*Disclaimer: this is not financial advice and should not be viewed as recommendations to buy or sell any asset, this is purely educational and the information below is solely my opinion, please do your own research and develop your own conviction*
Depending on who you talk to, crypto is either the greatest gift to humanity or the biggest scam that’s ever existed. Typically these comments are the result of over-exuberance, a love for technology and financial freedom, and an inability to understand technology, trends, and human emotions.
No one in the world should still be looking at crypto as a bubble or a scam but yet we’re still at that point in the adoption cycle despite institutions entering the scene and actual products being used by people on a daily basis instead of vaporware, whitepapers and dreams of a rosy future dominating the headlines. So the question remains why? Why are people on one side of the coin so in love with crypto while others are so vehemently against it? Is it the inability of an older generation to understand technology when they barely can figure out how to use their phones beyond Facebook, YouTube and porn? Is it jealousy and envy for all of those people who have created generational wealth on a stupid internet thingy? Is it just the effect of success and financial excess that allows people the luxury to think everything is going to stay the same and life is just perfect the way it is? Is it the fact that financial literacy is used as a tool of oppression in this country and that most young people would rather scroll through Instagram or TikTok for hours than learn something new that takes copious amounts of time to understand?
From my experiences with family members, it’s usually a wasted opportunity to explain crypto and why it's emerging as a legitimate asset class and a new way of life. I can sit down and explain that bitcoin is digital gold backed by the cost of electricity. I can talk about digital scarcity and why basic supply and demand metrics can drive the price of bitcoin up to $1,000,000 one day. I can break down how bitcoin is a better store of value or unit of measure than gold because of its liquidity and the ability I have to use it as a unit of measure with p2p transactions or as a currency at the point of sale. I can talk about how bitcoin is going to become the global settlement layer for world economies and will eventually be owned by every central bank in the world. I can talk about Ethereum and how it is the operating system that crypto depends on to build and deploy applications that people use daily to create financial stability, wealth, content and entertainment. I can talk about how ether is the settlement layer for digital assets and everything flows through its ecosystem before expanding out into its own little rivers and banks. I can go on and on about smart contracts, interoperability, NFTs, synthetics, etc. but none of this sticks, and it often falls on deaf ears, probably as a result of old age, stubbornness, laziness, ignorance, and it’s often a waste of time and a frustrating experience. And I probably should give up on trying to explain why crypto is important and not a scam, but I’m not going to, because it provides an opportunity that is changing the world forever and is a disruptive innovation that can create wealth for millions of people over the course of their lifetimes.
So I’m going to do what I probably shouldn’t, since it’ll just be ignored by one generation that is either obsessed with scrolling through Instagram and TikTok, or another lost in their old, stubborn ways, and try to explain why crypto is important, how it helps people, and why it is the key to improving the quality of life for all of us on this planet.
Bitcoin
You can’t have this discussion without talking about the most important asset and the backbone of the entire crypto community. Bitcoin exists as a permissionless and trustless digital currency that facilitates p2p transactions as well as purchases at the point of sale for select retailers (the list is ever growing). In layman’s terms bitcoin lets you send money to people without a middleman and gives you the freedom to spend something that isn’t a depreciating asset like fiat is.
The benefits of having a permissionless and trustless digital currency is pretty simple: no intermediary can step in and dictate monetary policy. With fiat, the Federal Reserve has the ability to manipulate monetary supply whenever it wants. This is helpful at times when economies need stimulating and institutions need liquidity, but overall this is a tool that’s often abused in order to devalue a nation’s debt and bail out bad actors in the financial system as a last ditch effort to avoid a liquidity crisis and contagion.
The Fed’s ability to create money out of thin air has a two pronged effect: typically, it leads to asset prices going higher while increasing the cost of living. For investors, the cost of living increase is usually covered by their investments appreciating more than their dollar is devalued, so the trade off is worthwhile and barely has a negative impact. But for the working class who aren’t fortunate enough to have the capital free to invest or the knowledge needed, the cost of living increases can be debilitating as their dollar loses its buying power each year.
This is where bitcoin comes in as a viable elixir for the Fed’s poison. While bitcoin is known for its rambunctious price swings, over the course of its existence it’s value has increased far more than it decreased during its worst droughts. This is the result of their being a finite supply that can’t be manipulated or inflated beyond the predetermined inflation schedule that has its output cut in half every four years.
What this means is pretty simple: only 21 million coins will ever exist, you have to use lots of electricity to create new coins which means it’s labor intensive and not something that can be abused or manipulated. Every four years the reward for miners gets cut in half which means the inflation rate decreases. As demand increases while new supply decreases, we see prices go higher with the majority of selling pressure coming from miners to make ends meet rather than holders losing faith. This is what drives the price higher and leaves it susceptible to volatile price swings since we have lots of buyers but fewer sellers that are desperate for liquidity. Since those sellers are essentially programmed to sell in order to continue their mining operations, it leaves them at the mercy of the buyers who determine if they are happy with the current costs.
When this happens they can take advantage of the miners needing to break even and utilize any pressure from regulators or nation states to their own benefit to drive down prices. This forces mining operations to eventually shut down, lowering the hash rate (amount of miners active) and sending bitcoin into price discovery. When buyers are satisfied with the current sell off, they typically begin accumulating again, sending the price of bitcoin higher while increasing their positions and allowing miners to turn their machines back on and resume the hash rate that decreased.
Although bitcoin is known for these crazy price swings that scare investors and allow pundits to label it as a volatile asset that is a fad, bubble, or ponzi scheme, it’s the result of a few weak hands that are uninformed and only there for the ride higher, those that find themselves under immense selling pressure due to their mining operations, and overleveraged longs that get liquidated due to their reckless behavior after being caught in the crosshairs of price discovery. The real believers who have invested in bitcoin aren’t the ones selling, and in fact, they’re the ones buying during those massive drawdowns.
During the most recent crypto winter, which saw bitcoin go from $20,000 down to $3,000, 86% of the holders from the highs never closed their positions or trimmed on the way down. In the last three months, which have been the most violent since the covid lows last year, 83% of holders didn’t move their supply and didn’t bat an eye at the price discovery drastically lower.
The people who own bitcoin as investors barely ever budge, and more often than not, find themselves to be active accumulators. In addition, we’re seeing new people flowing into the asset during these large drawdowns, with one million new holders entering the market over the past 30 days, which has seen bitcoin rise violently off its lows. So although this is an asset that in theory is too volatile to ever be a currency, it’s one that has strong support from its users and in fact functions as a true store of value over the course of its lifetime.
With El Salvador announcing bitcoin as legal tender, we’re seeing a new use case emerge for it as a true unit of measure. Although you can spend bitcoin currently thanks to the lightning network, crypto debit cards from Coinbase and other providers, and on the payment rails from the Flexa Network, it’s typically converted to fiat upon impact for most retailers. In El Salvador we could have the potential to see goods priced in sats rather than dollars for the first time which, in fact, would remove all volatility from the currency completely. If you view bitcoin in only sats, rather than it’s dollar denominated value, you will always transact sat for sat and not need to worry about your sat buying you $5 of coffee today, $10 of coffee tomorrow and $1 of coffee next week.
As more young people enter the business world and find themselves opening up SMBs, the potential for bitcoin to be accepted as payment will increase and at some point, exist on their books as an asset, rather than something that is immediately converted to fiat. Substack recently announced it will be accepting bitcoin for payments, Tesla plans to resume acceptance at some point, Shopify stores have plugins underway that facilitate this process, the opportunity for bitcoin to be used as a true unit of measure is finally here and only going to continue growing over the course of this decade.
Ark Invest has also speculated that bitcoin will be used as settlement at some point thanks to its ability to immediately reach your wallet within the time it takes for the blocks to confirm, which is infinitely faster than what we have now in the current financial system. This will make more and more sense as we see a rise in central bank digital currencies. China is currently in the process of unleashing their CBDC to the masses and eventually pivoting to an entirely digital world with smart contract capabilities.
As China’s CBDC enters the market, it will be easier for countries to transact with China by buying their CBDC or finding a global intermediary that is trustless. This is a move that will lead to the weakening dominance of the dollar globally and open the door to an asset like bitcoin to be used as the global settlement layer due to its neutrality. Again, if countries transact solely in sats without worrying about dollar denominated value, we will have an asset that is free of any volatility that impacts trade and international services.
At some point we will also see central banks which are ravaged by debt and inflation begin to pivot toward having a basket of currencies at their disposal backing their unit of measure, and within that basket will most definitely be the most neutral asset of all, bitcoin. This may not occur tomorrow, next year or in five years, but it is an inevitability as institutions continue adopting and countries begin seeing the light.
Utilizing bitcoin offers financial freedom for those who live in inflation ravished populations and oppressive governments. There are people currently taking advantage of crypto in Afghanistan to create wealth that far exceeds their daily wages, and there are those who are able to have ownership of their money thanks to crypto despite the banks locking the doors and telling people withdrawals aren’t allowed at the moment.
A few months back Lebanon turned its back on its citizens and wouldn’t let them withdraw money as well, leaving people susceptible to being taken advantage of by exchanging their currency on the black market for pennies on the dollar in order to have some kind of value in their hands. Bitcoin grants its users financial freedom and the ability to own their money, self custody it, and have it in their possession at all times. And while we are currently dependent on the internet and electricity to utilize bitcoin, China is showing that you can utilize a digital currency solely through NFC technology which will be the next foundational step for digital wallets, payment companies and point of sale providers.
Bitcoin may be an incredibly volatile asset, but when you live in a country where you aren’t allowed to withdraw your money during a crisis, or your money is continually losing buying power each day, like Venezuela for instance, the volatility that you see on a day to day basis in bitcoin pales in comparison to the oppression from inflation and corruption that you face over your lifetime. Bitcoin can and will be utilized to free people from their oppressive nation states, which is probably the main reason China issued their CBDC as quickly as they did to avoid that inevitability, and it can help bring world peace as we all function in unison, as Jack Dorsey hopes.
There is no asset in the world currently that allows users to send money to each other with settlement that is infinitely quicker than ACH transfers, has a finite supply with holders who are consistently active accumulators, and growing economic and international presence. Gold has long functioned as a store of value over humanity’s history, but in what world has someone been able to carry gold and use it to buy something since the pivot to paper money? Bitcoin gives you that ability, it can be carried literally on a piece of paper if desired, and through technological developments, will eventually be used anywhere for anything.
Smart Contracts, DeFi and Ultrasound Money
With bitcoin we have a digital currency that functions as the global settlement layer for transactions between countries, economies and people. In the case of Ethereum, at its core, we have the operating system that allows decentralized applications to be built upon it.
One of the main allures of ether is its ability to deploy smart contracts and allow developers to create revolutionary dapps that change the way we exist and function financially. Smart contracts are the backbone of this industry as it allows lines of code to act as owners of technology. Once a smart contract is written, audited and deployed to mainnet, we can remove the human layer entirely and allow people to interact with the code completely on their own without an intermediary or trusted person ruling over them, deciding if they are allowed to utilize the protocol that’s been created. The only people involved with smart contracts are the users who interact with the project and the node operators/developers who monitor the code for issues, exploits and necessary updates to improve functionality or increase optionality.
When we have legacy tech involved, legacy being anything that’s been built outside of crypto thus far, we can call this web 2, we have people who act as holders of the keys to the kingdom that determine what we are allowed to do. Facebook,Twitter and YouTube determine what you are allowed to post and how much you are allowed to push the boundaries (sometimes rightfully so as no one should have the right to blatantly spread misinformation and propaganda), and Apple and Google determine what you are allowed to publish to their app stores. Going a step further, we even have those companies creating backdoors and exploits against our will that monitor what we do on our devices, using that information to target advertisers, or determine if the content we are creating is within moral and legal bounds (the Apple backdoor although “noble” in principle—I use quotes because I do question their intentions about whether or not this is to protect children, or a ploy to train their algorithms to develop better AI—is a dangerous precedent that should be discussed in court). For the most part these are issues that we take for granted and push to the side because they let us interact with our friends and family and boost our social currency, self-esteem and dopamine levels, but at its core, it’s a predatory experience that doesn’t reward the user for engaging these products but rather, builds an empire off of their desires and experiences. Smart contracts don’t do that, smart contracts act from a third party perspective on a decentralized level and let you take ownership of what you do.
I’ve long believed that the next great social media company that emerges will be one built on web 3 that will create a flywheel effect by tokenizing its users, allowing them to stake their likeness to earn rewards based on the impact their content has on the network, as well as rewarding them through fee sharing from the advertising revenue that is collected from their usage. This is just one of many ways smart contracts can take an everyday experience and transform it into a value creating event for its users, and Ethereum is at the forefront of this revolution acting as the OS and digital settlement layer for the entire crypto network.
While play to earn gaming is currently on the rise thanks to projects like Axie Infinity, it’s still very early to truly quantify the revolutionary impact of its nature. I firmly believe that our children will be able to make a living from playing video games which will eventually be jobs that they can have, by them being paid to complete tasks like building worlds or harvesting items, but it is still early to truly discuss the long term impact. Instead, I will focus on the impact DeFi has had and why it’s one of the most powerful tools for creating wealth that people are dismissing.
DeFi stands for decentralized finance, which is a way for people to be their own banks and create wealth through various borrowing and lending protocols, as well as participating in liquidity pools as an automated market maker, or in other ways such as options selling and lottery pools, and much much more. The one thing that makes this a revolutionary part of crypto is the ability for people to take their fiat, convert it into crypto (typically a stablecoin) and earn interest that far exceeds what banks are giving you. In addition, it allows people to take their deposits and use it as collateral to borrow money without having to worry about low credit reports, or being denied based on employment history or any other mitigating factor. In crypto, everyone gets the same rate and the same percentage loan regardless of their education level, employment, credit or tax history. All loans are backed by their crypto holdings, typically overcollateralized to compensate for the anonymity, and low risk from a contagion perspective.
Whereas predatory loans in TradFi can decimate and destroy the world—2008 anyone?—predatory loans don’t really exist in crypto since your holdings will just be liquidated and we move on as if nothing happened. People often cite the need to own crypto as a flaw for DeFi and something that doesn’t exactly help those in need in emerging markets or the working class. But thanks to stablecoins users can just take the money from their local currency and put it into DAI, USDC, USDT, UST, RAI, etc. and be able to participate in the DeFi revolution without ever owning bitcoin, ether or any other “volatile” asset outright. The biggest risks of course are related to exploits and smart contract flaws, but as technology develops, security in theory should improve.
DeFi should be taken seriously because it changes the entire banking dynamic for people, allowing them for the first time the ability to be in complete control of their money and financial future. Some can think DeFi is just a Ponzi and a fad that will disappear, but with over $85B in total value locked in DeFi currently with institutional products being built at their requests, users are showing the world how sought after and important these services are. This is a new way of life for people across the world that lets them take ownership of their money, be their own bank, and participate in projects and protocols that typically are only for hedge funds and wealthy people. Regular folks can’t be market makers in traditional markets, we need extensive training and financial backing, but on Uniswap or any other DEX I can deposit $100 in USDC and $100 in ETH (or any other pair I want) and collect a percentage of the fees that are being generated. Of course there are risks like rug pulls and impermanent loss, but this is just another example of how liberating and amazing this technology is.
And this is all made possible thanks to ether the currency which is memetically referred to as ultra sound money. While other chains exist and are worth interacting with and learning about, the biggest, most powerful one is Ethereum and thanks to EIP-1559 and the eventual move to proof of stake that is set to take place early next year, we are seeing the coin’s issuance decrease from a 4% inflation rate to 2% currently to eventually being deflationary upon the conclusion of the merger.
What does this mean? Well, under traditional metrics for ether, every time a block is mined four ETH is rewarded on average, with the introduction of EIP-1559, we have a change in the structure of gas fees and issuance (inflation). Typically when people want to interact with the Ethereum blockchain to sign a transaction (send money, use DeFi or buy NFTs), they have to pay a fee referred to as gas in order to encourage miners (and soon validators) to include their transaction in the next block. Due to intense demand for block space, fees are often bid up to get included as quickly as possible which can lead to ridiculously expensive gas fees that can cost users over $100 to complete a small transaction.
With EIP-1559 we have a change in the fee structure with a base fee being introduced that is algorithmically determined alongside the ability to tip miners for their services. Instead of these gas fees going entirely to the miner, the excess is now being burned (100,000 ETH has been burned or deleted so far) cutting the amount of ether awarded per block from four to two. When we move from proof of work to proof of stake, we’ll see the asset turn deflationary which, alongside the amount of ether staked (6% of all coins are currently staked) and locked in smart contracts (26% of all coins are currently locked up), will turn the currency into a scarce asset due to its limited circulating supply on exchanges (rumored to be 10-13% of all coins in circulation), therefore bidding up the price of the coin, increasing its value for holders, and maintaining its demand from a productivity standpoint.
This is how the ultrasound money meme is created. Ether becomes deflationary, it becomes scarce, and it continues to become heavily sought after thanks to it being the settlement layer that everything in crypto flows through. This is why ether needs to be taken seriously rather than being ignored.
There are other chains that offer some awesome products which should be considered as well, but the majority of them function in conjunction with Ethereum and act as a way to support the ecosystem, rather than outright compete. Due to ETH’s developer and security moat, it’s unlikely it would be dethroned at any point in the near future. Something like Solana might find it benefitting more in certain areas, like blockchain gaming, but it remains to be seen whether or not it can dominate users in their daily lives. The Cosmos and Polkadot networks have seen a lot of developer attention, but overall their products are still being fleshed out. Terra is building a lot of interesting products for DeFi that maximize LUNA’s productivity. Avalanche has lofty ambitions but currently looks more like Polygon with a bunch of copy and past forks from Ethereum dapps instead of a truly unique platform. Although none of these projects are Ethereum, they should still be considered, researched and played around with because of the importance of a multichain future.
As long as a crypto project has a real product you can interact with, a strong community of developers and users, it’s worth being aware of and taking it seriously. Projects like Ripple, Cardano and Dogecoin, on the other hand, embody everything wrong with crypto, as they are either cash grabs for founders, centralized to the point of no return or vaporware with no real adoption or use case ahead of them. Despite this being a very important asset class to follow, there shouldn’t be any blind trust awarded anywhere with one’s time and money dedicated to projects that have a vision and are consistently delivering on their roadmap, not promising something like smart contracts for years and failing to bring them to market, despite numerous other protocols doing so rapidly.
NFTs
Right now NFTs are hot, they’re the most mainstream thing about crypto with the New York Times and Washington Post frequently writing about them. We’ve seen avatar projects like Crypto Punks, Bored Apes and Pudgy Penguins emerge out of nowhere and make people tons of money. Coca Cola and Twitter both minted limited edition NFTs and even Visa recently bought a Punk for $150,000, bringing more attention and legitimacy to a space that’s been dominated by crypto’s biggest winners so far.
But every time you talk to a non crypto person about NFTs, their mind immediately falls into the loop of: it’s a scam, it’s money laundering, it’s people running the price up through wash sales. And maybe there are some components there that are real, but the vast majority of attention in this space is dedicated to a new way to evaluate ownership and disrupt traditional thinking.
To a lot of people these are just JPEGs that you can copy and paste and display for nothing. And while that’s technically true, it doesn’t prove OWNERSHIP of any of these JPEGs. I can technically buy a print of the Mona Lisa, or download one off of the internet but that doesn’t mean I need to frame it behind bullet proof glass because it’s worth hundreds of millions. It’s not the original, it’s not actually mine, it’s just a bootleg replica that I got my hands on. The same idea applies to NFTs. You don’t actually own one until you buy it on chain and deposit it into your wallet.
To sit here and say this is nonsense, fake and meaningless is well within your prerogative, but the world is clear accepting that something digital can be not only owned by one person (unless tokenized), but incredibly valuable and an important part of pop culture. And that’s what some of these projects really are at their root form, a staple of the time period and movement. A lot of the people buying Punks, Apes, etc. aren’t doing it for the flip, but for the legacy behind it.
Needless to say, this isn’t an open endorsement for any and every NFT. I actually only own a couple that are basically worthless. I personally can’t justify parting with my ETH to buy any of the bigger projects, but I understand the tradition that’s being created here. And something like Art Blocks has my attention so it is possible that at some point, if and when valuations come in, I’ll buy some NFTs from artists or projects that I like. But to be honest, this isn’t why I’m incredibly excited about NFTs and what they represent. To me, the art stuff is just the front door to a much deeper rabbit hole that can truly change the world from a technology perspective.
NFTs are alluring because they provide immutable digital records of ownership, in other words, they tell you who owns something and no one can change it. It’s basically a contract between two entities that is written in code and stored on the blockchain and nothing can be changed without permission from the owner.
There are a ton of use cases that will be coming to light that should develop product market fit this decade. The easiest one to anticipate is gaming. Currently, when you are playing a video game, everything you do is confined to just the game and there isn’t any real marketplace or economy. Sure, you can exchange resources or products within the game, sure you can trade characters or items with people, but overall, you’re not owning anything and there isn’t any real exchange of goods for services. You’re just basically saying, I’ll trade you this Charizard for that Eeve and you’re moving on. But, in the blockchain world, an actual marketplace can be created that allows you to be an actual owner of the characters, items and products you consume in games. In the near future (and in some cases already), you’ll be able to sell something you acquired directly to another individual via the game’s marketplace and you will be able to receive a digital asset that can be spendable or easily converted to something that can be spendable in the real world.
Imagine having that rare shiny Charizard but not needing it or wanting it. Instead, you can sell it to someone on OpenSea or the video game’s marketplace and use that money to buy the Snorlax you really want. Or, better yet, you’ll be able to take that money, withdraw it and convert it into a currency you normally use and use it to pay bills or for a purchase you wanted to make.
Play to earn gaming is technically here, but it’s going to explode onto the scene in the next few years as game manufactures realize the potential ahead of them. This will create a new form of revenue for gaming companies, giving them the ability to levy taxes on transactions in their marketplace, and if desired, taxes on deposits and withdrawals, all for giving people the access and ability to create an economy inside of a game that has real world use cases attached to it.
We will also see the ability to utilize the money earned inside of games to earn yield through gamified financial products being offered. Imagine being in Animal Crossing and harvesting apples, you can now sell your apples for a penny an apple, take the money you make from that transaction, place it in your bank account, invest it, or lend it, and earn interest while keeping that money within the confines of the game, and then using it as collateral or spending it in real life.
This idea of GameFi is the next big thematic that will emerge from crypto within this decade. And one of the big drivers to making this possible will be Star Atlas, the open AAA MMO game built on Unreal Engine 5 and powered by the Solana blockchain. Players will be able to create opportunities for themselves, invest their time and energy, and receive an actual unit of exchange for it that holds real world value.
We already see people in the Philippines losing their mind and making a living from playing Axie Infinity which is just a dumb, little knock off Pokemon game. Just imagine what will happen when we see a video game developer take those attributes and apply it to a game that looks and runs like a PS5 game. Star Atlas and Solana have the potential to change the entire industry and bring NFTs into gaming and into mainstream society. Of course, things can fail, and Star Atlas could have its Dreamcast moment where the tech was too early for users, but the idea, mechanics and economics are truly game changing.
Aside from gaming, NFTs can deliver an even deeper, more personal real world importance through the digitization and tokenization of anything. At some point you will see people have the ability to get exposure to commercial real estate through NFTs. We currently see fractionalization emerging in the art world for NFTs through Fractional.Art, I fully expect this idea to carry forward in other industries with people being able to upload their proof of ownership to real estate, a deed for instance, and being able to tokenize their building to provide liquidity and grant passive exposure.
The entire co-op model is pretty outdated, with people owning shares of a building rather than the apartment they think they’re purchasing, at some point this industry will be disrupted with NFTs functioning as the proof of purchase/digital record of ownership/investment.
Imagine being a building owner, or even just a homeowner, and needing liquidity for a purchase or event, but not having the time, credit or comfort to go through the banking process which can take months, at some point you’ll be able to tokenize your real estate and sell off fractions of it to create that liquidity. And on the other side, you have people who can be passive investors in real estate projects without ever having to go through the long and arduous mortgage process which is archaic and outdated.
Aside from the ability to increase your liquidity in real estate, it also allows people to tokenize their property, upload it into a DeFi protocol and use it as collateral for yield farming opportunities. NFTs have the potential to evolve these ideas and allow them to span across any market or real world asset that possesses any type of value.
We also see an opportunity for the ticketing industry to be disrupted by NFTs. Currently when you buy tickets to an event, like a Dallas Mavericks game for example, you pay for your ticket and the owner, Mark Cuban, receives the fee. If you decide to take that ticket and sell it on StubHub or SeatGeek for twice the cost because the Mavs all of sudden acquired LeBron James and are in high demand, you’ll be able to pocket the difference and Mark Cuban will get nothing out of it. This has been the paradigm for years with resellers benefitting at the expense of the organization. With NFTs, however, all of that changes. Two things can happen, one, the organization can receive a royalty from sales on the secondary market, therefore benefitting from resellers and an influx of demand, and two, the organization can attach some kind of reward or collectible to the purchase of each ticket, therefore increasing the value of the ticket from the onset and improving customer satisfaction.
Mark Cuban has alluded to this use case and it’s inevitable that it takes off in the near future as every ticket will likely be an NFT solely for the purpose of benefiting from high demand on secondary markets, and the ability to increase prices due to collectibles or rewards offered with each purchase. If NFTs were just some fad, this use case wouldn’t exist and would never even be thought of.
When it comes to NFTs, we also see a tremendous opportunity for creators to not only interact with their audience and reward loyalty, but also leverage their brand in interesting ways. One project in particular that could lead to a revolutionary change in the way people create is Stoner Cats which features Mila Kunis, Ashton Kutcher, Seth MacFarlane, Chris Rock and more. The project is essentially an animated show that requires viewers to purchase a stoner cat NFT in order to have access to the latest episodes. The idea that makes this interesting is the ability to bypass Hollywood entirely and avoid needing to rely on producers for funding and distribution.
Content creators can fund their projects by selling NFTs to their communities, granting them access to the content and secret rewards like digital meet and greets, collectibles, etc. This is a unique ability to create content, engage a community, and make a living that potentially surpasses the traditional, centralized route that leaves content creators at the mercy of those in power. In addition, it could allow those content creators on apps like YouTube and TikTok to be able generate extra revenue aside from what is received from advertising which is based on subscribers and views.
NFTs are a revolutionary piece of technology that allows users to blend worlds, giving them the ability to bring any real world item into the digital world and granting the ability to utilize that item to fund projects, receive royalties, make a living, create liquidity and generate income. They may seem like a fad in their popular, mainstream form right now, but the potential use cases and evolution allow society to move past the primitive form of collecting JPEGs and into a new era of digital ownership. They should be taken seriously and valued as a disruptive innovation and technology and not some scam that anyone can create and get rich off of.
Infrastructure
When it comes to tech, one of the most sought after investments from VCs are the infrastructure plays that power the up and coming technologies that are disrupting the world. Crypto is full of new infrastructure protocols that change the paradigm.
Oracles are one of the most important pieces to the puzzle for crypto, due to their ability to bring real world data that is off chain (price feeds, weather, insurance claims) and bring it on chain. Basically, something like Chainlink is needed for us to know what an asset costs across all exchanges, and if we were farmers, we’d be able to have important information about crops, weather and insurance bridged into our smart contracts to trigger certain events and reactions. Oracles are the lifeblood of crypto because they take information from the physical world, bridge it into the digital one and allow information to pass through dimensions. Without oracles, we would have chaos and lack an equilibrium when transacting between different markets and contracts.
While oracles bring off chain data on chain, indexers do the opposite, bringing on chain data off chain so it can be indexed and analyzed. Data is one of the most powerful themes in our worlds today and protocols like The Graph help us scrape information from the chains and bring it into our physical world. This is important because it allows us to analyze what is happening beneath the surface and create a completely transparent look at the crypto industry.
Building off this idea of data brings us to a new theme that’s budding thanks to the rise of NFTs: decentralized file storage. While we are used to taking out documents, photos and files and storing them in Google Drive typically, it isn’t the most secure or appropriate way to store artwork or important files that were turned into NFTs. Centralization risks from Google, or other corporations, muddy the landscape of immutability and ownership. If I loaded an image into Google, connected it to an NFT, sold it for millions and Google decided to close my account before the purchaser could move the image into their own database, they would be completely out of luck and the whole NFT industry would collapse.
This brings us to protocols like Filecoin and Arweave which provide decentralized file storage services that have risen in popularity with the NFT community. Since a lot of the NFTs we see are large files, they can’t exactly be stored on chain, only the proof of ownership could (aside from a few projects) and users have to pull their original images from somewhere if they want to be in complete possession of their files. FIL and AR give you that opportunity to have the images stored decentrally, without worry of a corporation stepping in and ruling that you are violating their terms of service and terminating your account, or worse yet, claiming rights to the images and demanding a percentage of your profits from the value of the file.
This is becoming an important infrastructure play that will only grow to be more and more pivotal as NFTs continue to grow into the mainstream and evolve their offerings.
Filecoin just recently partnered with Flow to provide users of their network with FIL’s decentralized storage solution. This is just the beginning of a long runway of opportunity here for IPFS and decentralized storage as a whole.
Arweave is a little greener on this side of the coin, but they are partnered with Solana and as SOL’s marketplace grows, it is likely that AR’s will continue to inflate alongside it.
One of the most important pieces to this puzzle, however, and possibly the most necessary infrastructure tool to make crypto possible as a mainstream mainstay, is payment providers. While users can technically spend their crypto through Coinbase’s debit card, and a variety of other crypto debit card services, the future of finance isn’t in a piece of plastic, but straight from your digital wallet through QR code and NFC.
The protocol that stands to gain the most here is Flexa Network which leverages the AMP token as collateral to process immediate, fraud resistant p2p transactions in any currency at the point of sale.
The biggest flaw for spending crypto has been the threat of double spending and long confirmation times. Having to wait 5 minutes for blocks to confirm isn’t doable when you’re trying to buy coffee from Starbucks. AMP helps us avoid these issues in a very clever way.
In order for Flexa’s rails to power transactions, users need to stake their coins for collateral which gsfs liquidated upon purchase and converted into the merchant’s desired currency (they decide on their end their preference but typically it will be fiat for now). Essentially what happens is simple, I want to buy coffee with bitcoin, I scan my QR code and Dunkin Donuts gets the $4 in cash that I owed them right away. Behind the scenes however, we have my bitcoin sitting in limbo as it’s blocks are being confirmed, and AMP from the staking pool is sold and converted into fiat to immediately pay the merchant, when my bitcoin is confirmed, it gets sold and converted back to AMP and replenishes the staking pool. This enables the most important piece of this puzzle which is seamless and immediate fraud resistant and risk free transactions.
While some can claim that there is no purpose or utility to crypto and that it’s just a money laundering Ponzi scheme, the reality is through these infrastructure protocols that play pivotal roles in enabling price feeds, analytics, storage and payments, amongst many other ideas I didn’t touch on, we are seeing not just an asset class emerging, but an entirely new way of life that is disrupting the old guard and changing our existence while creating new innovative protocols that go beyond the traditional corporate format.
And that traditional corporate format is currently being disrupted by DAO’s which are decentralized autonomous organizations. This new structure is an important piece of the instrastrue puzzle as it takes businesses from a centralized corporate entity whose decisions are dictated by a select few, and turns them into community driven products with no overbearing central figure. DAO’s offer a new potential way to take an idea, bring it to market and raise funding for projects that run themselves. These are community driven projects that never have to worry about approval from banks for loans or appealing to venture capitalists that lack the foresight to see their vision unfold or lay out the risks they need to bring something to light.
They also protect ideas from manipulation by investors. OnlyFans recently risked destroying their business and ruining the lives of millions of women by temporarily banning explicit content. Sex work isn’t something that is approved in the world of finance and due to difficulty from finding investors, OnlyFans was willing to cast aside over 10 million women who utilized their platform to provide safe, consensual, and economically appealing opportunities for themselves. If OnlyFans was a DAO with a token, they could have appealed to their community, involved content creators more directly, and utilized their vision to grow the company. DAOs might provide the most important form of infrastructure for organizations in cryptonby freeing them from the chains of bankers, investors and regulations, and allowing them to function freely and on their own merits, as dictated by their users, developers and community.
The Point of No Return
There are a plethora of new opportunities ahead of us that are very different from the traditional way of life that people are used to and crypto is the wave that innovation and disruption is riding.
It’s very easy to claim that everything you don’t understand is nonsense and a scam, but the reality is, the best opportunities exist when people struggle to understand the potential implications.
Using one’s time to understand crypto and why it isn’t just some fad but in fact a disruptive, innovative revolution, can set someone up for a generational opportunity to never worry about anything again.
Crypto may seem like a scam to the misinformed, ignorant and lazy, but to those who have fallen down the rabbit hole, it is one of the most exciting and compelling times in human history. Bitcoin saves lives, Ethereum, smart contracts and DeFi improve business, create wealth and grow our quality of lives, NFTs disrupt the old guard and put more opportunity in our hands, and the infrastructure that’s laid out legitimizes everything and gives us all the chance to interact with some amazing products and people.
This is an industry that’s been dead many times that has constantly risen from the ashes and pushed itself to new heights by acquiring new users along the way. Take advantage of this opportunity by reading as much as possible, talking to as many people as possible and asking every single question you can imagine.
This isn’t just a fad anymore, it’s a way of life now.