Finding The Signal

There have been three technological milestones in my life that changed how I view the world. The first was the transition from BBSes to the internet. Realizing that I could interact with people not just within my area code, but from all over the world was unbelievable. The second was the advent of Flash. My career started at the early stages of the creative revolution that Flash catalyzed, and I vividly remember watching the internet transform from a static information delivery system to a collection of interactive art pieces and experiences. The third milestone —which occurred only a week ago— was fully understanding the implications of blockchain technology and how it will alter the future. Strangely, it took me over a decade to fully understand how revolutionary this technology will be.

In 2010, I caught wind of Bitcoin and was floored. It was the most fascinating tech I had learned about in a long time, and I remember telling my friends over dinner how this will change the world. My excitement was mine alone, and they mostly just nodded politely with glazed eyes.

Over the next few years, I acquired some coin, sold it, and lost interest. The promise of bitcoin as a transactional tool died with the high fees and slow confirmation rates. Criminal organizations began using it and it birthed the ransomware scourge. Then it morphed into a storage of wealth, and I began to see it only as a pyramid scheme, where the early adopters hyped it to get rich.

I believe this is why it took me so long to get interested in Ethereum and more specifically, smart contracts. The initial broken promises of BTC put a dark cloud over that space and I didn't look close enough. I didn't see the how different Ethereum was from Bitcoin.

Recently, two of my friends got heavily into NFTs and when they asked me to get involved, I passed. The early NFTs referenced centralized URLs and I saw how fragile they were. It reeked once again of pyramid schemes and I didn't touch it for almost a year. But after a lengthy conversation with one of them, something clicked. I spent the weekend reading everything I could, devouring every article on NFT, DAO and smart contracts. I started writing contracts in Solidity and figuring what was possible. It was like those other "milestone moments"; I was loving technology once again.

My perspective has changed. This is the future. This will change everything from ownership to governance. Here is what I learned that changed my mind.

IPFS makes NFTs work

NFTs are simple. They are essentially unique strings of text that reference a given media asset, like an image. If you own an NFT, it means you have purchased a receipt for that particular string of text. When early NFTs were created, they often pointed to URLs that were hosted by centralized servers. Why is this bad? Well, imagine you paid $1000 for an NFT, only to find out that the server that serves your image has gone down due to an unpaid hosting bill. It makes no sense to build decentralized tech on centralized components.

IPFS drastically reduces the fragility of NFTs. IPFS is a way to serve URLS in a decentralized way that cannot be censored. If you put an asset into the IPFS network, it is available from multiple sources/locations, and even if one node goes down, it's still available. It makes NFTs work and far less fragile than their earlier incarnations.

NFTs act as keys to private worlds

Because NFTs can be verified inside a wallet, creators can offer special access to anyone who bought their items. You can have NFTs that can interact in special ways with your existing NFTs. You can restrict online chat rooms to owners of your collection.

The ability to create experiences around this ownership is key to future of AR/VR.

NFTs can breakout of walled gardens

NFTs exist outside closed gardens. If you buy an NFT of an axe in Game A, then later start playing Game B, the creators of Game B can build a version of your axe from Game A and offer it to you. Digital assets can break out of their centralized, walled gardens.

The absurdly hyped MekaVerse minting is happening as I write this. I can see owning a Meka and later on playing a game that allows me —and only me— to ride inside the Meka I have in my wallet.

None of this is controlled by a centralized entity. There is no server that goes down and I lose all my digital assets. There is no Facebook or Twitter that controls my assets.

Blockchain enables creators and reduces gatekeepers

Our economy allows people who gate creators to make money. Want to publish a book? Find an agent. What does an agent do? Helps you get your book published by guarding her network and giving it to you for a cut. How do you get your book published? You have to find a publisher that takes a cut to get your book printed and distributed. How many slices of your profits before you're left with nothing?

In the new economy, authors will mint their books on blockchain and distribute editions at their leisure. The network will not be gated; it is open. Publishing will not require physical printing. Authors will build contracts that give them a percentage of all resale profits. They could even offer a percentage of each sell to their loyal fans.

Blockchain will shift massive amounts of wealth to creators (as you are already seeing with the current NFT bubble) because traditional gatekeepers won't exist. The ease at which contracts can be crafted to give percentages to creators will pressure those in power to be equitable. The era of SaaS companies creating massively profitable walled gardens will diminish.

Data no longer sits inside walls. It exists in the public —with open standards— and you take it with you wherever you go.

This is only the beginning

For the longest time, I could not see the signal. I only saw noise. But it's there, amidst the inflated prices of silly NFTs and hype-bubbles spawning daily, the signal is saying: "This is the future. Plan accordingly."