I spent a sizable chunk of my December diving into NFTs and NFT communities. I didn’t expect to, beyond maybe doing some cursory digging into smart contracts and trying to understand what “web3” actually meant (feels prudent, idk). But NFTs turned out to be one of those vortexes that latched onto me and just didn’t let go. I turned into that guy in my friend circle.
And NFTs are becoming more than just an online-only fad or a hobbyist thing. They’re bleeding into the Discourse, they’re showing up in the meatspace. I met someone after a rec league volleyball game who owned a Bored Ape. You don’t expect your online and offline worlds to ever collide like that. It was weird, and it’s probably not the last time it’s going to happen.
So here’s to trying to wrap my brain around all of it: digital assets, ownership, smart contracts, art, price, and looking for the “so what?” of it all. No doubt I have a basic understanding that’s likely to change drastically in the coming months. But here’s where I’m at now:
There’s NFTs, and then there’s the emergent behaviour born out of NFTs and the tools available in web3. There are Levels to this thing, not unlike the Scoville scale: the higher the number, the spicier the developments.
These are things like files, links, and images and other media.
Level 0.1: You can sort of own them?
There is some version of owning of digital assets pre-web3:
But this isn’t a strong form of ownership. The same files can be copied and distributed easily and endlessly (i.e. the assets are fungible), which is what they’re made to do right now.
Crypto (specifically Bitcoin) is built on the idea of a decentralized public ledger of where you can conduct transactions that are roughly impossible to fake.
The Ethereum network (where most NFT activity takes place today) takes this a step further by allowing you to store more complex data in the ledger (“on-chain”), including messages, links, metadata, and even executable code.
(More on the differences here)
On the technical side, you can store some metadata on-chain, call that a token, and give that token data to someone. Now they’re in possession of it; they “own” it. Taking this further, you can use smart contracts (more on these later) to create tokens that cannot be replaced or duplicated, i.e. non-fungible.
On the social/conceptual side, we have a new kind of social contract on our hands. This idea of digital ownership only means something if your tribe decides to give the idea merit. If you all agree, then you can abstract away the technical details and just view the above as the equivalent of owning a digital asset.
On the financial side, every token can be transferred, or bought and sold (more on the effects of this later too). And because transactions are public, token ownership is also made public, so anyone can look at your address (or “wallet”, your unique ID in the network) to see what tokens you have.
This is the basic case for NFTs.
Level 2.1: New forms of Digital Art
Now that digital assets can be owned, bought, and sold, we have the environmental conditions for new types of digital art and media to flourish.
Here are some “digital art thoughtpieces”, a genre I’m sure existed in some form prior but certainly not to this level of boon.
— Visualize Value (@visualizevalue) August 2, 2021_"Price vs. Value" sold for 0.99 ETH, or $2,600 at time of sale._
_"Chisel" sold for 33.888 ETH, or $61,000 at time of sale._1 of 1
— Visualize Value (@visualizevalue) March 6, 2021
↓https://t.co/1QTMKpY3ZK pic.twitter.com/PvUPPgfGKp
It just so happens that with Ethereum you can store executable code on-chain and run it too–these are smart contracts.
(A very brief summary is that you write code onto the ledger via a txn, and then others can send specifically formatted data to that address, like function inputs, to have the network execute that code on those inputs.)
This makes NFTs that much more compelling. Some very rudimentary examples of smart contracts in action are:
This is where the realm of possibilities opens up. I don’t really know what’s possible with smart contracts and will probably be headed deeper down this rabbit hole in 2022. For the rest of this post, I’ll be focusing on the scenes and emergent behaviour I’ve observed down the “RNG art” branch of the web3 tree.
Level 3.1: Right-click save
“What do you mean you own that image? Look I just right-click-saved it on my computer, I own it now too! I just stole your NFT!”
In the world of NFTs this statement makes no sense, because my source of truth is still what’s on-chain, and I can check and yep I still own my NFT. Not sure why NFT people get so riled up about this.
(Outgroup-calling-your-customs-dumb-is-an-act-of-war or something, maybe)
“I can right-click-save your Witch jpeg and put my copy on the blockchain. Now I own it too!”
Part of why NFTs are non-fungible are their association with smart contracts. My Witch NFTs are linked to their contract, call it A. Since Witches are non-fungible with respect to A, to put a copy of a Witch onto the blockchain you’d need to create a new contract B for your copy. But then anyone would be able to check your Witch and deem it fake since it clearly isn’t linked to the correct contract.
Evolved out of minting simple limited edition collections of NFTs is having each NFT now possess some randomly-generated attributes (I’m using RNG Art as a shorthand for this). So not only are the number of tokens limited, but tokens also have some relative rarity. Not all tokens are created equal.
There are iterations of RNG Art where creators give some additional value or “utility” to each token besides just the token itself (e.g. community access or feature access which I’ll touch on below). But the basic version is just the tokens themselves and what you value them at. Like collecting art in the digital world.
Examples:
So you want to generate 9999 pieces of RNG art. What can you do from there?
Here’s an example. Let’s say I’m creating an NFT art collection of 9999 RNG hamburger called CrypDonald’s. Each token is a pixel art image of a burger where the bun, toppings, and meat are randomly selected from some preset list I made. The art is nostalgic. Maybe someone is looking for their 1 favourite Burger that exists in this set - whole wheat sesame bun, mayo, tomato and onion (no lettuce or cheese), and two patties. There are only 100 Burgers that are vegetarian, and of those only 10 that are fully vegan.
Then I create a Discord for anyone who owns a CrypDonald’s Burger (NFT “holders”) where we talk about our love for burgers, from fast food to gourmet. I also made a decent chunk of money from the initial mint of my Burgers, and I can use those funds to develop my next CrypDonald’s project, a Fries NFT that pairs with your Burger. We’ll see where things go beyond that. Maybe I’ll host an IRL meetup at In-n-Out where we discuss the different tiers of fast food burgers (In-n-Out for example is low tier, but it’s at the very top of the low tier). Oh, and holders might make a profit, or even get rich off of Burgers if this blows up, who knows.
This is a popular model right now–Art projects that provide Community and Utility, and that are Fundraising for future plans.
(There are also non-RNG-Art-based NFT projects that are Community-focused (e.g. Poolsuite) or Utility-focused (e.g. Gallery), where owning a token acts as your ticket to entry.)
Level 5.1: Explicit value, and Investment
One area I haven’t really touched on yet is the financial side of things, but it’s a foundational part of the NFT ecosystem and I think it’s going to have a lot of impact on what can be built in web3 and what problems we can solve.
there's something ,, subtle about everything in web3 having a price so explicitly attached to it. makes me wonder if and how limiting that might end up being. from a 'future tech / tools for solving problems' perspective
— Billy is writing (7/100) (@billyisyoung) January 3, 2022
like there can be no deviantart in web3. it's not the same
NFTs are directly tied to a dollar value, whether that’s the price to mint it or the price to purchase it from someone else on the secondary market. Any token you own doubles as a financial investment, whether you want it to or not, whether you plan to “flip” it or never sell (everyone has a price…).
And there’s something strange about assigning a dollar value to art, utility, community, status, and potential in such a direct way. It’s ever-present, even if just in the back of your mind, in your interactions with your tokens. At worst some holders might just be around to see if the project skyrockets (“moons”) so they can flip their NFT for a profit, or they try to pump up demand by “sweeping the floor” and buying up the lowest priced tokens of a collection so the price of entry seems higher and therefore more valuable. Then, maybe FOMO kicks in and you buy in too since the price is going up.
(Here’s my exchange with dame.eth on this for more of the other side of the fence)
Level 5.2: Crypto Coven, and discerning projects
Not all projects are funds-focused though. Creators and projects can choose to actively shift the atmosphere of their community away from focusing on price or rarity, and one project I absolutely adore that does this is Crypto Coven.
Not only do they have some of the most beautiful and inspired and tasteful and inclusive art I’ve seen from an NFT project, but the creators (the five High Witches of the coven, and yes they’re all women) have also cultivated a delightful and inclusive community that focuses on art, aesthetics, lore (the Weird Wilds), and helping onboard people into web3. (Discussion about price or rarity is discouraged as “not the focus of this project” and so it just doesn’t come up much now.)
So it is possible to have spaces like this in web3, though Crypto Coven is definitely an outlier in this regard.
We reached self-parody surprisingly quickly. Or maybe it’s not so surprising in this age of memes and with how quickly things move in web3.
Anyway we have Olive Garden NFTs, of different Olive Garden franchise locations, that are entirely a fan project and not associated with the Olive Garden brand proper. Oh and these were $20 to mint and reached a floor price of 0.5 ETH, or $2000… before they got DMCA’d by the actual Olive Garden and got delisted from the largest NFT marketplace, OpenSea. (But because data is public in web3, NFOGs can still be bought/sold on other marketplaces like ZORA!)
“haha good one lemme throw some money at this even though it’ll probably be nothing haha but imagine if it 10x’d or something haha”
At face value, the project is a lighthearted joke. But surrounding the project, there’s still a shadow of financial gain that colours the motivation to join in. Memes can now be pump-and-dumped (as if $DOGE wasn’t enough already). It feels new and weird and I’m still wrapping my head around it.
Web3 is a sprawling…well…web of different technologies, use-cases, and potential, and I’m nowhere near familiar with the bulk of it. Also I just spent hours of my life writing 2600 words about NFTs, so I’m going to go touch some grass after this. But before I do, here’s a list of ideas in web3 I am aware of that I find interesting: