At a point in my life (early 2021), when I heard people talking about “fungibility” my immediate response was an eye-roll accompanied with a yawn and the realization that my time spent on junk like this was also invaluable.
By now you have probably read plenty of headlines and pundit takes: when you look past the cartoon memes and volatility of cryptocurrencies, you’ll see there are practical applications for these nifty little contraptions. And soon, many believe these standards will define more than AI arranged pixels.
But every time I come across conversations about NFTs on the internet, I feel like we’re still talking about this in a very fixed mindset. So I wanted to add my take to the conversation, because I’m interested to see what others are thinking about these issues too.
Not the pixels, but the policy
Under the hood, an NFT is a contract implementing a transfer of ownership and arbitrary valuation.
This is altogether an abstraction of the gold standard.
The general principle of the gold-standard was for giving governments a way to exchange fixed amounts of their local economy into a commodity. This monetary policy stimulates economic-based production when its value rises and discourages similar production activity when its value falls.
The same application applies crypto, their liquidity pools, and ultimately to NFTs.
How can we define these concepts on a blockchain?
And why use a blockchain for social honor concepts at all?
Let’s clear something up right away. An NFT is not a picture. An NFT isn't a piece of music or currency. Nor is it a “receipt” or even a simple "acknowledgment" (as it’s so cleverly referred).
It's a tokenized (data secure) agreement. And in today’s cryptocurrencies, we know it as a smart contract. But not only any smart contract; an NFT is typically a variation of the ERC-721 smart contract the defines the specific events and functionality, making it globally unique in a way so that within the contract we can:
- assign anyone ownership
- describe its contents as unique
So, what can meet an ERC-721 definition?
Before ERC-721, our valued-based agreements were limited the exchange of correlative measures by assets like precious metals, foreign currencies, or the price of food.
But the birth of the web gave us a new way to describe everything that is included in our economy and more. And history of Web 2.0 is precisely what makes Web 3.0 on beyond so incredible to be witnessing.
Now, thanks to these simultaneous digital revolutions, frankly, immutability on the blockchain (being able to store and prove something is unaltered) opens a world where we could make a global digital description of almost anything!
The magic is that we can now take objects or "things" off-chain, like you see with both digital and non-digital art alike, and we can digitize a description of this "thing" in a way that is immutable. This gives us a piece of code that lets us do things like assign value or transfer ownership or give voting rights.
If we can extrapolate data that describes a specific piece of property, content, or a piece of data, we can then describe ownership and keep a ledger of who keeps this information — in a way that is nearly impossible to dispute.
Since we can keep a digital record of all the meta information describes the contents, we can attach it to smart contracts. This gives us an unbiased observation of the transaction that can also be validated and documented by a 3rd party. Automatically.
With this recent change in technology, we can take certain structures that exist in society and values that need to be upheld and we can validate them through mechanisms of crowd-sourcing.
If you add the NFT value proposition back into industries like the gig economy, we automatically shift power back in the hands of people to allow them to take part in a tangible system of consequence.
This same system is not impractical, it’s already US Law.
A social-driven collective
So how does a NFT help the economy and workforce?
Perhaps they got carried away with The DAO. But now, through things like The Wyoming Decentralized Autonomous Organization Supplement or Vermont Limited Liability Company Act, we have practical approaches to help legitimize and start such systems.
They did not set up the gold standard to be completely rational, but to become more comprehensive as it grows. And we see the same sort of agility in the defi’s governance techno-revolution.
Despite the misnomer, a DAO is not a robot; it is a collective of human intention. And it’s the only tool we have today to help solve our many crises. And it’s time to reason with it and get it working for us.
We have already seen tools, metrics and processes born out of the gig economy explode — especially with the rise of freelance becoming so attractive, even Microsoft/LinkedIn’s news about launching a marketplace hard to ignore.
But in my experience, they usually built these methods solely for the benefit and optimization of the for-profit companies that run them.
I believe we can take some of these concepts we’ve seen in the industry like car sharing, online freelancing, and other B2B contracting agencies for W2 and 1099 based knowledge-workers and make a techno-economy work more favorably for everyone involved.
It would not be too far-fetched from today’s models to implement fair and transparent AI inspired techniques like a universal query engine that can factor in industry agreement upon milestone measurements that are paired with stake/ownership. Or process discovery through a Case-Based Reasoning (CBR) process models to help plan, rationalize, and integrate both organizational and individual worker goals.
An idea bigger than the system
By matching previously documented work activities, a knowledge graph gives us specific data about previously experienced situations to help the economy revise products and reuse them for solving additional problems identified in new situations. This allows for incremental processes and inventory development that can be recalled, sustained, revised, and kept for future problems. We can anonymize and circulate this information through automated market makers providing companies more data back into the economy to help us learn from each other. In public, like we always did, before we decided our time was so valuable.
The difference between using exiting current corporate vendors versus using these ideas coming from blockchain protocol is that we will no longer need to be at the mercy of any authority (think Ticketmaster vs your favorite local venue).
Local participants could create small “liquidity pools” for individuals and supporters alike that would help translate value, stake, and rewards directly to the participants.
Instead of relying on one party to just “trust us” we start a trust-less model where everyone can take part and the market. And yeah, I know that is probably beyond what you’re thinking about when I used the word NFT, but this is happening whether you see it as a problem. Alternative forms of digital rewards are an untapped market and vacuum filling fast. Jpegs are just the start, sporting event tickets are just the signal of mass adoption, and insanely high APY could just be the benefit of the early adopters.