Why NFTs Will Destroy the World

what the heck is going on with nft that is something called nfts the nft and called nft nft nft nft nft non-fungible tokens okay so i had a conversation with my family over the weekend about nfts and crypto you know super casual and i realized that nfts are still this very strange thing that only internet people actually know about and even then most people don't truly understand what it is including you and it's simply because of this this is the technology adoption life cycle a model that describes the adoption of a new thing in society the first people to use a new product are called innovators followed by early adopters and so on until the last group the laggards for example cryptocurrency such as bitcoin its popularity accelerated significantly in the past few years alone but yet it's still only at this stage the early majority nfts on the other hand are still very very new over here so let's make everything easy to understand are nfts the biggest scam of our century or will they transform the world as we know it but first you need to actually understand what is an nft nfts nfts nfp nft nfts like nft is purchased in nft board ap explain nfts to people that don't know what you're talking about this painting sold for 51 670 000 in 1989. adjusted for inflation that's nearly 121 million dollars today even if you didn't know anything about art you're probably still familiar with this man pablo picasso who revolutionized what it meant to be an artist this piece is from picasso's modern contemporary collection which sold for 91.8 million dollars very recently it's strange when you think about it value it's a very interesting concept so uniquely human this painting by picasso is nothing more than fabric with some colored oils splattered across the surface functionally completely useless yet we as a whole all agree that this painting is worth more than a thousand lifetimes of food water and shelter and now is probably a good time to tell you that i haven't been completely honest with you this is a lie it's not a painting by picasso in fact it's not a painting at all it's a digital art piece on the computer on the internet that someone now contractually owns because of a new technology called the nft but what exactly does that mean owning a digital piece of art it's not tangible unlike this water bottle right here i can touch it i can smell it i can taste it i can see it all my senses agree that this is real but this i can't do any of that with this so are we in the middle of the biggest scam of our generation simply a way to party fool and his money maybe by the end of this video you'll have enough information to decide for yourself if we're at the peak of another tech bubble or if we're in the middle of completely revolutionizing what it means to be digital and physical okay let's jump into it nft stands for non-fungible token to make things easier we can change the word fungible to the word replaceable non-replaceable token meaning it's something that you cannot replace with something equivalent the biggest misconception that i need to clarify is that nft is not art that you see like this or this or this an nft is just some data a digital certificate of ownership that in theory lets you say you own this unique thing whether it's something digital like this or technically even this water bottle the key point is that an nft is separate from the thing itself but let's focus on the middle word here fungible what exactly does fungible mean here take this hundred dollar bill it's fungible or replaceable because if i rip it up i can replace it with another hundred dollar bill and it'll be functionally identical which by the way this is fake so please don't call the cops on me however here's where it gets really interesting focus on this hundred dollar bill signed by mr magic mustache lamp over over there this hundred dollar bill brings me good luck and if i rip it up oh i can't just replace it with another hundred dollar bill because this one has special value to me because mr magic lamp can no longer sign a new bill because well look at him so this is non-fungible that might have been confusing so let's use these yu-gi-oh cards here let's zoom in a bit i have two dark magician cards here the one on the left is a replaceable copy since it's a regular dark magician card it's produced in bulk and is interchangeable however the one on the right is a non-replaceable copy why it's an ultra rare holographic dark magician card signed by the dark magician himself once this limited edition yugioh card is sold out you can't get a new one because they don't make it anymore so that's why you'll pay a premium to get this extra special card even if you're not technically getting more out of it that's why this picasso painting costs so much more you're paying for its history and its uniqueness by the way if you're a real one comment below what is your favorite yu-gi-oh card but here's where it gets really interesting and it's applying this uniqueness aspect towards the digital world like this picture of a rock that sold for 1.8 million dollars in theory digital media is something that can be infinitely reproduced by simply right clicking and saving it so how can you have something special and unique if you can create an identically functional copy it's by using this concept nft imagine it as a digital signature that links to this image that can be used to verify that you are the unique owner this technology is still very new and it seems like it's only being used by 15 year olds to sell monkey pictures wearing funky hats but this use case is nothing nothing compared to what i'll show you later in the video the way a digital signature or nft is stored and verified is in this thing called the blockchain think of the blockchain like a public cloud database where anyone can see the data but the data cannot be manipulated now the mechanics of the blockchain are super complicated so i'll boil it down to the bare essentials by using an example from the most important moment of your life when you bought your very first cheeseburger i'll take the cheeseburger meal you're at a mcdonald's and you order a double cheeseburger extra onions and the cashier tells you that it costs 2.31 cents so you whip out your credit card and you swipe it when the card is swiped a signal is sent to your bank account to verify that you have more than two dollars and 31 cents to spend when it's confirmed that you are in fact a baller a transaction happens between your bank account and mcdonald's bank account which is then recorded in the bank's private database that's how our financial system works today now blockchain technology aims to do the exact same thing except without the middleman i.e the banks in this blockchain world when i swipe my card all of the people's computers will work together to verify that i have enough digital funds or cryptocurrency in my digital wallet to buy the cheeseburger if it's confirmed that i have the funds the transaction is then recorded on a public database or blockchain that everyone can access but no one can manipulate and you guessed it nfts are stored in this blockchain or cloud database it's using the exact same technology as cryptocurrencies except a nft is not a cryptocurrency they were and are used for different purposes a quick refresher a cryptocurrency is a digital currency that lets you buy or sell goods similar to a fiat currency like the us dollar nfts on the other hand is a digital certificate that says you own something and you can buy or sell this digital certificate with cryptocurrency and all this happens on the blockchain so how does an nft actually get created linked to a digital image and get on this blockchain well this is actually one of the biggest flaws to the entire nft system that could cause everything to collapse but we'll cover that a bit later right now nfts are still at its infancy stage to the extent that we haven't even tasted its future potential yet rather what we see in the nft world is people convincing others to buy and sell pictures of a rock at higher and higher prices looking to make a quick buck but there's so much more future possibilities but only if we can get over these three obstacles it was the 1990s the era of vhs roller skates and jawbreakers there was a little craze going on around the globe with these things beanie babies a collection of unique and rare plushy toys that people bought for thousands of dollars with one goal in mind a dream that its hype and its uniqueness would let them profit handsomely in the future but things didn't turn out that way most of these bare monkey horse toy things are now completely worthless and millions of people lost a ton of money now i'm not saying this is what's happening with nfts but some people are taking advantage of this nft euphoria just a few months ago the creator of the evil apes nft series scammed investors out of millions and millions of dollars let me be clear i'm not saying nfts this technology is inherently negative rather i'm saying i'm not a fan of how the technology is being used right now with so much hype around monkey pictures i'm worried if nfts ever become permanently synonymous with scams and get-rich-quick schemes that it could slow mainstream adoption and the development of actual use cases that could transform the direction of our digital and physical world but this first obstacle is only the tip of the iceberg there's something else with nfts that could cause a revocable harm it may not seem obvious but we are facing a man-made disaster on a global scale one of the biggest problems with this technology is how it functions at its core nfd transactions whether to create bid pay or transfer digital ownership relies on the blockchain and right now blockchain technology consumes a ridiculous amount of power just ethereum the blockchain that most nfts are on consumes around 99.8 terawatts of power every single year that's more power than places like belgium or the philippines use every year in fact a single artist who sold just two nfts used 175 megawatts of power the equivalent of creating the greenhouse gas emissions of 21 years of a u.s household's electricity use and this is only the beginning ethereum's energy consumption has skyrocketed in recent years and with an increased interest in nfts and sales of monkey pictures things are only getting worse now here's the biggest misunderstanding with nfts mere existence of it on the blockchain let's say that you bought this nft for this beeple image for 69 million dollars if you actually open up the nft file the digital certificate that's on the blockchain what you will find will shock you because you won't find much of anything you won't find the name of the art you won't find the name of the artist or even the actual art or image itself and this isn't a mistake it's how the nft system works today the reason being is that the image itself doesn't actually live on the blockchain because uploading a jpeg file onto the blockchain takes a lot of space it's very expensive and very inefficient instead this is how an nft is actually created and generated you essentially go on a website like openc and you upload your image file or whatever you want you fill out some information and then you're practically done but this is where it gets really fascinating what lives in the blockchain is just the nft itself the digital certificate essentially a very small data file a piece of digital paper that says i own this digital image and then there's a hyperlink a url that points you to the website where you can go to look at its image and the details the digital image that you thought you were buying forever actually lives on a website servers not the blockchain and there are two massive problems with this one is the digital image is dependent on the website's survival which can go down at any time and if it does go down your image is gone although your digital signature still lives in the blockchain there's no associated image number two is you're placing your trust in the domain and website owner in theory the website owner could just redirect the url that's in your nft file to a rickroll video and bam your associated image is gone like that and you just being the nft owner the owner of this digital certificate you have absolutely no control over any of this the only way to ensure permanence of this digital image is if it's stored directly on the blockchain which again is very challenging now there are some things people are trying to do to reduce or minimize this problem such as using multiple hosts but still the system has major major flaws but let's assume that we're able to solve these three hurdles the perception of nfts aren't tarnished forever blockchain energy consumption is significantly reduced and we come up with a way to permanently store both the digital image and the digital signature permanently then we can peek behind the curtains and get a taste into the future which is surrounded by people just like you turning that like button into a beautiful orange okay here are five future use cases for nfts that will redefine what it means to be physical and digital and by no means is this an exhaustive list here think about what nfts could do for digital artists across the world musicians filmmakers photographers other than the a or b list celebrities most struggle to make their creations profitable there are huge corporations or middlemen that exploit these creators by taking a large chunk of revenue and creative control and in return give the actual creators just peanuts nfts it's possible for artists to retain more control and be more financially rewarded as they won't need to rely on a middleman anymore or what about video games recently ubisoft the company that makes assassin creeds in rainbow six they released a new platform called quartz a way to buy and trade unique nfts on some of their games it's still in very early stages but imagine if you can create unique gear or clothes for characters in the game that no one else has access to which you can trade and sell to one another or what if we merge our digital and physical lives together nfts can be used to increase security and confidence between a buyer and seller because you'll always be able to verify the authenticity of an item whether it comes directly from the manufacturer or not making scams a lot less likely to happen nfts could even disrupt how governments and entire cities function it could end land disputes copyright infringements and many other legal problems a publicly verifiable and impossible to manipulate database would make property land and car ownership much easier to manage and more effective to run in the real world but even then this is still thinking way too small way too primitive nfts could overhaul our entire lives as we know it for example ready player one is a story where people can connect into a virtual world to live a completely different life every single day and this virtual world and society just like our physical one it needs rules to run smoothly rules about who owns what and what you can do with it turn into any giant robot for two minutes that's rad and that's where this concept of an nft can be applied for example only the nft owner may download and use the artwork tools programs equipment land titles or whatever else is tokenized with an nft in the virtual world at the moment the use cases for nfts are limited run with rampant speculation and get rich quick scams but nfts the core technology has so much potential that is only limited by our collective creativity now personally i am a little concerned that the current uses of this technology could give nfts a bad name and the whole technology could get ran off if enough people get hurt but maybe this is all part of the life cycle maybe using this dream of getting rich quickly attracts greater interest from the innovators and early adopters maybe this is how this technology can be funded initially until we can truly harness its future potential but do realize that just like with beanie babies eventually the hype will die the euphoria will end and people will realize that they've been paying tens of thousands of dollars for pictures of monkeys it would all come crumbling down but soon after underneath the ashes the rubbles a new flower will bud and another wave of interest will be born with more meaningful industrial and digital applications that serve a much greater purpose than just collecting pictures of rocks and it's at this moment when people will realize that the most exciting thing about nfts is not owning pictures of penguins rather it's realizing that the whole world has overcome the biggest hurdle of a self-functioning digital economy by making scarcity and uniqueness possible but that can only happen if the world doesn't go into complete chaos and destruction from when and if the us dollar dies check out this video to learn more and trust me it's going to blow your mind

Channel: Vincent Chan

Views: 152,858

Keywords: nft explained, nft for beginners, nft how to get started, cryptocurrency explained, cryptocurrency for beginners, nft how to make money, what are nfts, crypto, nft, best nft projects to buy, best nft, nft tips for beginners, nfts to buy, best nfts to invest in, best nfts to buy, upcoming nft projects, non fungible token explained, non fungible token for beginners, non fungible token for dummies, non fungible token art, non fungible token

Id: WdQzYcM04bE

Length: 17min 35sec (1055 seconds)

Published: Sun Jan 09 2022