NFTs have been a lot in the news lately, jolted into mainstream spotlight by Beeple’s $69M sale of his NFT art piece called the first The First 5000 Days. As with most things crypto, there are as many passionate believers as there are skeptics of this new model for digital collectables. Regardless, from a purely technical level, I have been fascinated by digital collectables for a while (ever since CryptoKitties broke the Ethereum Blockchain) and have been trying to learn more about the technical underpinnings for the last couple of weeks.
A16Z, the venture capital firm, has been a great source for information on the whole crypto space for a while and organized an online summit this afternoon bringing in some big names in the field to speak about the state of the NFT space. Below are some of my takeaways from the event
On NFTs in general
Dan Boneh from Stanford University and Chris Dixon from A16Z kicked off the event with a fireside discussion on the state of the NFT space in general. Some interesting points of discussion included:
- How one of the big reasons that Decentralized Finance (DeFi) exploded was because of the composable nature of Blockchain finance primitives. NFTs could offer similar capabilities. For example, you could wrap non-fungible ERC-721 tokens in fungible ERC-20 wrappers.
- How we are already starting to see NFTs be used as collateral just as other assets tend to be
- Could Quantum Compute destroy Blockchains and therefore the NFT value (nope, we have quantum resistant algorithms which we can move to as QC attacks start becoming more probable)
On NFT Marketplaces
It was fascinating to hear Kayvon Tehranian from Foundation and Devin Finzer from OpenSea talk about their NFT marketplaces. I missed a big part of the latter’s talk but I have been really curious about how Foundation works and it was great to hear a bit about that.
- Every action on Foundation (listings, bids, etc) are recorded on the Blockchain and the asset itself is stored in IPFS. The system only works with non-custodial wallets (sorry Coinbase)
- While technically it is possible for someone to upload an asset that they don’t own, Foundation manages this a bit by a pretty exclusive invite process with only current artists being able to invite new artists (which does feel a bit centralized IMO)
- Since everything is managed in a decentralized way, it is theoretically possible to buy an asset from Foundation and sell on a different marketplace
Dieter Shirley and the Flow Blockchain
This may have been my favorite session since I am already interested in Flow. Dieter Shirley is the CEO of Dapper Labs but really got famous when he and his team built CryptoKitties while still working at Axiom Zen. Flow is a new blockchain designed for applications, not financial instruments and is famous for running the NBA Top Shot NFT
Flow’s architecture is driven by 3 goals:
- Enabling building tangible products
- Simple on-boarding for non-crypto-nerds
- Higher capacity to enable web-scale products
He also talked about the decision to build their own chain instead of using Ethereum (“wasn’t easy”), though he does feel that interop with other chains is going to happen among different chains anyway.
On his one regret with the ERC-721 specification that he drafted, he wishes they hadn’t punted on the metadata specification for ERC-721 tokens (“it was a classic bikeshedding moment and there were too many people with too many opinions”).
On the challenges he sees with NFTs in general, he feels legitimacy of the NFT, the challenge of balancing scarcity and abundance and the challenge of interacting with the traditional financial system will remain the big challenges for the near future.
DAOs and NFTs
The last talk of the evening was by digital artist pplpleasr who talked a little bit about her process for NFTs but then mostly talked about the birth of the PleasrDAO, a Decentralized Autonomous Organization that was formed organically to acquire her Uniswap NFT and now exists as a community that buys other NFTs and leverages their assets to power socially conscious projects on the Blockchain. Her talk ended with her revealing her new NFT titled “Apes Together Strong”, with all proceeds going towards charities supporting autism advocacy.
I love the idea of DAOs and the talk, as well as the sentiment on her slide below, was the perfect talk to end on