NFTs (non-fungible tokens) are shaping up to change the face of the economy. But why should you care about these virtual bits of data? To many people, NFTs are nothing more than a file and, beyond their utility as profile pictures, really have no ‘value’ to speak of. For this article, we’d like to talk about NTFs within the framework of stocks and real estate.
Utility and Value
The very first instance of popular P2P file sharing arose with the invention of Napster back in 1999. The popularity of file sharing makes it clear that the value of something is about much more than its utility. For example, a house in the states and a house in a popular city like Mumbai may offer the same utility (protection from the elements, a warm and dry place to live, etc.), but the house in Mumbai will cost more due to other factors. Its value is not just in its utility.
The economic value that can be gained from a place has a lot to do with networking and other opportunities that surround the thing itself. The higher the economic activity such as employment, events, business, etc., the higher the property value in these places. In this way, property value is very much dependent on this networking factor.
Value can be derived from social status as well. Property near golf courses or in other high-end neighborhoods can be much more expensive than their immediate neighbors just due to the social value placed on the property.
Stocks have long been valued by discounting the future cash flow, but even stocks have been moving away from this in recent years. Certain brands have a value premium due to aligning themselves with a public mission. It may be a good idea in the future to allow investors to showcase which brands they back on their social profiles, allowing the public more knowledge as well as the ability to bond with them over shared values.
A Social Network
Speaking of shared values, some of the best tech companies capitalize on this sort of networking value by creating their own network from which they can derive value. Current NFTs are in the place that cryptocurrencies were in back in 2015 — the initial stage of mass adoption. Many of them are PFP (profile picture) NFTs — belonging to mission more than the utility. These give insight into the account owner’s values and beliefs, allowing for more networking as others feel a connection based on those shared beliefs.
All this hype and attention is not without risk, however. Amazon Web Services even recently defended against a DDoS attack that recorded the highest peak traffic volume ever — 2.3 Tbps.
New World Web
Still in an early stage, NTFs aren’t for everyone. Even now, over 40% of buyers eventually regretted a purchase they never thought they would regret.
That said, NFTs are a fantastic conduit for all of the information a system may need and then provide it to the community in an aesthetically pleasing way. NFTs could very well be investment, currency, identity, and gateway all wrapped into one before much longer.
The Bottom Line
Web3 is fast approaching as the future of the internet. As we spend more and more of our time digitally, the digital economy will eventually surpass the IRL (real world) economy in terms of sway. The multi-fold reality of the economy as Web3 is truly boundless. In other words, if you want to retire to Florida for some self-care, investing in NFTs may very well be the way to go.