now, each of us can become an online creator, and ownership continues to play a pivotal role. However, the role of ownership on technology platforms is often overlooked.
We can share billions of images, videos, songs and various other media works on social media every day. After these files are published, people can obtain a copy of the media from the creator’s device and paste it on the platform server that distributes the file, such as Facebook, Twitter, YouTube, TikTok, etc.
This seems to be a lightweight interaction, but the creator will not only simply copy when uploading files-they will also copy and paste the “file ownership” to the platform itself.
I am not talking about copyright, but the “terms of service” set by the content platform. These terms usually specify that when creators upload files, the platform will share ownership of the work so that they can profit as they see fit. These “terms” have some advantages: the platform can bring creators sustainable and optimized advertising revenue, and economies of scale as the number of fans grows. However, the profit model given by the platform today is not always consistent with the best interests of the creator, and this situation is no longer a secret-and this is actually the real problem, that is: for a long time, The platform side can always get most of the benefits and value from the content provided by the creator.
Encryption technology is opening up a completely different path (I call it the “ownership economy”), which is a broader narrative that the next generation of Internet platforms will be directly constructed, operated and owned by users.
In the media industry, NFT (non-fungible tokens) allows creators to “retain” content ownership without restricting the spread of their files on the Internet. This means that NFT is likely to subvert the ownership model of media content and provide services to creators, content audiences, and related developers. This is also a viable alternative to platform-driven and monetization.
A simple way to consider NFT-store data on the blockchain, which means that the content cannot be copied, pasted, edited, deleted or otherwise manipulated. The reason why the blockchain can provide these guarantees is mainly because of its own technical properties (in fact, this property can also make cryptocurrency valuable): like Bitcoin, NFT is a digital generation that is bought, sold, and traded. Coins, their ownership and provenance are always tracked invariably by the blockchain. Your assets are your assets and can be verified, and there is no need for any third party to act as the “intermediary” of the ownership.
With NFT, the way to own digital media assets is exactly the same as the way to own digital financial assets.
To many people, NFT looks like a brand new high-tech “toy”. Of course, some people think that NFT is a bubble about to burst. Indeed, the money spent on digital art and encrypted collections is growing rapidly, but the practicality of NFT allows creators to benefit more without being “exploited” by the platform.
Therefore, I believe we are working hard to make NFT the “port of entry” for all media on the Internet, including 2D audio/video and text-based Web works, as well as emerging 3D works, and even cover future Games and virtual worlds.
I think that if you want to realize the arrival of such a world as soon as possible, it is a better choice for every stakeholder involved in choosing a business model supported by NFT. Whether it is creators, content audiences, or related developers, they can gain greater benefits in a market that has realized true digital ownership.
To further illustrate this point, I will respond to some common questions about NFT in the following text. Many of the answers below are based on the “Tweetstorm” I wrote in the past few years.
How does NFT work?
In fact, NFT is only a unique token representing a digital file. Each token has a canonical identifier, a unique ID, and metadata linked to the ID (for example, who created the ID, its What is the name or price history). When the creator creates the NFT, this information will be registered on the blockchain invariably and become a kind of “digital passport” for the work. Taking a closer look, as long as the media work is distributed to another platform, the platform can “check its pass” and view its entire transaction history.
This means that any instance of a creative idea can eventually be registered on the blockchain, and the original, immutable historical record can also be queried. Images on the Internet no longer need to be a kind of “two-dimensional box” with only “X-axis” and “Y-axis”. On the contrary, it can have a “Z-Axis”, and third parties can Find out all the history and background of a work, thereby increasing its cultural and financial value.
Is digital artwork valuable?
There is indeed a common criticism in the market today, that is, because digital art and digital collections can be copied, they will not have much value. But NFT introduces a whole new possibility, that is, when works of art continue to circulate freely online, they can also have real ownership.
For a document, the more it is shared and viewed on the Internet, the higher its content value. For example, we can see that many posters and T-shirts with images of Andy Warhol are mass-produced. (CryptoC Note: Andy Warhol is known as one of the most famous figures in the art world of the 20th century, an advocate and leader of Pop Art, and an artist who has the greatest influence on Pop Art. He boldly experimented with letterpress printing, Various copying techniques such as rubber or wood rubbing, gold foil technology, and photo projection.)
As the mainstream of society pays more and more attention to issues such as copyright, plagiarism and piracy will make you notorious. Therefore, the concept of having a normative work becomes more exciting and will also become a sign of social status. If you have ownership of the work after purchase, it can also increase the value of the work for resale. NFT allows collectors to enjoy most of the benefits of owning artworks. In addition, their collections can also be freely shared on the Internet without restrictions, thereby gaining greater benefits, because the wider the scope of the works, the more value they get There will be more.
In fact, NFT can provide support not only in the field of art. With more and more cryptocurrency collectibles, game assets, digital fashion, skins and more content, you will find that the line between art and programmatic utilities is becoming more and more blurred. Next, let us continue to analyze.
Why collect NFT?
People collect NFTs for many reasons, such as:
You may find a very promising new artist or artwork and feel very excited;
You may find that a work has great cultural value potential and appeal;
You may have discovered a unique and classic “social state”;
You may find an opportunity to profit by reselling your work.
Currently, in the NFT (and other crypto markets), many people are collecting works of speculative value. Like other crypto markets, the NFT market is also “reflexive”. Just like cryptocurrency and traditional art, as long as the more people who believe that NFT assets may have value (even for subjective reasons), the higher the actual value that can usually be obtained in the market.
For example, the reflexivity of the Bitcoin market started when Bitcoin became more and more “popularity”. In the beginning, Bitcoin was just a Memecoin that can buy pizza, but it has now become the world’s most important reserve asset. , And this momentum is getting bigger and bigger. Similarly, NFT may seem like an entertainment activity or a cryptocurrency giant whale game at first, but as more funds flow into these markets-and more and more content creators mint tokens and participate in them Outsiders will see that the value circulation is getting better and better, and the perceived value of the market will also increase. This reflexivity creates a positive feedback loop, and in many cases, over time, this feedback loop helps to promote the inevitable rise of market activity.
In the long run, what is the direction of NFT development?
Back to the question of practicality: Like many technological development cycles, speculative value will eventually give way to functional value. Since these NFT assets are programmable and open, any developer can build what they need on top of the NFT. Not only that, because NFTs can be easily carried, this programmable asset can occupy a new leadership position in our entire digital world.
Tokens and smart contracts are called “currency Lego” because they allow programmers to write and remix DeFi applications. Similarly, NFT will also become a “medium Lego” for developers and creators to remix and build new experiences, even without permission. Therefore, users will be able to expect a richer experience and add more practicality around the items they own.
Is the adoption of NFT inevitable?
I think NFT will become the “port of entry” for all Internet media, because everyone involved in this field can make more money from the market it supports:
For creators
By selling directly to fans and charging a usage fee each time they resell the NFT, they can make more money. This is a new kind of income stream, and it is only possible when you obtain the true digital ownership of the work—that is, when you embed “loyalty logic” in the medium itself.
For consumers
NFTs are a better model because they combine two resources well:
Or today, on the Internet, consumers rent many goods and services, including some content creators. The new ownership economy platform has a main principle, that is: “Incorporate skin into the game”, it will have an incentive effect. If you want to provide support for creators, there is now a brand new model-I call it “Patronage+”, where “+” is the possibility of getting value with the creators you support. Of course, this is a strong incentive mechanism that has not yet been developed, but I think this mechanism may promote the demand for creative works in the market, thereby attracting more people to participate and give feedback.
For developers
They can make money by establishing a new NFT market. There are many problems with traditional platforms, such as:
In the NFT market, even if built on an unlicensed infrastructure, developers have the opportunity to gradually enter the growing ownership market economy, and in many ways, this ownership economy function is similar to the function in the real world. similar.
Where are we in the NFT adoption cycle?
In 2021, the cryptocurrency market (including many other markets) has begun to enter a bull market, and the Internet has begun to awaken and carry out collective investment campaigns (WallStreetBets)-in this context, suitable conditions have been created for the NFT market to enter the frenzy stage. Emerging markets are beginning to attract mainstream attention and attract a lot of capital.
At this stage, most NFTs still mainly occur in the field of digital art, but some emerging niche markets have also begun to explore NFTs, including game world assets (such as Axie Infinity), other encrypted collectibles (such as Hashmasks and CryptoPunks, or through programs Generative artworks created on the chain.
We have also seen many brand new NFT trading platforms spring up, where creators can create NFTs and contact collectors. Foundation’s sales in its first week of launch exceeded $150,000, including the first Vine video ever created, which sold for $14,000. Venture capitalists also began to purchase AI-generated art (including myself) in their portfolios. It is worth mentioning that I recently raised funds for the publication of the paper on the decentralized blogging platform Mirror, and received more than $13,000 in crowdfunding. Then I auctioned off my work as an NFT, so that those donors got the money. Quite a return.
However, it should be noted that currently interacting with NFTs on Ethereum is still quite awkward and expensive, but every new thing is like this, everything is difficult at first. At present, it costs about $100 of ETH to mint an NFT, and buying and trading NFTs will also incur high transaction fees.
But for the cryptocurrency industry, 2021 will be a year of major technological upgrades-transaction costs will continue to decrease and network throughput will become higher, all of which will help developers to push NFT into a larger level of social networking field. For example, Zora is moving in this direction. They launched an interface similar to the light blog Tumblr, in which each “post” can appear in the form of NFT. Because of these social experiences, we have seen a growing NFT market spawned, and users can make money with the creators they support, so everyone has a strong motivation to participate.
Remember, NFT is not just a collector’s item, but also a programmable asset that can be mixed by any developer. As developers create a new environment for the survival of NFTs, the needs of digital creators will continue to increase. As long as their works are included in the NFT, they can obtain indisputable ownership.
to sum up
In 2014, I founded a company called MediachainLabs, when we were developing an open protocol called Mediachain. Our goal is to build a “universal media library” to handle digital media assets, just like Bitcoin handles digital financial assets.
Now six years later, in a world where most people in the world own digital currencies (more than 10% of Americans own digital assets), digital currency infrastructure and markets have become ubiquitous.
I am very grateful to the team and community that can continue to participate in the establishment of a universal media library through NFT. If you are also one of them, I also hope to understand what you are building.
