As mentioned in a previous article, jobs are one of the basic elements of the economy. The more people have jobs, the better the economy is. But there is an even more basic element to the economy. It is the thing that creates the wealth that in turn buys goods and services and pays the wages and salaries. This is the very good and services, themselves.
The physical economy of past centuries has long involved the exchange of money, or tangible things of physical value like precious metals such as gold and gems, such as diamonds. But in this century, there has been a change once thought impossible – the exchange is now being made with an intangible “thing” known as cryptocurrencies.
This has brought in some very important questions about ownership, including the use of NFTs and crypto currency.
Crypto currency like Ethereum, Bitcoin and others are being used with increasing frequency for making purchases and payments of every kind using blockchain technology. Blockchain is well-known for its overall security. Since every transaction is verified by everyone else on the blockchain, both the buyer and the seller are protected from fraud. But what about intellectual property rights and proof of ownership? More on that, later…
It is fascinating to observe the debates over this change from traditional currency to crypto. Many still stand on conventional wisdom, that cryptocurrencies are based on an intangible idea that has no real value other than that which people assign to it. Gold, on the other hand, is a solid, physical entity that has real value. I find it intriguing that these same people think nothing of using credit cards or cash which themselves have no real value, either. In fact, “real” money has been spun off printing presses for so long at the whim of political leaders that few really know if it could withstand any serious market shocks.
The “wise” economic experts often claim that the way to protect yourself is to hold gold or other precious metal, or gemstones. They scoff at the very idea of liquidating cash for cryptocurrency yet have great confidence in metals and stones.
But a very wise person has said something like, “Crypto coins are an imaginary currency driven only by the perceived value of those holding them. Gold is a yellow stone you cannot eat.” So it is my opinion that, even though there are risks involved like anything else in this world, crypto currencies are here to stay and will likely become even more commonly used as the metaverse emerges.
A Safe Choice for an Emerging
Crypto currencies are the safest form of exchange ever devised (as long as the world’s electricity supply is not disrupted, and no future magnetic storm wipes the world’s coin wallets).
But if the confidence of one of the world’s largest multinational technology companies is any indication of the long-term future of crypto currency, it’s probably here to stay in one form or another. Jensen Huang, CEO of Santa Clara, California based Nvidia Corporation has recognized that the crypto mining industry has created a massive shortage in the graphics card industry, making them more expensive and difficult to acquire. Worse, the high demand has created shortages across the semiconductor market, affecting everything from smartphones to trucks.
Even worse, crypto mining uses massive amounts of electricity, and that affects everyone. But rather than seeing such challenges as the beginning of the end for crypto, Huang and his team are building a special new product, the CMP, directly for the crypto miners. This new type of GPU is much more energy efficient and will only work for crypto mining. It will neither work for nor compete with their GeForce graphics card.
As more people are relying more and more on DeFi (blockchain-based decentralized finance) and at the same time becoming more environmentally conscious, the metaverse, with its much lower resource consumption, is rapidly becoming a reality. (Nvidia is also heavily invested in the metaverse with its own project, called Nvidia Omniverse, which as of June, 2021, had more than 400 companies using it, including BMW and Bentley.)
With the explosion of new products and services in this rapidly emerging metaverse, physical distance and borders mean very little. People from anywhere can buy, sell, trade, and collaborate with anyone from anywhere.
But what about intellectual property rights? How can I, for example, offer my photograph, music, movie, game, etc., for sale or use my stunning personal avatar, without someone just pirating it and selling or using it as their own? That’s a huge deal in the metaverse!
The economy of the metaverse is eventually going to be much larger than the economy of the physical world. And in fact, there will likely be many metaverses, perhaps a “world” of metaverses! Digital currency – aka, cryptocurrency – can solve the matter of cross-world currency, but what about ownership?
NFTs are already becoming popular to answer this very question, allowing users to interact with assets they own using AR (augmented reality). But what are they?
An NFT is defined as a non-fungible token, a “unique and non-interchangeable unit of data store on a digital ledger (blockchain.)” They can be associated with digital files like photos, videos, and audio. They use blockchain to provide a public certificate of authenticity – aka, proof of ownership.
At the same time, NFTs do not restrict the sharing or copying of the underlying digital file. In other words, such digital files can be shared across the metaverse, but they cannot be interchanged like cryptocurrency.
One way to explain this would be to first look at something everyone is still somewhat familiar with – the money you might carry in the physical world. Let’s say you have a ten-dollar bill. You can go to a store and change it for two fives or five ones and you still have the same amount of money. The ten-dollar bill is therefore fungible.
Now let’s say you want to acquire a painting, the Mona Lisa. You cannot simply trade it for another painting, or even a truckload of paintings. It is non-interchangeable (okay – the Mona Lisa is practically priceless – but you get the idea).
In the blockchain world, which is part of the metaverse world, attaching NFTs to intellectual property is kind of like an artist putting his signature somewhere on his painting – except that in the case of the NFT, the digital “signature” cannot be cropped off.
When someone creates some kind of data as an NFT, they are in effect writing a digital note (a smart contract, something like the artist’s signature) in a shared ledger (wallet). The note says something like, “I am the original creator of this data and whoever owns this data owns this digital file.” This further means that if this owner sells the data, they owe you, the creator, a royalty.
These smart contracts are supported by the Ethereum blockchain. This prevents someone from changing the digital ownership record or creating a copy. With a provider that allows you to buy and sell Ethereum, you can use it to buy and sell these NFTs.
Ethereum is presently the second largest cryptocurrency by market cap and it is what powers NFTs, so you need an Ethereum wallet to mint your NFTs and you need to purchase Ethereum. There are some decent tutorials out there about how to create NFTs. Artists of any kind should learn about NFTs, as they or something very similar are going to be a vital part of the metaverse economy.
Right now, NFTs are being used in the developing metaverse to “sign” things like image files, music, and videos. But the possibilities as the metaverse grows are practically endless. They will certainly be used for gaming. But that is only the very beginning.
The physical world has many things that limit growth. The metaverse is limited only by the imaginations of the people who are a part of it. And like it or not, everyone who is connected in any way is part of the metaverse in some way.
But as more and more people become completely immersed in the metaverse as they spend almost every waking moment in this virtual world working, playing, learning, creating, and more, the demand for digital products of every imaginable kind – and many not yet imagined – is going to explode.
NFTs are a critical part of this new economy – at least for the near future. Perhaps, like Ethereum and other cryptocurrencies that have arisen since Bitcoin appeared, another way of confirming ownership will catch on. But now is the time to learn about how to create and use NFTs. They are the future of digital commerce in the metaverse. Those who say otherwise are likely the same people who told you Bitcoin would never catch on!