The Secret Power Of NFTs
Issue #9 9.25.2021
Meet CryptoPunk #7804.
He’s one of 10,000 24 bit pictures that were first minted on the blockchain. (If you have no idea what that means, don’t worry we will explain.)
This cute little picture, inspired by the London punk scene of the 80’s, just sold for a hair under $13 million dollars.
It’s one of scores and scores of NFT projects that has exploded in popularity and ushered in a new era of internet riches.
The magnitude of wealth being generated in the NFT/Crypto space is hard to wrap our heads around:
Earlier this month, 100 pictures of apes sold for over 24 million dollars in a Sotheby’s auction
Axie Infinity, a play to earn blockchain video game, raked in over 13 million dollars in sales yesterday.
Nearly 90 billion dollars have been invested into Bitcoin and Ethereum in the last year alone, equivalent to the annual revenue of retail behemoth, Target.
If you’re in disbelief - join the club. How is it possible that digital files are worth so much money?
The common critique of NFTs is that this is yet another get-rich-quick scheme driven by speculative-hype bordering on hysteria. Critics wonder: why would anyone buy a jpeg when you can just right click and save the picture for free?
These questions are missing the forest for the trees. Web3 is ushering in a new technological revolution similar to what we experienced in the late 1990’s with the rise of the internet and web 1.0.
While we definitely don’t recommend investing in NFTs as a way to make money, the dramatic rise in this space can teach us a ton about what’s driving its value. It can also bring to light what young people need to be successful in a rapidly changing world.
Emerging technology creates new forms of value. And the direction that technology takes signals what people value. The meteoric rise of blockchain and NFT is telling us what people value:
Trust and Community.
These two widely valued assets are the generative renewable energy that’s driving desirability and gains in the NFT space. They are intrinsically motivating for most young people. And if we can encourage them to leverage these intrinsic interests we will be setting them up for success in a web3 world.
NFTs are art projects created with blockchain technology. NFTs are blockchain-based records that uniquely represent pieces of media. We know who “owns” the Cryptopunk above because it’s written in the blockchain. In other words, blockchain technology creates the possibility for ownership of digital assets. Yes, we copy & pasted the CrytpoPunk above but the blockchain provides immutable evidence of who actually owns it. Just like a deed proves you own your home, a blockchain does the same for anything digital.
What’s more, blockchain technology also serves as a ledger to document the transaction of digital assets. Just like we hire lawyers to help us sign the mound of legal documents needed to close on a new house, the blockchain does the same for digital transactions.
This combination of ownership and secure transactions driven by a decentralized network creates a world built on trust.
Trust is one of the most valuable assets on the planet. Just think how trust has affected our relationship with technology.
Entering your credit card information onto the internet was once unthinkable. Then Amazon came along.
Putting your kid in a stranger’s car once seemed like an act of negligence. Then Uber came along.
Vacationing in someone’s house you’ve never met once seemed ludicrous. Then AirBNB came along.
How did these companies win the trust of a skeptical public? They leveraged technology. We trust Uber drivers because we can view their profile and number of happy riders they’ve served on the Uber App. We trust AirBNB hosts because we can read the verified reviews of people who have stayed with them.
Together, Uber & AirBNB are worth a combined $200 billion dollars. This fortune was built on trust.
When people buy and sell their NFTs, they know that blockchain technology will prove ownership. So much money is flowing into NFTs because people trust the technology driving it.
When you buy an NFT, you’re not just buying a JPEG - you’re buying into a community of like-minded people who share your interests, passion, and excitement. Typically, NFTs launch with several thousand items for sale. And they can sell out in seconds. This process organically and instantaneously creates a community of thousands of people who can identify with each other.
These communities that arise on Discord or Twitter are a sight to behold. The members engage enthusiastically and sometimes deeply about all aspects of life--sports, family, fitness, and other bonds far beyond the JPEGs that brought them together. In a physical world that’s been carved out by the global pandemic, people are building authentic, meaningful digital communities with the help of NFTs.
Ask anyone in the NFT space why they’re so excited about the space and they’ll talk about the people that it’s connected them to. In sharp contrast to other social media environments that have been called out for toxicity, NFT Discords have been described as remarkably positive, collaborative spaces on the internet.
NFTs have been likened to membership in a digital country club.
People are on their best behavior because NFTs incentivize them to be; the more they contribute to a community, the more valuable it becomes. The more valuable the community is, the more their NFT is worth.
As is true of trust, we’ll pay exorbitant prices for community. We spend thousands of dollars on our peloton bikes, our favorite sports teams, and the colleges we attend. Cheaper alternatives exist, but scores of people are willing to pay the premium.
Because these communities become part of our identities. The communities we associate with signal to the world a version of ourselves that we aspire to live up to.
NFTs do the same.
Skills of the Future
Web3, and similar technology, is disrupting, destroying, and creating the future faster than ever. It’s impossible to predict where all this will take us, or what all this will even look like.
What we can do is learn from the value being generated now.
Based on the early iterations of NFTs we know that people and projects that focus on trust and community building will be increasingly valuable in a growing Web3 world.
Whether or not we feel compelled to jump onto the blockchain or NFT bandwagon, we know that being trustworthy and being a community builder are deeply valued skills and attributes in the world of work. When our students invest in the skills of building trust and community, they’re investing in invisible capital towards their future success.
The problem is our school systems and traditional organizations do little to reward/incentivize trust and community building. Students don’t get an “A” for being trustworthy. Being a good community builder is not something so easy to prove on a resume.
But, savvy educators, parents, and other mentors who see trust and community as powerful assets, can help their students zero in and cultivate these assets in themselves, and in their work. Consider how below.
🧭Get Your Bearings:
How often do you prioritize trust as a core virtue in parenting and mentoring your people? Where are they building trust? How can you support them for doing so?
How often do you recognize their contributions to the communities they are a part of? Where are they building community? How can you help fan those flames?
🌴The Scenic Route:
Enjoy some golden doodles