WTF is an NFT

WTF NFT Dan Kelly Nonfungible.com

Who are you and what do you do?

My name is Dan, @dafky2000 on Twitter, co-founder of NonFungible.com. First of all, I am a hacker in a playful sense. I love creating and I enjoy the journey of developing functional solutions. Aside from an abundant supply of side-projects, my primary focus is data mining NFT (“non-fungible token”) sales on the Ethereum blockchain and abstracting useful information from otherwise illegible or hard to aggregate sources. We provide private and custom APIs, data analysis, and marketing services for projects in the ecosystem.

What the F is an NFT?

NFTs are “non-fungible” tokens.

We wrote a fairly extensive article on why most of the definitions of “non-fungible” are incorrect, but let’s cover the basic concept.

A “token”, tracked by the blockchain, that most people are familiar with is Bitcoin. These are immutable, and the user is the custodian of their own wallet. No one can take these tokens without strict checks and balances in place by smart contracts (software) that enforce the rules with absolute certainty.

Fungible is to the Dollar as “non”-fungible is to collectibles or real-estate. So, in the blockchain world, we consider Bitcoin and Ethereum to be fungible and we consider CryptoKitties to be non-fungible. “CryptoKitties” is a collectible and breeding game, each cat is verifiably unique and stored on the blockchain with several unique “cattributes” such as colour, eye colour, eye shape, … Although you could trade 1 bitcoin for 1 bitcoin, or 1 dollar for 1 dollar without any change in value, you wouldn’t necessarily trade 1 CryptoKitty for another without a difference in value.

Did all of this stuff grow out of cryptokitties?

Yes, and no. CryptoKitties is the major implementation that generated the hype and popularized the concept in November 2017. They also proposed the draft ERC721 standard for Ethereum and built the community to take it over.

cryptokitties

There were few projects before them: CryptoPunks on Ethereum, and Spells of Genesis, Rare Pepes both on the Bitcoin network earlier than April 2016. Now, non-fungible tokens have spread to several blockchains and are quickly evolving past the simple use-cases as collectibles and gaming items.

You were recently at the Futurist Conference in Toronto. What stood out for you at this conference?

Futurist Conference Vitalik Buterin 2019

Futurist is such a great conference, Tracy puts on really great events! I love meeting new people and watching people’s eyes light up when the NFT light bulb illuminates in their head. What stood out to me was the increased presence of non-fungible token projects. From supply-chain management, games, and digital collectibles to tokenized physical collectibles. The use-cases for NFT are very broad and the Futurist conference demonstrated this through several key projects attending sponsoring the event. I suspect that during next years event, we’ll see different NFT implementations dominating the event.

Just to give us an idea of scale and in terms of money, how big of an industry could NFTs become and what are existing industries you feel are going to be impacted by NFT technology?

Between initial use-cases like collectibles, artwork, and gaming, this technology has the capacity to easily exceed a $100B market over the next 10 years. I expect that NFTs will become the hidden backbone to these markets, users will simply hold their own wallets which contain all their fungible and non-fungible assets.

Crypto-collectibles and artwork are already a proven valuable industry. Consumers in this market appreciate the value of scarce assets, and with the blockchain backing NFTs they can expect and prove that the assets aren’t over-produced. These properties make crypto-collectibles extremely attractive to collectors.

We expect that the gaming sector will contribute the most market value in the short term, NFT-based games offer players incentive to play these games with asset-freedom through “true ownership”. Again, the same properties that make crypto-collectibles attractive to collectors, make NFTs attractive to gamers, who have experienced and heard all the horror stories with traditional in-game item marketplace restrictions and changes. Traditional gaming studios more often than not, steal the value created by the users to their own benefit – blockchain is disrupting gaming and changing user-expectations.

What projects exist you the most in the NFT space?

I love projects that are using NFTs to solve real-world problems. Problems from traditional markets that aren’t easily solved without unreasonable amounts of money and time.

To name some specific projects, ENS and Decentraland are big excitements of mine. I grew up with the internet, from 28k dialup, through “high-speed, to the age of fiber-to-the-home. Software, internet content, and games have been a giant part of my life. These two projects are democratizing how we will interact with each other in the future, “Web 3.0”.

ENS is the Ethereum Name Service, it is the DNS (domain name service) on the blockchain. You can buy domains with the “.eth” suffix that you truly own, you can transfer freely and the rules and regulations from keeping your registration are laid out and controlled in absolutes, not influenced by human emotion.

nonfungible marketcap

Decentraland is a decentralized VR content platform, where consumers own plots of digital “$LAND”, 16m x 16m with an X,Y coordinate on a virtual map. $LAND owners can deploy whatever content they like in their space. Decentraland organization is building the initial development tools to support simple static scenes very easily but also, complex and multiplayer games. The entire world is owned, developed, and eventually run and governed by the community. There are already several cool projects that are building on top of their platform!

I think the digital art NFT space is one of the more interesting aspects of NFT. Who are the players in this space and do you think these NFT art platforms are going to blow up?

Art is a very important, and in my opinion, underrated, use-case for NFT. There are several art projects taking slightly different approaches. Some focusing on more scarce assets, some supporting “editions” for limited runs of the same piece, some focusing on the legal benefits that blockchain provides via provenance. KnownOrigin, SuperRare, MakersPlace, Mintable, Artcryption (in-progress) to name a few.

Known Origin nft digital art

It seems like the blockchain art world is creating more artists from blockchain enthusiasts and attracting very few existing, exhibiting artists from traditional markets. I believe utilizing the blockchain to provide the basic framework for artists to save their hard earned money on legal fees and protecting infringement is a great way to appeal to the “real-world” crowd. Implementations like this, that provide a real and additional value to the artists will be the groundwork for this industry.

Do you think NFTs could find a way to be integrated in the online gambling space?

Absolutely, I see NFTs being integrated into online gambling in the near future. We can use a non-fungible token to represent a slot machine, card-table, or even an entire casino! With the appropriate auxiliary smart contracts in place, the owners of these tokens could automatically and immutably profit from the use of these gambling facilities. If there are popular and profitable gambling “units”, users could speculate on the value based on revenue that is transparently published on the blockchain by the gambling facilities.

What is your advice for all those people out there that don’t believe in Bitcoin?

If the current monetary system and government & bank control systems don’t bother you enough to have already considered researching Bitcoin and alternatives, I highly recommend reading some literature about the history and value of “fiat” money and how Bitcoin is designed to be “hard money” akin to gold. Bitcoin is less susceptible to manipulation and fraud at the government level, it is completely transparent and open for the world to investigate.

The Bitcoin Standard: The Decentralized Alternative to Central Banking by Saifedean Ammous

The Internet of Money by Andreas Antonopoulos

What opportunities do you see for anyone that wants to launch a website focused on either NFTs or blockchain?

This one is tough, in many ways we are still at the equivalent of what was the earlier days of Bitcoin. But in other ways, there are a ton of opportunities to get involved in the space. Whether via useful tools, resources, and well-studied content pieces, or view involvement with existing projects. The community is relatively small and tight-knit so there is opportunity to make a name for yourself in the industry. There were more than 10,000 active addresses (user) in the month of August 2019.

Some NFT projects such as OpenSea.io (a decentralized NFT marketplace), and MarbleCards (collectible cards, representing web page content) where you can earn a commision for referrals.

John, thank you for the opportunity to be featured in Commission Magazine! If any readers need any further information please visit our website, NonFungible.com – where we track sales of NFT across any decentralized marketplace on the Ethereum blockchain as well as release weekly blogs about different topics, project introductions, and statistical analysis. You may also email me, [email protected] and I can point you in the right direction!