I created an NFT, fully knowing it won’t sell — but that’s alright
It was in January 2017 that I wrote my first solidity smart contract and ran it on a test node. I had very little understanding of what a blockchain is and what the full potential of smart contracts and crypto currencies are at that point in time. Ethereum itself was quite new and smart contracts were at the peak of inflated expectations in the Gartner hype cycle. But for us in that project, it really made sense to have contracts as code on a distributed ledger. The project I was working on was building a Reverse Factoring solution on the chain — there were only a very few similar ideas being implemented at the time, so this was charting new territory. Few months later, I had to leave the project, but I kept my interest alive.
Fast forward five years and smart contracts have really gone through the hype cycle and are now settling in. While collectibles were not the 1st use case of ERC-721 (Non-fungible Token Standard) that I would have guessed, it makes perfect sense for the first mass adaptation of the standard.
(As someone from a collapsing 3rd world economy, I’m rooting more for Metaplex tokens on Solana over ERC721 tokens on Ethereum purely from a gas money perspective — but the idea of an NFT is undoubtedly valid for the future.)
The first NFT that I minted is a piece of art that my niece gifted me about an year ago. Why did I mint it? Because that NFT token is now a good representation of what an NFT is— My certification of ownership for that piece of art. Of course others can make copies of this drawing — Like people making copies of Monalisa, but they will never own it — unless I transfer the ownership to them. (I minted this on Solana — as I mentioned above, I can’t quite afford the gas prices on Ethereum)
I also listed the NFT in an auction (Sumera’s Fine Art (holaplex.com)) fully knowing the chances of someone buying it are quite slim. I’m just exercising what I could do with an NFT — I could sell it, and if I do, I can then continue to earn royalty on any subsequent sale it makes — all as part of the smart contract put on place when I chose to list it for auction!
If my niece goes on to become a very famous artist (Just look at that drawing above, and she was just 16 when she drew this) this NFT, as the 1st minted NFT of hers will skyrocket in value! and all the people who saw the listing and didn’t buy it, will start crying :D
Alright, now for a little bit of speculation on NFTs themselves — what potential do they have? The current prominent use case for NFTs is the assertation of ownership.
We need assertation of ownership for two primary reasons in my opinion.
- For legal reasons — I own a house, I own a car, I own insurance for both for a period of one year
- For social validation — I own mahasen@gmail.com and I own the above drawing by my niece! Some friends of mine own certain merchandise in games..
The current incarnation of NFT art is the latter of the above — but in a more formal adaptation, they could replace your certification of ownership for your lands, houses, expensive watches and so on — and they will stand valid in a court of law.
A more commercial implementation of the same use case is the Factoring/Reverse Factoring use case we were working on, where the invoice becomes an NFT. Another is a sovereign bond. In both cases the debt owner could sell that debt as an NFT token and the debtor is legally obliged to pay their dues to the owner of the NFT token — if the banks get connected to blockchains (which many progressive banks are working on now BTW) then this whole process could be done without any humans involved.
Some people tie the NFT to off-chain value — Garry Vee for example has created an NFT project in which each token gives the owner the right to be participate in VeeCon, play tennis with Garry etc. Anyone who owns a token can sell it in a secondary market if they wish to — at a higher price! Slight problem here is that the smart contract has no way of validating whether Garry keeps his word — so the trust-less aspect of the blockchain is not really valid in this case.
The other aspect of a smart contract is really in it’s ability to interact with other smart contracts and off-chain APIs (Checkout Connect Any API to your Smart Contracts (chain.link)) The possibilities this presents is quite fascinating to think about. Think of a smart home or a smart car which you unlock using your blockchain wallet — there’s no key for it. When you sell your car on the blockchain, the ownership of the NFT is transferred to the new user and with that, not only do they get the title to the car, but also the “key”.
The next DAO (Decentralized Autonomous Organization) perhaps will be smarter and wouldn’t be vulnerable to hackers as much, and more and more people may choose to work for a DAO than a company led by human decision making.
With banks and legal systems opening up to blockchains and start accepting smart contracts these possibilities will take a huge leap.
NFTs in it’s current form, like any other hyped up tech will go through it’s phases. It will peak in near future, people will start to lose hope, but it will find it’s right application and will go on to become something as fundamental as the internet or the legal system.
NFT as a form of validating ownership will prevail, the market for digital art however will not be as big as it is now made to believe in my opinion. But there will be other things that we own and we will be proud to have them in our crypto wallets.
We might even be able to do things that we never imagined with our NFTs, like how our previous generation never expected internet to be so fundamental in our lives.
And I’m happy that my ownership of my niece's drawing is now an NFT :)