NFTs are coming back

[LordFall]

I want this timestamped so I can say I told you so. I think NFTs are a fundamentally great technology and the mid 2022 crash of the industry has no bearing on it's potential future success. 

You see it today with collectibles blowing up as people are looking for a mix of entertainment and personal finance. It just makes so much sense. I think web 3 as a whole and Web 3 gaming are gonna be huge. If I had to give it a timeline I would say in about 5 years bullish case and by 2035 latest. For it to surpass it's previous market cap of $40 billion 

It's also gonna piggyback on the AI slop dissatisfaction as generative AI makes anything digital very abundant. We are overall gonna be in an entertainment renaissance in the 2030s as generative video makes movie production and game production accessible to the masses. More consumerism and more entertainment by itself is not that valuable but anchored by a wave of investing in collectibles makes too much sense. Just to be clear the previous bubble was built from the euphoria of the money printing around the covid era and that overvalued basically non-products. That's not what I'm talking about. I'm talking about the literal concept of non-fungible tokens that will make video game items, media assets and perhaps all kinds of asset tradable on the blockchain.

I see it with the IP I'm building now Legend of the Abyss, making a cool plot and game is one thing but creating an economy that people can participate in and also get wealthy from has perhaps literally uncapped potential. Axie Infinity was the progenitor of web 3 gaming but in 10 years actual mainstream AAA titles will embrace the tech en masse. 

Edited Sunday at 12:38 AM by LordFall

[yetineti]

How do you propose this plays out?

I would like to relate this to Pokémon cards. Personally, I see zero value in Pokémon cards. I will never buy them. I think the value is arbitrary.

Unfortunately, this is my perspective on gold, in general as well. I understand the extrinsic value. I do not understand the intrinsic value.

Obviously, gold does have intrinsic value for electronics, etc.

I understand this is foolish as well and I do not deny their actual market value/going rate and I predict it will not going anywhere, despite my lack of interest.

But how do you see this playing out? Will businesses include NFTs into their models for exclusivity, promos, gated access, etc. Will GTA 6 implement them to create a microcosm economy people actually trade and invest in? Do you see it as a foundation to a meta verse like Zuck?

I do not dismiss the value, like Pokémon cards. Extrinsic value can be just as expensive as intrinsic value. Yet, considering my disconnect with the Pokémon example, it is one thing for me to intuit that you are correct and it is another for me to see how it actually plays out.

Edited yesterday at 04:00 AM by yetineti

[LordFall]

These are good questions.

Good place to start is separating intrinsic value from social value. The average Rolex is worth $14,000 USD. It's pretty useless as an item and is way worse than an Iphone but is 10x the price. Water and Oxygen are the substances with the most utility on earth but have no real tradable value. 

As a general rule, human beings assign astronomical value to three things: scarcity, social proof, and liquidity.

Pokemon cards aren't valuable because cardboard is expensive or they have real world utility. They're valuable because they are a tradable product valued by tens of millions of people on earth and have a built in mechanism for scarcity. 

Now let's go to Counterstrike skins. It's a market with billions of dollars of trading volume(liquidity) and rare knives regularly sell for $30,000-$150,000 USD. For pixels mate. Who controls this market entirely? Valve. If they ban your account or decide to shut down the platform, you're shit out of luck. I played League of Legends for 10 years, spent $2,000 of my own money and got to Challenger which is top 0.01%. What is my account worth today? Maybe like $400 and I have to go through a complicated video game black market service to sell it. Very low liquidity.

The AI revolution is gonna be what starts out the NFT craze again. Why is the average person vulnerable to AI? They are dependent on labor and own zero or very little assets. I think the logical conclusion is everyone starts obsessing over owning and creating assets. What makes assets worthwhile? The previous 3 things we mentioned. The one we didn't cover is social proof. What segment of society has the most status i.e. social proof? The entertainment industry. 

If I guess how it's gonna play out it's gonna go wave of AI layoffs -> Agentic AI getting praised as the solution -> AI slop becoming even more common -> NFTs becoming a mechanic for scarcity in a now digital abundant world. 

Next year is gonna be the year that AI media starts taking off. There is fundamentally not that much value in pure entertainment, you can't have a society operating on watching movies. You can have a society where most people are incentivized to use AI themselves to make their own money but that's hard. What's easier than teaching yourself how to become an AI savant? Trading assets based on your favorite form of entertainment. 

I think it's gonna piggyback right off the creator economy that took off with social media in the 2010s. Many people made careers out of building a business off of social media. Social media represents web 2.0. Web 3 is basically social media but with the public owning more of it instead of all the value being centralized in 10 tech companies. 

Edited yesterday at 05:10 AM by LordFall

[Basman]

I feel like blockchain stuff and nfts are just a solution looking for a problem. There exist already successful digital markets long before nfts where a thing, like Runescape and CSGO. I don't see why you even need blockchain technology in the first place. Backend doesn't make a commodity any more valuable. 

Edited 20 hours ago by Basman

[Basman]

NFTs took off entirely as a speculative market. When the rug had been pulled and people realized that you couldn't use NFTs for anything it crashed. 

[LordFall]

46 minutes ago, Basman said:

I feel like blockchain stuff and nfts are just a solution looking for a problem. There exist already successful digital markets long before nfts where a thing, like Runescape and CSGO. I don't see why you even need blockchain technology in the first place. Backend doesn't make a commodity any more valuable. 

Ownership. Cosmetics owned and controlled by Jagex and Valve have 10% of the true value potential of an immutable asset. If you have a CSGO blockchain skin and valve decides to ban you and it can still be traded to other players and used by them in the next version of CS like games because we are now in a web 3 world vs a web 2 one; then the world changes forever.  

Of course. I think many lessons will be learned from the 2021-2022 era of NFTs and the next wave of products built around it will be far superior. 

Edited 19 hours ago by LordFall

[Basman]

2 hours ago, LordFall said:

Ownership. Cosmetics owned and controlled by Jagex and Valve have 10% of the true value potential of an immutable asset. If you have a CSGO blockchain skin and valve decides to ban you and it can still be traded to other players and used by them in the next version of CS like games

It's not just cosmetics sold in an official capacity, but also stuff like gold or accounts. The value applies to within the game itself. An immutable asset is only practical for speculation. It's not in of itself relevant to people playing a game and whatever market sprouts around it.

And making nfts that can be used across different games is bs. Different games have different code and assets. You can't just port stuff in. It has to be made specifically for that game. At that point it doesn't make any sense to not make people buy thing separately. 

[LordFall]

Of course it makes a massive difference if it can be interchangeable within different games. A dollar is useful because it's a universal means of exchange. If your money was monopoly money stuck within one country it would be pretty worthless. There are many ways to make assets from one digital ecosystem be usable in another.

The currencies like the USD that keep their value across conversions are the strongest. Some currencies are so weak that if you make a wage in that currency you can't even travel because the exchange rate is so high. Current game items and skins have a 0 exchange rate, that's worthless in terms of long-term value. 

Immutable X is the biggest project linking many different games together on its layer 2 blockchain which is built on top of Ethereum. If you wanna look at it in terms of each big studio building their own blockchain then that's called blockchain interoperability. 

Eventually, I think game studios that don't support this feature will be considered obsolete. Just like an online e-commerce platform that doesn't accept credit cards and only mail-in cheques.

Not sure how exactly it's gonna go down but perhaps major developers are gonna make items backwards compatible for the other multiplayer games in their ecosystems. The core idea is to make the value liquid. 

 

Edited 15 hours ago by LordFall

[Joshe]

They were only a thing for a very short while, until the marketplace saw through the bullshit. Are you familiar with how Gary V and company manipulated this market?

IMO, it's never coming back. It's far too niche. Some "status" symbol on your computer isn't very flex-able. How do you flex a jpeg? lol

[LordFall]

17 minutes ago, Joshe said:

They were only a thing for a very short while, until the marketplace saw through the bullshit. Are you familiar with how Gary V and company manipulated this market?

IMO, it's never coming back. It's far too niche. Some "status" symbol on your computer isn't very flex-able. How do you flex a jpeg? lol

I don't think Gary Vee manipulated the market, he's legitimately trying to build his NFT company. I would be curious what you mean by that.

A jpeg is not really the valuable part, its about the provable scarcity part. Especially when in the next few years when AI is gonna generate so much stuff. Sort of like how a fake rolex is worth $500 and you have to pretend that you didn't buy the fake thing to keep the status of it where as a real one is worth $15k. 

I think soon social media platforms will have NFTs as part of the content that you post. Tons of girls I know got into investing and crypto when it was popular, they just have a nose for what's cool and trendy. Pokemon cards are just too gimmicky and I mean a bit lame so I don't know any that are into that. They like the plushies and bag charms though so I could see them collecting rare plushies that are also an NFT so you can track original ones vs the mass market Walmart ones.

I know 40 year old women with Louis Vuitton bags aspiring to get a berkin. Collectibles and status just appeal to a deep drive in humans. If Hermes can sell $40,000 bags that don't do much make $20 billion in yearly revenue I think adding an even greater rarity component to the concept is fundamentally sound. 

[Joshe]

37 minutes ago, LordFall said:

I don't think Gary Vee manipulated the market, he's legitimately trying to build his NFT company. I would be curious what you mean by that.

It's been so long ago that I can't recall, but I saw some pretty damning piece on it where he was talking about intentional psychological manipulation, and even if it didn't work, it would still profit. Something like that. 

[Joshe]

Also, that Tom dude who is Gary V adjacent (forget his name, but he's popular on Youtube). That mother fucker was holding huge conference calls telling tons of people that he knew it in his heart that NTFs were gonna take off, and if they would just trust him and invest the 9k in his NFTs, the investment would far more than pay for itself down the road. Tom was in that Gary V group of influencers that were pushing it, and they were all peddling the same shit. 

I myself seriously considered investing the 9k because Tom was such a good salesmen.

I don't care what Gary V or Tom said. Just look at what happened. They made a fucking killing and everyone else lost their money. 

Edited 12 hours ago by Joshe

[Joshe]

You basically had a group of influencers behind the whole push, and for them, it was win-win, no matter what. 

[LordFall]

Those are more than fair criticisms. It's very important to understand how things are sold and where the value comes from. The classic case used for this concept is the California Gold Rush where most people lost their time and money and apparently shovel makers made a killing such as Samuel Brannan.

What I'm pointing to though is that Gold was never the scam. I'm not saying to go out now and buy X or Y NFT project cuz it's gonna FuckIng GoCrazYBro IPromise(although maybe tbh) but it's more of a discussion to predict the phenomena and how we can best position ourselves from it.

My fundamental thesis is this, 2027 will be the year that generative AI products start booming. Both games and animes/show built around it will start popping up. It will be the start of the wave and 2028 and 2029 will be when it really starts to grip society. That plus AI agents that start to labor for you 24/7.

I think that will be great for the consumer, we'll start to get the best entertainment we've ever had. How does that really help us though? It doesn't unless there is value added to our lives around it. That's where I think trading collectible assets make so much sense.

Pokemon cards are the proof of concept for it. There are plenty of people that don't have jobs, they just build Pokemon card businesses! 

That's just the start and I think in 2030s it will become a wide industry just like becoming a Youtuber/Tiktoker is now.

Think about it, idk if you guys are gamers but Pokemon Cards actually fucking suck. I have some I bought some to check it out and I tried to play it. It's actually ass of a product. It's just the best there is now.

In 10 years from now there will be 20 other competing products that will be way better and augmented reality/virtual reality will take over to create great products around it. It'll be a mainstream thing fully integrated into social media. The next Pokemon will be worth 10x so $1.5 trillion instead of the $150 billion that Pokemon has generated lifetime.

It could very well be Legend of the Abyss boys and girls stay tuned  I'm taking down these clowns 

Edited 11 hours ago by LordFall

[Joshe]

Yeah, it's an interesting thing to speculate on. Maybe if you wanted to benefit from such future fads, you'd study and monitor the influencer networks that attempt to push fads. Doing an in-depth breakdown of how NFTs even came on the scene would be a very interesting study. It's not like it was just some organic emergence. Then, figure out how pokemon cards became what they did. Basically, assemble the full map of how these fads come about. That's what I would do if I was trying to capitalize on them.

[LordFall]

I'm not really interested in pokemon cards themselves. 3 main concept interest me:

1) Why are Pokemon cards worth so much as an emerging asset class? What makes people go crazy for them? 

2) What other similar products will similarly rise in value over the next 10 years and become viable businesses/investments out of thin air?

3) What lessons can I learn from it for the products I'm building myself?

Influencers will shill whatever is hot and shiny, I got into crypto myself around that time so I remember how the market moved. I never bought NFTs but I researched them. 

Edited 9 hours ago by LordFall

[Joshe]

Hell yeah, good questions.

For #1, I find that to answer that question well, you have to go back to the origin point and gather all the circumstances and zeitgeist. Understanding psychological, market, and any other relevant factors. 

I would need to run that type of analysis on many fads if I wanted to have confidence in my answer to questions #2 and #3. It would be a lot of work, but AI would be a huge help. 

[LordFall]

Yeah, you're right it takes a lot of research to understand. Around that time I researched around 200 hours of crypto and read a book on it and I basically gave up because I realized it was still too complicated to bet my future on and some dudes smarter than me spent 20,000 hours researching it and had millions to hire teams of analysts so I couldn't really find a competitive advantage. 

I was a big fan of video games growing up and I was a semi pro gamer at once called League of Legends and I actually mostly quit when I got into pickup and business to your point on the other thread about taking women as a conquest haha.

Fundamentally though I do believe video games had peaked as a medium for the past 10 years almost and there haven't really been new innovations until now over the next years with AI npcs, generative graphics, web 3 economy, augmented reality and virtual reality. Fortnite was basically the peak of the medium in terms of mainstream appeal but the next big hit will incorporate one or many of the things I mentioned I would and will bet on it. 

Edited 9 hours ago by LordFall

[something_else]

I think there are some practical applications of NFTs, like video game items, ticketing systems and corporate loyalty programs. But even there, the value is pretty limited. The same things can largely be achieved cheaper without NFTs. I just don't think NFTs will ever be particularly mainstream, they're limited to very specific use cases.

There is just not that much social value in being able to say "I have the original copy of this digital asset!" when everybody can type the name of that digital asset into Google and see an exact copy. Rare digital assets don't have the same value to humans as a physical asset like a painting or a playing card, perhaps with the rare exception of video games. There, the feeling of owning a rare digital item does have some value. But again, games have been creating that feeling for years without NFTs.

It's also often the case that the digital asset itself isn't even stored on the blockchain. Often the NFT is just certifying a link to that digital asset on somebody else's server. If you bought a 500k original copy of a JPEG you aren't even certified as owning the JPEG. You're certified as owning a URL to the JPEG on some other company's server, or if you're lucky, distributed storage of some kind.

Copyright is another thing entirely. Owning an NFT does not automatically give you ownership of the copyright or any other legal rights over the associated work, those rights must be transferred or licensed separately.

There are just many issues with it. I think it's likely that this tech will be silently used by companies in ways that it's actually useful to them, but is unlikely to ever become mainstream.

[LordFall]

@something_else Being able to see an image of the asset somebody else owns is pretty limited though. You don't get much of the value of that yourself. Here is a picture of a million dollars, enjoy.

I think your point on copyright is the strongest but the legal system will eventually adopt it if the trend starts taking off. Crypto is being legislated across the US federal system as we speak. 

Digital assets are obviously worth a lot. You can argue that your money in a bank account is the best example that's so mainstream that it's hard to remember that once upon a time people thought that digital banking was a scam and would never take off. My own dad has never shopped online because he thinks it's too likely that he'll get scammed. Amazon seems to be doing just fine without him.

Not that along ago people were confused about the internet and some prominent and smart people flat out came out to say it was a fad and a pretty useless technology.

Paul Krugman (Nobel Laureate in Economics)

In 1998, Krugman wrote an article for Red Herring stating:

"By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's."

He argued that e-commerce growth would stall as people realized that moving physical goods was still bound by traditional logistics. I think NFTs will most likely be the same thing. Why on earth do we trust random corporations that fundamentally have different incentives than us to hold our assets? It makes no sense.

A universal ledger that keeps the account of everything impartially just makes sense. 

Edited 2 hours ago by LordFall