The Future of NFTs: Disruption is Coming

Do you trust me?

Well, presumably you do to some extent, or you would not be dedicating precious moments of your life to reading this article. Through some personal internal calculation, you have decided to put some trust in me.

However, as is often the case in life, your trust might be misplaced. Only time will tell. I mean, who knows? I might have no idea what I am talking about.

But that is kind of the point. Our relationship as reader and writer is built on trust. And every relationship you have in life, personal and professional, every transaction, is built on trust. Even when we talk about things like family and circle of friends, we are really defining levels of trust.

But now imagine a trustless world. Imagine a world without lying. What would that look like?

When Lying Becomes Impossible

In the world of blockchain, we talk about trustlessness. This is a difficult concept for most people to wrap their heads around because we do not have a frame of reference for it in the real world.

Most people think of trustlessness as 100% trust. Ironclad, steel plated, heavy duty trust. But that is not trustlessness.

Let me illustrate the difference. How many people have at one time thought: "I am 100% certain my spouse will never cheat on me"? And how many of those people eventually had their hearts broken?

Because they had to rely on trust, it was never 100%. It was at best 99.999%. But because their partner always had the capacity to lie, it ultimately came down to trust at less than 100%.

But when we talk about trustlessness, we are talking about a system where the possibility of lying does not even exist.

When lying becomes impossible, trust becomes unnecessary.

Think about it. You can send Bitcoin over the internet to a complete stranger halfway around the world. You can do it direct, peer to peer, with no third party to validate. No bank. No PayPal. No Western Union. The digital equivalent of putting cash in an envelope and just sending it to someone.

And yet you can have complete confidence in the validity of that transaction. You cannot claim to have sent it if you did not. And the other party cannot claim to not have received it if they did. Because both of you can go onto the blockchain and view the confirmed transaction for yourselves.

I have been in this space for over a decade now, and this most basic fact of blockchain still blows my mind. This ability to transact directly with anyone, anywhere in the world, without having to get somebody's permission, without regard to borders, without thought of currency controls. It really is incredible.

The Magic of Blockchain

A trustless system is one that has transcended trust. We do not need it anymore. We can throw it away. Because you only need trust if there is a chance of lying. But when lying becomes impossible, trust becomes unnecessary.

This is the magic of blockchain: the incredible combination of immutability and transparency. Take a system where data can never be altered or deleted and make it visible to anyone at any time.

Brilliant.

Lying becomes impossible. Trust, and all of the intermediaries whose primary function is to maintain that trust, become unnecessary.

And this is what gives NFTs their immense power and potential.

Far More Than JPEGs of Apes

Make no mistake: we are talking about a lot more than just JPEGs of apes.

Although do not discount those apes. They are teaching an absolute master class in community building that we should all be learning from.

But the reality is we are on the verge of an explosion in NFT mass adoption that will affect every major industry.

So what makes NFTs so special? This decentralized architecture creates three guarantees:

• Guaranteed Authenticity: Even Christie's and Sotheby's, with all of their acclaimed experts, often inadvertently sell forgeries. But this is impossible with NFTs. You cannot issue a fake NFT and pass it off as the real thing, the same way you cannot issue a fake Bitcoin and pass it off as the real thing.
• Guaranteed Scarcity: If you buy an NFT that is a one of one, you know with absolute certainty that there is not and can never be another NFT just like it. And yes, while it is technically possible to right click and re-mint that image, the blockchain makes verification of authenticity possible in seconds.
• Guaranteed Ownership: Because every transaction and every wallet is visible on the blockchain, discerning the rightful owner of every NFT is very easy. It also makes selling stolen NFTs, especially high profile ones, very difficult.

In fact, every piece of physical art on earth should come with a corresponding NFT, if only to register provenance on the blockchain.

And that is part of the core message here: digital art, digital land, the digital world in general is not about replacing the physical world. It is about enhancing it.

Real World Disruption

Let us look at some real world use cases.

Real Estate: Every piece of land on earth is non-fungible. Every plot is unique, at least in terms of GPS coordinates. Even plots of land all the same size in a row in a subdivision are still unique. Some may back onto a ravine. Some may back onto a swamp. And some might have gold or oil underneath. So they can have dramatically different value.

Real estate is a natural use case for blockchain. My company is actively working on moving the mortgage transaction onto the blockchain: using NFTs for all documentation, moving all of the legal into the smart contract, and utilizing decentralized finance protocols for mortgage and insurance.

I apologize if there are any mortgage brokers or real estate lawyers reading this. But this is where the industry is going.

In North America and elsewhere, this means a more efficient, more secure, and more privacy focused process. But in many places, the difference is much more profound. In many parts of the world, a government office can get flooded, all the paperwork gets destroyed, and then good luck proving you own the land you live on.

So in many places, moving all land ownership onto the blockchain, in other words making land ownership trustless, can have profound implications: empowering entire communities and increasing societal trust.

The $4.5 Trillion Forgery Industry

Now let us look at another use case: the massive global forgery industry, worth an estimated $4.5 trillion a year according to the Harvard Business Review.

When most people think about forgeries, they think Louis Vuitton bags and Nike sneakers. This does make up about 60% of the industry. LVMH alone employs over 60 lawyers and spends over $17 million a year on anti-counterfeiting legal action.

But right behind luxury goods is supplements and pharmaceuticals. And this is where the consequences go from a company losing out on legitimate revenue to people dying.

Shockingly, the World Health Organization estimates over one million people, including over 250,000 children a year, die from fake medicine.

One initiative trying to do something about this involves employing AI and blockchain in an innovative way. Using NFTs in the form of specialized QR codes on packages, people can bring up immutable data on every aspect of a medicine's life cycle.

What about the pill itself? They are working on a system that will allow you to shine your phone's flashlight onto a pill, and using a combination of reflective spectroscopy, refractive index, and app based AI, will analyze how the light bounces off the pill to determine if it is real or fake.

It is incredible. And you can imagine the implications of something like this around the world.

The Path to Mass Adoption

And then there is the use case that is probably closest to ushering in true mass adoption: ticketing.

NFT based memberships encompassing access to virtual and physical events, with a whole host of other benefits and deeper levels of fan integration, will soon replace current ticketing systems. This includes all coupons and customer loyalty programs as well.

Very soon, sooner than most people realize, everyone will be owning and using NFTs. Because very soon, every sporting event, movie theater, concert, conference, even airline tickets and other forms of travel will all be in the form of NFTs.

So resistance, I am sorry to say, is futile.

Now that may seem aggressive until you look at this: in 2000, an editor allowed a headline to go to print essentially saying the internet was a fad that would not last. Within 20 years of that article, everyone was using Google and email and had a smartphone.

Paradigm shifts can happen very quickly.

Focus on What Matters

Now through all this immense change, the road will not be smooth. We have seen trillion dollar drops in market cap. We have seen projects fail spectacularly. And there is no doubt that in the short term, some of the volatility represents the market figuring out what works and what does not.

It hurts. There is no question about it.

However, that should not be your focus. Your focus should be on technical innovation and mass adoption. And when you start to look at some of those charts, you start to see a different picture.

Look at the total number of developers: the chart tells a different story. Look at the total number of wallets: the chart tells a different story. Look at total mining power, total number of decentralized applications: different story entirely.

It is very important to look at charts other than price if you really want clarity on the big picture.

The Invisibility of Success

By some measure, it can be said that the success of a technology is determined by its invisibility.

Look at electricity as an example. 99% of us have no idea how it works. I certainly do not. I do not understand how it is generated. I do not understand how it is distributed, how it gets into my house. I do not know any of that.

But I know how to flip on a light switch if I want to see at night. I know that much.

The internet is not quite at invisibility yet. We still have to pull something out of our pockets. We still have to use our fingers. But even that will be a relic of the past very soon.

NFTs and cryptocurrencies in general will reach this point sooner than most people realize. And like with the internet, they will see exponential growth over the coming years.

The Earlier, The Better

So I leave you with this thought: the earlier, the better.

That was certainly true of the internet. Eventually everyone got on board. But the sooner you got there, the better off you were.

And the same thing applies today. Very soon, NFTs will be as much a part of our normal lives as the internet is today. But the sooner you get there, the better off you will be.

So if you have not done so already, I encourage you to take the plunge. Come on into this wonderful world of NFTs.

It is amazing here.