I’m sure you know by now what NFTs are. If not, I’m envious of you (but you should read this). What you’re probably still confused about is why NFTs even exist - what is the real purpose of this technology?
I’m going to tell you about a new revolution that is happening with NFTs, and why I believe they are the future. Just... not bored apes.
One of the biggest problems of the web is that your information is everywhere. There is no doubt that you have at least 10 social accounts - Google, Twitter, Facebook, LinkedIn, Reddit, Discord, Slack, Steam, Airbnb, JIRA - each holding remnants of who you are as a person. With the internet becoming less anonymous and more focused on connection, keeping these accounts separate is a thing of the past. Apps like Polywork (web2) are attempting to tie together the professional timeline of LinkedIn with other achievements such as speaker events and published blogs. In a world where everything is spread out over the web, this is a much needed service.
This is where web3 truly thrives. The biggest technological advance that blockchain offers is ownership, and the decentralization of control gives power to the users. If it’s in your wallet, there is not a single thing that a centralized entity can do to alter or delete it. This opens up huge opportunities in the social space, with the ability to carry a social profile with you everywhere you go.
Instead of having a different profile for each social platform you use, you’d have one profile that you use for all of them. This profile holds your information, your followers, your posts, your groups, your events, your travels, and more.
This may not seem game-changing, but the interoperability of data is one of the best use cases of NFTs. This interoperability is a huge part of the metaverse. It isn’t just information that can be viewed on social platforms, but it is information that can actually be utilized by all apps on the blockchain. If you earn an NFT in an education platform, a separate entity can give you exclusive access to an event. Or you can be given a special role in a DAO that allows you to moderate the chat. This idea isn't new - Skynet is already exploring with the idea of a decentralized identity through MySky.
The goal of the metaverse is to merge real and online life. There are hundreds of ways to achieve this, two of them being Meta’s vision of a VR world and blockchain ownership of items you earn in games. For this merge to be successful and in any way effective we need to echo the way in which our real lives work. We’re one person, not 100s of accounts. With the rise of NFTs and FTs being used in real life circumstances, such as event ticketing and education certification, the metaverse is becoming reality at an increasingly rapid rate.
People are already starting to build their social reputation without really knowing it, commonly through purchasing an NFT domain name (like ENS) and completing transactions using this wallet. Their wallet contains information about achievements (such as Buildspace), events (such as NEARcon), and DAOs they are members of (such as Maker DAO). There are UIs to log in with your wallet and view all your NFTs privately, but we are still lacking a public UI with this kind of transparency. Of course they do exist, and I think we are getting closer to fully integrated social profiles with the ability to view and utilize NFTs on an internet scale.
Governance and proof
This idea of NFTs got me thinking about DAOs. If you don’t know what a DAO is, it stands for decentralized autonomous organization and it’s basically a community-led company. Owning some sort of token gives you some sort of governance of the organization.
Currently, people can trade governance tokens, meaning that you can buy into governance of a DAO. This opens up problems of its own - where is decentralization if the person with more money owns more governance tokens?
One of the best parts of blockchain is its transparency, with the ability to see when and from whom the tokens were minted and traded. Vitalik recently wrote an interesting piece about ‘soulbound NFTs’ which uses this technology to give governance only to the wallet that originally owned the token. The example is a city DAO; when you’re born into a city a governance NFT is minted to your wallet, but if it leaves your wallet this will be shown on the blockchain and will no longer hold its governance power. It means that although NFTs have incredible use cases, they are actually worthless. If they are traded they no longer have the same utility. This is where I believe we are going with NFTs.
We can tie this kind of transparency together with the social reputation we talked about, and give particular kinds of NFTs particular types of governance. For example, if you have proof of education in the environment or donating to an environmental charity, you can vote on environmental concerts. Fraud is impossible, considering that selling the proof of education or donation is a public transaction.
Of course there are political issues with this particular example, and imposing any sort of black-and-white proof of competency is a step backwards. But I fully believe that the proof that exists on the blockchain combined with social profiles is the ultimate direction of NFTs. It's ironic isn't it? The technology, originally enriched with scammy crypto bros, could be normalized by something that is nothing to do with money.
There are thousands of other uses of NFTs that are currently shaping the crypto community. On top of art and music, NFTs can help manage rights, real estate, certification, gaming, fashion and hundreds more ideas every week. And when the transparency, interoperability, and ownership of blockchain technology reaches its true potential, we'll suddenly start to understand the importance of NFTs. It's just the beginning my dudes.