What is The Decentralized Web? Who is Using it? And Who is Big Fluffy?
“The masses never revolt of their own accord, and they never revolt merely because they are oppressed. Indeed, so long as they are not permitted to have standards of comparison, they never even become aware that they are oppressed.” — George Orwell.
NFTs, an advent of blockchain technology, have erupted from a tiny corner of the internet into a cultural phenomenon worthy of a skit on Saturday Night Live. This article does not explain blockchain technology nor NFTs. It asks business owners in the music industry, healthcare, and investing for a non-technical introduction to blockchain’s rich and famous offspring, non-fungible tokens.
Why Is Blockchain Important?
With that said, I recognize that many people don’t have a standard for comparison when thinking about blockchain. So, before we enter the entrepreneur roundtable discussion, let’s begin in a familiar place, with today’s major tech giants — Amazon, Apple, Facebook, Google, and Microsoft. Chances are that you use their services every day, dozens of times each day. So do billions of people around the world.
When we create an account with one of the big tech firms, our information is stored in what’s called a database. Located on the respective campuses of each tech giant, think of databases as physical warehouses that store tons, literally tons, of computer hard drives. When we engage with Amazon, Apple, Google and the others, our usernames, email addresses, passwords, and personal files are organized and housed in these warehouses.
Snap a photo with the iPhone and it’s uploaded to Apple’s database in California. Open Google Drive to create a spreadsheet, and it’s stored inside a sleek-looking building at Google. Amazon and Facebook databases are a bit more abstract. Rather than storing personal files, they tend to track behavior. The products we buy, the comments we write, the videos we watch, the phrases we search. All stored inside databases on futuristic campuses on the west coast of the United States.
This storage arrangement is the foundation of cloud computing, which, within the last decade has converted physical storage into “thin air”, better known as “the cloud.” By storing files in “the cloud,” we can login from any computer in the world to gain instant and remote access to our files. It’s as though our online fingerprint follows us everywhere. Only recently have publications like “The Age of Surveillance Capitalism” (written by Shoshana Zuboff) and “The Social Dilemma” (directed by Jeff Orlowski and distributed by Netflix) pointed at the danger of this storage arrangement. In essence, major tech companies have become the gatekeepers of our personal and professional information. Our emails, photos, word documents, videos, search history, and anything else we relinquish (including financial information and medical records) live behind the lock and key of big tech.
The extent and severity of this danger is playing out like a weekly drama. As congress questions Mark Zuckerberg in front of a live TV audience, YouTube feeds us videos based on phrases we Google-searched and comments we wrote in personal emails to friends and family members.
From the shadow of this invasion emerges blockchain. A new technology with a fresh promise. No corporate databases. No gatekeepers. An encrypted ledger as the foundation of a new internet, where each person is the direct and anonymous owner of their digital property.
Non-fungible tokens (NFTs) are files stored on this anonymous ledger, the blockchain. The most commonly used chain (thanks to its speed and durability) is called Ethereum. Create a file, authenticate it on Ethereum’s network, and become the sole and verified owner of that file. Songs, images, videos, written documents are all eligible to be minted and verified as NFTs.
Blockchain technology has existed for more than a decade. Technical institutions have invited computer scientists to teach its functions on the most famous university campuses in the world. It is far more complex than what I have written, but these words are designed as a standard of comparison, a reference point to contextualize the value of a decentralized internet.
Who Is Making NFTs?
This week I spoke with entrepreneurs from three distinct industries. Each has either created a verified NFT or funded an NFT platform. In the spirit of this fresh digital world, I invite you to imagine a glass table inside a room with a solid blue backdrop. Four chairs. I’m seated around the table along with three entrepreneurs, and a conversation begins.
Checo is a recording artist whose music has generated more than 1 million streams on Spotify. He’s also a clothing designer with a brand called Women Are Undefeated. Checo just minted his first NFT.
Checo: People are referring to blockchain and the NFT world as Web-3.0, because it cannot be controlled by Google, Facebook, or anyone else. Back when I first jumped into the crypto world in 2017–18, working with the Ethereum blockchain was scary. It felt like you could make one wrong click and lose all your money. Now, three years later, it’s just as easy as using an app on your iPhone. You don’t need to know computer science in order to be in the NFT game. If people want to know where to start, I would just tell them to get a metamask wallet. That will give you access to the NFT world, and a lot of things can open up from there.
Me: When you mention web 3.0, I think back to the 1990s when the internet first reached the masses. If blockchain is a new version of the web. Where are with in the blockchain and NFT lifecycle?
Checo: It’s tough to know, but it’s definitely still early. I spend a lot of time in the crypto world on a daily basis, so sometimes it seems to me like everyone is rushing to be part of blockchain. But when I take a step back, I realize that creating a metamask wallet and trading in Ethereum is still so foreign to people. It took me about a week to adopt a metamask and get connected. I feel like it’s a hedge, a long term play, for anyone to start gaining literacy in the blockchain and NFT space right now. The bottom line is that this is a new technology and it’s not going anywhere.
Omar Serra is a serial entrepreneur and investor born in the Dominican Republic. In 2007 he began designing and developing a virtual currency project (Buscan2) for students in Latin America.
Omar: By performing well in school, students would earn digital credits to buy food, clothing, transportation, cell phone service, and even schooling. Financial strain is the reason why the school dropout rate in Latin America is so high. So our focus was on solving that problem, not on creating a digital currency. But we were way ahead of ourselves. Banks, malls, and food corporations were not ready for such innovation back in 2007. Now they are.
When I called Omar this week he was fresh out of a meeting that garnered a six figure crypto investment.
Omar: Within this new blockchain world, we are at the very, very beginning. We haven’t even scratched the surface. I think about 1993 when I used to connect my computer to the phone outlet and how that opened a whole new world. Suddenly I was able to chat, hangout, see pictures, and send emails right from my house. I felt like I was seeing the future. So, if you’re asking me to put the dial-up web side-by-side with the blockchain web, I would say we are in the mid 1990s. The current [blockchain] web is AOL. Google, Amazon, the new Apple…they haven’t even been born yet.
Me: How does this change the way you approach investing and entrepreneurship?
Omar: People give me money to assemble a team, build a brand, find a market. That’s my work. These days, when I get contacted by investors regarding my next big project, my answer is “blockchain.” 100 percent of the time. Why would I start building a team, researching a market, getting an audience, and promoting the brand when all I have to do is find blockchain companies that I believe in? The market is already there. I find a project that I believe in and we invest in their token. It’s less complicated than the traditional way. Matic (also known as Polygon) is a project I support. The value of its token went from 3 cents to 39 cents in the matter of one month. Uniswap is another one, a decentralized trading protocol.
We’re talking about direct access to markets. The idea that you can trade like a pro on the exchange. I can touch everything that’s happening through my crypto wallet. 10 years ago, advisors were the only ones who could be part of the club. You needed to take a class and become a certified investor. They were the only ones with direct access. Now my kids can exchange crypto. I can get an NFT directly. I can buy Bitcoin or any token I want.
Ryan Garcia is the CEO of Beeville Medical Clinic near San Antonio, Texas and runs Ryhill Media, an independent digital marketing agency. He is as practical an entrepreneur as you’ll find in the millennial generation. Finding the value of an asset — be it a baseball card or a medical clinic — requires a simple action: bringing it to the market. When I called him he was finishing up a full day at the clinic. Ryan minted his first NFT last week.
Ryan: I think about blockchain like I think about the social media bubble explosion. For me, designing an NFT was about being “first to the market.” When I find something I don’t understand, I immediately want to use it and become familiar with how it works. Blockchain is still super early. This is dialup internet. I’m talking about when you used to get the CD in the mail and put it in your computer. You would get 1,000 free minutes. In the blockchain world right now, some people are coding and building crypto assets for no reason. They don’t even know the use case or purpose of their token. That tells me this is still a wide open field. It’s way early. If you want to compare it to the early web. Yea, We’re talking AOL chat.
Ryan: I relate NFTs to the process of grading sports cards. The way it works in that space is you send your collectible to a verified grader. If it passes their inspection, they will certify the item, seal it, give it a product grade, and ship it back to you. That grade gets attached to your card number and is documented. A graded card is worth an average of 5x more than an ungraded card. That’s how I think of NFTs. It’s a stamp of approval.
What Do NFTs Look Like?
Me: Last week Checo designed a 3D asset called Big Fluffy. Check it out.
Me: How do NFTs change the way artists operate?
Checo: Anyone who has artistic or creative energy will recognize that the NFT platform experience is a new and exciting way for independent artists to monetize their work. A lot of artists and designers will hire people to do a job through sites like fiver.com. With NFTs, artists now have the power to know how well-received a freelancer’s work is before hiring them. It’s a new way of measuring value. On the blockchain, it’s hard for people to copy or steal things.
Already in the NFT space there are people with thousands of followers who like the artwork they’re making. Blockchain merges the worlds of art, branding, and company-building with some potential mega value. There’s life-changing money being made right now. I don’t know how long these prices will last. It reminds me of when kids used to collect basketball cards.
As an artist, you want to build a portfolio. All you can do is make what you think is cool and fun. @xcopyart was one of the first to mint digital art. @larvalabs is creating generative environments where you can go and interact with crypto-based apps and games.
Omar: Who would ever have thought you could own something that you cannot touch? Collectibles are now digital, and someone is willing to spend $70 million on a piece of digital art. If you want to go see the Mona Lisa you have to have a passport, in some cases apply for a visa, buy a flight, get a ticket, wait in line. My kids love the Oculus Quest 2 (Virtual Reality Headset). When I talk about the travel restrictions due to the virus, they talk about all the places they’ve visited in VR. If we have to wait another 3 years to travel they’re fine with it.
Ryan designed and minted his first NFT using a platform called Open Sea. Take a look.
Ryan: I’m a big fan of putting my artwork up on my social media wall. I don’t think it’s selfish to do that. I think it’s being proud of what you make. More and more people are willing to display their digital work even though some people may not understand the art of it. If I have five copies of a piece of work I did and someone wants it, I don’t see why they wouldn’t pay for it.
Me: Where have you gone to mint NFTs on the blockchain?
Checo: There are a lot of platforms you can use. Each one has its own pros and cons. I did my first one on OpenSea. It has a feature called lazy minting, meaning an asset doesn’t get minted on the blockchain until it sells. Open Sea doesn’t keep any metadata. Rarible is a user-friendly platform with a nice design.
What Else Can NFTs Do?
Checo: Art pieces are just the surface of it. I think you’ll start to see people bridging the gap between the blockchain and real world inventory like real estate. You’re going to see concert tickets, game tickets, and memorabilia verified on the blockchain and then retailed in the physical world. Mark Cuban wants to make Dallas Mavericks tickets available through the blockchain.
Me: Can you see blockchain having an impact on the healthcare industry in the near future?
Ryan: I could see it being a unique way of verifying patients’ insurance ID cards. An issuance company could go out and buy 10,000 digital wallets and then assign one to each patient. Think of it as a tech version of the DMV but instead of motor vehicle cards it would be healthcare patient IDs. I can imagine patients walking into our clinic and in their wallet they have a piece of ID that verifies them on a blockchain. But right now it’s all about art and collectibles.
What are some of the downsides to blockchain technology?
Checo: There’s a cost to accessing the Ethereum system. You’re paying miner fees and transaction fees. They’re called gas fees. Essentially, users are the ones funding the blockchain’s operating costs.
Omar: Gas fees are a big problem right now. Ethereum kills with gas fees. The good news is that there are companies out there — and Matic is one of them — who are working to reduce or even solve the problem of gas fees.
Ryan: There’s a ton of hype right now, so the market is overpriced. A video of Kevin Porter, who is an average NBA player, went for $250,000 just because its verified on the blockchain. Think about that. I wouldn’t pay $250,000 for Kevin Porter to come to my hometown and practice with the local high school basketball team. Heck, I wouldn’t pay that much for him to come to my house and play one-on-one in my driveway. That tells me the marketplace is way overpriced.
But right now is a great learning opportunity for a lot of people. One37PM is GaryVee’s journalism site. It’s kind of like a BuzzFeed type deal. They publish content about interactive technology, cannabis, new age stuff. They posted Jack Harlow’s NFT skit, which was a clip that originally aired on Saturday Night Live. They’re trying to teach the younger market that they don’t have to invest in stocks. They’re sending a message to the next generation that they can invest in crypto instead.
Me: Omar, when you get a phone call from an investor who wants to support a blockchain project, how do you respond when they ask about investment risk?
Omar: Listen, this is investing and it’s entrepreneurship. There’s always risk. This can go to the moon or this can end up crashing down. Ultimately we are all responsible for how we manage this new world. Be careful who you vote for, that’s what I tell them. We are responsible for who we put in charge. Also, CEOs have the power to destroy things. We have to be selfless, not selfish. That’s the truth.
But I am 100% committed to blockchain. If I could sell my underwear to get an extra dollar to invest in Matic I would do it. Entrepreneurship is full of risks, but throughout my entire life as an entrepreneur this is the least risky thing I’ve done. There was a lot more danger the old way.
What’s Next?
Checo: I’m working on an NFT platform that’s trying to bridge the physical memorabilia world with the NFT world to generate experience-based rewards with some current NBA players. For instance, you might be able to win a practice session with a high profile basketball player. So we’re going to be launching that platform soon.
Ryan: I want to learn more. There’s still so much we don’t know. A lot of people think they’re involved and think they’re in a great position with blockchain, but most of them aren’t educated enough about it to truly know where they stand or where the market is at. But people always want what’s new and exciting. Kids don’t want to invest in an index fund. They want to be the first in their group of friends to be involved in new technology.
Omar: I want to feed the poor, build homes, improve people’s lives. My end goal always leads to that. But right now I’m not being as forward with that mission. My first goal is to return my investors as much money as I can. I want to 4x their investment and then say to them, hey let’s take half of what you earned and invest it in a humanitarian project. Ultimately, this is world-changing. This is going to change politics. It’s going to change the minds of people. And it’s going to happen fast. We don’t have to wait 5 or 10 years. Even people who are 80 years old right now are going to see changes that they never could have imagined. This will be the biggest change that I have ever been part of.
Wrap It
Three business owners. Three different industries. Three distinct agendas. None of them computer scientists. Each of them active in the blockchain and NFT space.
Back in 2014 filmmaker Laura Poitras released Citizenfour, a documentary film featuring Edward Snowden. For much of the film, Snowden is sitting on a bed in a Hong Kong hotel room “blowing the whistle” on the National Security Agency for its invasive surveillance practices. At one point, he flashes back with pure joy to the early days of the internet.
“I remember what the internet was like before it was being watched, and there’s never been anything in the history of man that’s like it. You could have children from one part of the world having an equal discussion, where they were granted [equal] respect, with experts in a field from another part of the world on any topic. It was free and unrestrained. We have seen the changing of that model. Many people I’ve talked to have mentioned that they’re careful of what they type into search engines, and that limits the boundaries of their intellectual exploration.”
