The internet brought digital abundance—content and media can be freely consumed at massive scale. The blockchain provides digital scarcity using mathematics to prove uniqueness. NFTs built on top of blockchain can be applied to digital art to transfer ownership as a token (in whole, non-fungible) to another party. By proving ownership and that there is only one owner, digital art can be valued higher with these guarantees.
While the application is novel, it’s unclear that the technology led to a digital art boom or merely the centralization of digital artists into marketplaces like SuperRare. It also seems to feature heavily in any kind of distributed metaverse with marketplaces for digital goods.
Links to this note
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Trading Volume of Nfts Fell 97%
A recent analysis of the trading volume of NFTs found that it fell 97% from $17 billion in January to $466 million in September.
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AI Puts a Higher Premium on Unique Knowledge
AI augmented tools for creative processes like writing (ChatGPT) and drawing (StableDiffusion, DALL-E-2) establish a new baseline for content. This is a step change for many industries where the value will get competed away (e.g. everyone can compete in editorial SEO). That means that there will be an even higher premium for unique knowledge that is, by definition, not replicable by advancements in general AI tools.
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Cryptopunks Are the Star Wars Action Figures of the Future
A commonly cited success story of NFTs is CryptoPunks. They were 10,000 uniquely generated pixel art avatars released on the blockchain for free. They’ve since become a hugely sought after item with market prices greater than $7MM.