We are on the brink of a (r)evolution regarding another step of communication between people and the ability to express ourselves as individuals or members of a particular community.
The Introduction
The following is a summary of the great interview I had the pleasure to listen to. The podcast hosted by Raoul Pal provided the listener with a deep dive into the idea of NFTs lectured by one of the greatest minds in the space — Punk 6529. Let us grasp the OG level of understanding of the world we live in and the changes that are about to happen.
Let us embrace and build the future.
The following article is solely based on the interview with Punk 6529. All the ideas and examples are based on the interview unless otherwise specified.
The examples and additions written by the author are marked with an asterisk sign ‘*’.
TL;DR
Throughout history, humanity has seen times of great leaps in technology and significant transformations within society. The development of transportation, the spread of mass media or the inception of the Internet; all of those events changed the world and societies significantly.
We are on the brink of a (r)evolution regarding another step of communication between people and the ability to express ourselves as individuals or members of a particular community.
The technology of Non-Fungible Tokens (NFT) is something far greater than just profile pictures and collectibles of questionable quality. We have barely scratched the surface of what is possible with the use of NFTs, and only a handful of individuals are experienced and devoted enough to see the prospects it may bring.
The Bitcoin
*Imagine living in a world where all the financial transfers between individuals cannot be made during weekends. How does it sound? It might not seem so taxing at first, but when you think of it, about 30% of the time — weekends and bank holidays — you are unable to transfer the funds even in dire need.
*It seems there is a limit to how you would like to use and transfer your funds after all.
One of the first moments of realization what Bitcoin can become happened on a Saturday afternoon when 6529 made a transaction with his friend from another continent using Bitcoin. The transaction took minutes to reach the recipient, cost a fraction of the bank’s transfer fee, and was made on Saturday afternoon.
Some people claim Bitcoin is the hedge against inflation, hence its popularity and growth. It is a common narrative one can often hear when discussing Bitcoin’s purpose, especially during the last Bull Run. In fact, there are other inflation hedges being far less volatile, thus preferable as an investment.
There is something more to Bitcoin, both technically and socially.
It is claimed Bitcoin has solved the Byzantine General problem which stems from the field of game theory and distributed systems. In short, the Byzantine General problem describes the scenario in which all of the involved parties have to agree on a single strategy in order to avoid failure or defeat. The whole problem revolves around the issue of limited trust or unconfirmed reliability between involved parties.
*The Byzantine General problem in Bitcoin involves validation and passing on the information that is not stored in a centralized database. It is a decentralized network of miners and validators who are ensuring the functionality of the blockchain via the Proof of Work mechanism. The individuals do not have to know each other; the trust is established via their commitment to the network and gaining rewards in return.
The Database
The life of every citizen nowadays is organized by thousands of databases. The banking system, hospitals, hotels, and even taxis you use have their own database to run the entire infrastructure needed to provide all the necessary services.
It was not an overnight change. It has been slowly and gradually built with the use of the new infrastructure, like the Internet — it is a very important piece to bear in mind. In the world before the inception of the Internet, databases were not a big thing in society, not in the form we have it today. All the information has been stored in files, on paper sheets or other means of storing records.
Nowadays, databases have become inseparable from society.
The world lives and thrives on databases.
One of the most significant features of using databases is the need to trust someone with the provided information. There are thousands of TTP — Trusted Third Parties — we are entrusting our data to on daily basis. How can we be sure no future data leaks will happen or that the entrusted data will not be misused? We cannot, it is the harsh truth which has to be embraced. Yet in order to be a member of modern society, we have to trust some counterparties.
The basic examples of running databases and shared trust might be found in everyday life in a form of money we are using every day, the privileges of citizenship or the right to a given property.
All those databases run in centralized systems, which is not a bad solution as everything has been working decently due to provided security.
*Just a short note to all the acolytes of total decentralization; not everything is meant to be decentralized. Both centralized and decentralized systems have their advantages and disadvantages. In fact, quite often, centralized systems might be a far better solution than decentralized ones when considering the needs of present societies.
The early problem in crypto was — and still might be — the widespread belief and custom to trust and use centralized databases for their higher security profile. The common notion of running things on Amazon Web Services and being astounded by the number of transactions per second is missing one significant point; the question of what are the social implications of this.
The social implication of running things on AWS is you have to trust someone with your data.
The more digital we become as a society, the fewer large entities we trust with our data, becoming more and more centralized and dependent.
The New Medium
The inception of the Internet broke the barriers impossible to overcome for people before; the barrier of physical presence or the barrier of distribution, once broken, allowed a number of individuals to elevate their skills and ideas to another level. All of a sudden, people have realized you do not have to be New York Times to publish online, and you do not have to be Walmart to sell things via the Internet.
The change of mediums led to the immense growth of small businesses across the developed world. The sheer fact of gaining access to the Internet opened the doors only a few imagined to ever exist.
However, the Power Law Distribution applies to everything and so the Internet, at its core, tends to be centralizing. That is a fact some people might not agree with or might not be aware of. Yet we see huge oligopolies of the digital world being built and expanded thanks to the Internet. A similar tendency applies to technologies like Big Data or Machine Learning which also might become centralized in the near future.
Economies of scale, economies of data, and economies of scope; all lead to centralization.
At some point, a new invention has entered the stage — Bitcoin.
As with every new technology, we will finally see a group of visionaries seeing possibilities no one else will be able to comprehend at the very beginning. The revolution takes time. That is why Bitcoin is not an overnight evolution, nor is it a quick-rich scheme. Bitcoin is the idea that, over the next 30–40 years, might re-architect vast chunks of society if used properly.
The Consumerization
When does new technology become consumerized?
Does it happen while trying to explain how many transactions per second (TPS) can be performed on Solana and how many on Ethereum? I doubt that.
How about discussing the security measures? Not even close.
Do people discuss Instagram through the lens of technology?
Oh, look! That’s some nice Python script that just got released, let’s try it.
The technology becomes consumerized once we stop talking about the technology per se.
The DeFi Summer of 2020 led to the surge in valuations of tokens connected with decentralized finance. People were talking about projects, implementations, and cashflows; they were talking about the technology and numbers while the core problems and ideas were left behind or barely mentioned.
DeFi did not yet hit the core societal problems with its implementation. It needs time to grow and evolve to address the needs and become widely consumerized.
The fun and ease of using NFTs allowed the consumerization of crypto without talking about technology.
The Beginning of Punk 6529
What was the initial view of the NFTs, even by the true OGs in the space, when Punk 6529 decided to explore the area and see if there is any potential to grow?
That is some goofy thing. Let’s go back to real work; building projects, writing smart contracts or whatever.
Towards the end of 2020, the spidey sense made Punk 6529 dig deeper into the world of NFTs despite initial views of crypto OGs he spoke with. The hunch turned out to be the spark that led to unravelling the possibilities of the NFT technology.
One cannot understand something without doing it, as the best learning is through practice. That is why Punk 6529 decided to roam OpenSea and buy cheap NFTs just to get the feeling of playing and owning them. Exploration of the space and playing with it turned out to be fun so the further investigation began.
The next step was getting his friends to own and play with NFTs by sending them to different wallets and checking what else can be done with them at that point.
The feeling of using and owning NFTs began to grow, not only in Punk 6529 but also across the crypto community as well leading to the growth of a trend which can change the crypto world forever.
The Distorted Image
Consumerization of crypto through NFTs has at least one major point of failure — centralization.
The moment we do not care about technology, we do not care whether the infrastructure is centralized or decentralized. The end-user cares about the nice look of the application, decent UX and low transaction fees. It does not matter whether the NFT is stored in a centralized and custodial wallet or not.
The bold guess might be that most people in Silicon Valley and Crypto Twitter have the majority of their crypto stored in Coinbase’s custody or other centralized entity. One of the reasons for such behavior might be the fact that most of them treat Bitcoin as a financial investment and not as a way to organize things; to build the society anew.
The distorted image of Bitcoin, Web3 and NFTs comes from trying to understand it via theory and not by practice. Therefore, let me repeat the words of Punk 6529.
