For the past year or so, the words NFT and Web3 have been getting thrown around with increasing frequency, from headlines about art selling for thousands of dollars to a blossoming interest in AI and the metaverse.
I’m a freelance journalist and creative writer who doesn’t come from the tech world. As such, I was initially skeptical of the idea of Web3. But the more research I’ve done into it, the more I’ve realized that NFTs aren’t just overpriced JPEGs.
No, NFTs have the ability to disrupt everything we know about content creation, and can pave the way for content creators of all kinds to take back control of their work and usher in a new era of creativity online.
Blockchain is coming whether you like it or not
Web3 refers to the new generation of the internet emerging being built on blockchain. Just as Web1 brought us static content, and Web2 brought us social participation, Web3 brings us a new fundamental way of interacting digitally: the blockchain.
But why should we care?
Well, probably for more reasons than you realize.
A little background
If you are unfamiliar with the concept of blockchain, just think of it as simply a decentralized, immutable ledger. A blockchain is just an ever-growing list of credits and debits to accounts (and this doesn’t necessarily need to mean financial accounts – any type of information can be stored this way).
But the kickers are:
1) these records are decentralized – there is no middleman or record-keeper, meaning all the account holders directly own and control the network rather than being customers of a central platform entity, and
2) these records are immutable – once information is recorded, it can’t be modified or reversed, as long as the internet exists.
Even congress is starting to wake up to the idea (and is surprisingly good at explaining it).
NFTs are one way of utilizing blockchain technology. You can think of an NFT as simply a digital stamp of proof of ownership of … anything. There’s nothing unique about NFTs in terms of what they are in content: it could be images, documents, media, membership, accounts, assets, records…anything that can be used on Web2 can be used in Web3. What’s unique is how they are stored: in a decentralized, immutable ledger.
We are moving beyond ape pictures
If you thought NFTs only consisted of pointless, overpriced, pixelated pictures of apes, you’d be forgiven. We’ve certainly seen too many of those.
When NFTs first hit the market, artwork was apparently the easiest type of content to mass produce and build interest around. The novelty and quick price appreciation of some of the early launches led to bubble-like buying in many projects with no real utility or track record. (Though to their credit, some such projects that at first glance appear to revolve around silly JPEGs have actually used the funds raised to build legitimate brand and utility for their holders; but many simply found it more convenient to disappear after selling their “collectibles.”)
But what if there is deeper utility to NFTs?
What if, regardless of our views on animal JPEGs with arguable utility, the underlying technology behind NFTs is maturing rapidly as we speak, and is here to stay?
What if Web3 offers creators such as musicians, artists, photographers, and writers control over their content and its distribution in a way that we haven’t seen on the internet so far?
The 90s all over again
The promise of getting rich quick happens with the birth of each new technology, when people become speculative about its future before its utility is fully developed.
So far, NFTs have had that nonplussing, dot-com bubble feeling because the fever of speculation overtook the rate of development. Speculators are quick to foresee a revolutionary future before it is a reality, and become the first to act – and often overreact. But the future they see is often still real.
The parallels to the 90s dot-com boom are many. Back then, investors dumped billions into baby tech companies in the hope that they would take over the future. While many of the investments failed, some are still here 25 years later. And the technology of the internet itself certainly did take over the future, in ways beyond even what most would have dared to dream at the time.
Likewise, as with any bubble, the initial fever of no-questions-asked money dumping into NFTs is subsiding, while the actual utility of Web3 is beginning to take form.
And the form that it is taking is actually one we need. It’s one that can help correct many of the ways that Web2 has gone astray, and to take some of the power away from big tech platforms and give it back to the users and creators.
The Fundamental Problem with Web2
It can be helpful to take a step back and understand what Web3 fundamentally is about and why it is so revolutionary.
Web1 was about Content and static pages. (Think of the internet in the ‘90s.)
Web2 was about Interaction, and brought us social media, blogs, streaming services, e-commerce, and other content sharing platforms. Web2 is what we are living with now. It promised to be a revolution that would open the internet up to any creator, big or small, and unleash the power of peer-to-peer networks.
Practically, however, Web2 isn’t about creators. It’s about platforms.
The issues with Web2 have largely stemmed from their centralization: a few big tech companies own all your data, unilaterally censor and manipulate your behavior, and sell your data to advertisers and governments (as detailed in the documentary The Social Dilemma).
Indie authors were excited about breaking away from the large corporations of traditional publishing houses, only to be dependent on Amazon.
Musicians were excited about finding listeners through the internet, only to become dependent on Spotify.
Photographers are dependent on Instagram…the list goes on.
The lie we’ve been told is that Web2 is about creators.
But Web2 is not content-first. It’s platform-first.
Some of the main problems with the centralized, platform-first web2 model we’ve put up with (or become numbed to) for too long include:
- Ads. This goes beyond the alternately annoying or cleverly disguised content that clutters our browsing 24/7. The focus on ads in Web2 is the basis for privacy issues and data-selling issues in addition to the reduction in quality of user experience from intrusive ads. This isn’t inevitable. Do you remember using Instagram before ads? It’s a categorically different tool and environment without ads.
- Bloat. Almost invariably, platforms that begin as simple, user-focused sites become larger, more bureaucratic, and more controlling. Think of the early days of popular sites like Facebook or Airbnb. After going public, they gradually became complex behemoths, becoming more controlling over what people post, all while chasing an unending need to be constantly “improving” and “growing” until there are more features than you can keep track of and you can’t find what you need. This bowing to the altar of shareholders takes away individuality in an attempt to control the user experience.
- Content control. In a world that is platform-centered rather than content-centered, artists are forced to create what will do well on a given platform based on explicit rules or censoring as well as the hidden biases of algorithms. This goes against the fundamental idea of artists being able to create what they want, or creating from true inspiration. While the internet has certainly given voice to people who may have never been able to share their work publicly before, the algorithms of these giant platforms have also changed our brains, not only in the way we consume content but in the way we create it in the first place. The content that isn’t created or shared is likely one of the biggest costs of Web2, a cost that cannot be quantified because the content never existed.
- Money, not humanity, is the end goal. Have we ever stopped to wonder why peer-to-peer networks need to be monetized in the first place? It makes sense to monetize lawnmower supply chains and editing services. Things get messy when talking about human social interaction. (If you went to have dinner at a friend’s house, would you want a company over your shoulder trying to extract maximum monetary value from your interactions?) Algorithms are not made to help creators or to care for the well-being of users. Algorithms are designed to keep users on the platform as long as possible. This is done by exploiting people’s emotions, fostering echo chambers of misinformation, and favoring inflammatory content, to the point that it could be creating a nationwide mental health crisis.
All of these issues stem from a simple sequence: peer-to-peer interaction (which was part of the glowing promises of Web 2 a decade ago) leads to the network effect, which on its own is great, except in technocapitalism this unavoidably leads to being bought out by for-profit corporations, as the potential for monetizing the attention of millions is too great for some to ignore.
Therefore, the technology and ownership structures of all the above lead to big, centralized, profit-motivated gatekeepers that have all the power. The results above are not then surprising.
We need to move away from a platform-centered, advertisement-centered internet. The only solution is to change the underlying technology and ownership structures of the platforms themselves.
And this, my friends, is exactly what Web3 does. It can provide a hedge against corporate takeover and preserve decentralized, ad-free, peer-to-peer experiences forever, regardless of how big their network effects become.
Now we finally get to the fundamental key to understanding all of Web3 and its implications: decentralized ownership.
With decentralized ownership, there is no middleman or gatekeeper– the platform/network itself is owned by the users. Which is revolutionary.
What this means for users
Imagine a Facebook without Facebook/Meta: a social media platform with literally no headquarters or entity, because all of the users own the platform. They own their own data and can charge advertisers if those advertisers want access to their data. They can get paid for their content from other users, rather than providing it to a billion-dollar corporation for free.
Imagine a streaming service where you can actually own the content you purchase forever. Your NFT is your movie, which could port to any viewer/player in a platform-agnostic way. You would own your content rather than simply renting the right to view something locked into a certain big tech ad-driven platform.
Imagine a video game where the in-game “assets” you “buy” (i.e. currently donating money to the gaming platform in exchange for the right to use certain pixels in their ecosystem) are instead true independent assets that you can resell to other players or port into other completely different games.
The list goes on. Anything that can be done in platform-owned Web2, can be done in the decentralized ownership model of Web3.
Keep in mind that in Web2, you as a consumer never really own anything–even when you “buy,” say, an audiobook or movie on Amazon, you are really just renting the right to view the content on their own proprietary platform as long as it’s on there (which isn’t guaranteed to last forever, or in all jurisdictions).
A huge benefit of this ownership is the ability of users to resell their stake in a project. This completely changes the dynamic of creators’ relationships with their audiences.
Community members are no longer customers to extract as much value from as possible, essentially having your financial gain come at their financial expense. Community members are now co-owners and co-creators of what you are building. Your financial success is their financial success, and vice-versa. Not only do they gain as your IP (intellectual property) rises in value, but you also gain as their NFTs rise in value because of secondary royalties (getting a percent of each re-sale), which can be programmed into your NFT. It’s a rising-tide-lifts-all-boats mentality.
Why is this so huge?
1. Community members can directly share in the success of creators they believe in.
2. This also means there is an army of fans that have a direct incentive to help the project do well and promote it.
3. The creator is incentivized to always keep improving the value of the IP – they don’t necessarily just release something and forget about it. Rather than having to continually churn out more/new content to make a living, they have both the ability and incentive to continually improve the value of the existing content, since they still have a stake in it.
What this means for creators
And this is all just on the user side. Think about what this means for content creators.
Independence of platform’s control over your work
In Web2, the work that you’ve created and posted to large platforms is ultimately not in your control. At any moment you can be banned from the platform and all of your work (and your following) will be gone. Your content can get taken down or demonetized for any number of reasons. And to access your content, your audience is having their personal data tracked, analyzed, and sold.
For example, Amazon can change their algorithm at any point, meaning a book that had previously been making good sales can plummet in the search results overnight, drying up an indie author’s income.
An NFT is platform agnostic. Over time, there will be thousands of websites and apps that connect with your wallet and are compatible with your NFTs, and even if one tool goes down for any reason–or you just don’t like it anymore–you can just switch to an alternative, and still have the same creative assets – because you actually own them.
Who accrues the value
Think of all the enormous value created online each day. Who is actually accruing (benefiting from) that value?
In Web2, the answer is clear: the platforms. Unless you sign away exclusive distribution to Bezos, Amazon takes a whopping 65% of your ebook sales and well over 75% of your audiobook sales. Spotify shareholders take at least three times as much as the songwriters on their platform, who get a measly 10% of their sales. The list goes on.
And here’s my favorite: how much of the value of your data do social media sites take? 100%. They don’t even try to give you a cut.
I work as a freelance journalist; I get paid to write stories for a publication, and the publication sells ads that run alongside my articles. So the publication makes money, I make money, and the readers get free content because they see the ads.
Now let’s compare how most social media platforms work. You as a writer, artist, or photographer post the content that the platforms need–they need your content so people visit their site, and so they can sell ad space to advertisers. It’s quite like my work as a journalist, except…you don’t get paid.
That’s right. If you are posting quality content to a site like Instagram, which is owned by Meta, you are essentially working for Meta for free. They rely on your (and all of our) free content so that they can sell adspace. We do this in the hopes that their algorithm will look favorably on us and help us grow our businesses in return, an algorithm that we didn’t design and can’t control and is full of hidden biases and will only favor us if we play by their rules.
What about in Web3? The platform takes…0%. That’s right. There is no middleman or platform entity. The network is, by definition, owned by the users. You, the creator, and your users collectively retain 100% of the value you create.
Of course, like with any business you can choose to utilize other sites or platforms for doing business if you want, but they are not hosting the assets themselves. They are optional, competing interfaces with no control over your content. Not coincidentally, we’ll find, for example, that Opensea only charges 2.5%, or Readl only 2%. A far cry from Web2.
It’s time to get away from these platforms’ absurd claims on the financial value you create.
Deeper levels of connection
The technology of ownership brought about by NFTs reaches deeper than many people imagine.
For example, a musician could create an NFT for their music where the holders get access to their songs. But they also could create a higher-level version of the same NFT where holders get royalty sharing, access to an online community, concert tickets, or backstage meetings.
Photographers could do something similar, as could writers, movie studios, athletes, or anybody who has something of value they could give to their fans.
Think of it a bit like Patreon, but with greater utility (like configuring royalty sharing) as well as the potential for resale of the NFT. (Whereas with current Web2 subscription models, you can’t resell your past payments to creators you’ve supported, so the longer you’re involved the more money you are sinking into it.) This could even spark a sort of Renaissance for content creators.
It’s not hard to see how the level of engagement in good Web3 communities is often remarkably high, as the community members feel a real ownership in the project and benefit by helping it grow.
Web3 brings huge potential for cross-media comprehensive world-building. You can easily tie textual assets, audio, video, membership club, website access, games, metaverse, access to collaborators’ projects, and more all into one single asset (with a list of benefits/access that can grow with time). The ramifications for “universe” building and creative collaborations that weren’t feasible before are immense.
With Web3, you can program royalties–both from initial sales and from secondary market resales–to have defined portions go to relevant parties. This can go to you, and/or to contributors such as editors or designers, as well as back to your audience if desired, rewarding community members. All on autopilot. Instantly. Forever. With no middleman.
Secondary royalties itself is huge; normally if you sell a book or painting, the buyer could resell that and you would never know or profit from it. What if you work hard to grow the value of your work, and so the works you created long ago are now much more valuable than they were initially? In the traditional world, none of that increased value benefits you; with blockchain, you could write it so that, say, 5% of any resales go back to your wallet, giving you a share in any long-term gains of your works.
Scarcity, authenticity, and authorization
Scarcity is a concept foreign to Web2. As any artist knows, it’s all too easy for others to copy and distribute your work, without any attribution or revenue to you, ad infinitum. It’s awfully hard to convince people to pay you for your original work when it is easy to make an infinite number of free identical copies of it. Not exactly a kind environment for content creators that want to actually make a living.
Remember the immutable part of our definition of blockchain? This means that when you publish your work you can specify a quantity, locking in true scarcity. The fact that others could still copy the content onto Web2 misses the point that within Web3, your content, along with any benefits or value to owning it, truly can have an absolute fixed supply.
Furthermore, it provides immutable time-stamped proof of first-to-create, and any subsequent trading, additions, or derivatives of it can always be traced back to its origins–and corresponding attribution and revenue due to you can be enforced automatically by the contracts in the blockchain.
Starting to see how this is a game-changer?
Web3 isn’t just a new platform. Web3 has the potential to disrupt everything we know about the internet.
Discussing some legitimate concerns
All that being said, while Web3 promises greater autonomy, value, and direct community than content creators could ever imagine in Web2, its use has brought up some legitimate concerns. Here are some that seem most prevalent:
Blockchain and NFTs are just a pyramid scheme.
As mentioned earlier, the speculation surrounding NFTs drew an initial wave of investors hoping to make some cash on this intriguing new technology. But the purpose of NFTs isn’t investment, in the same way that the purpose of websites in the 90s ultimately wasn’t investment. No, the purpose of both is to be useful.
What if back in the 90s we had decided to never use the internet because we were worried that some investors might lose money investing in websites? Of course that idea seems ludicrous now, just as suggesting we do the same for NFTs will seem ludicrous 10 years from now–it completely ignores the utility of a revolutionary piece of technology.
Good projects often take years to develop. The real utility of NFTs is being built every day by countless skilled teams behind the scenes, but behind-the-scenes work doesn’t make for exciting headlines.
Now, there are many individual NFT projects that are scams, just as there are plenty of scam websites in Web2. But there’s nothing inherently wrong in the technology of blockchain, just as there’s nothing inherently wrong with the internet. Saying that we shouldn’t use any technology that has the potential to be used by scammers leaves us with…no technology.
For the record, I am all for the NFT bubble bursting. It will help the collective focus move to blockchain’s real utility instead of just investing.
Criminals could use cryptocurrency, so we should stop using it.
This is an outdated concern. There’s a lot of research showing that criminals are increasingly avoiding crypto because it is a permanent ledger which risks making it easier for authorities to connect the dots. Paper cash is by far the currency of choice for criminals, but we don’t hear people calling for the elimination of cash.
NFTs don’t help creators. They just help creators get their work stolen.
Intellectual property violations are a real problem, but they’re not a new problem created by blockchain. As a writer, I’ve heard of several other writers who have had their work copied and pasted onto sites like Wattpad, a Web2 site. Does that mean that writers should stop sharing their work online? No, because we are living in a world where sharing your work online is becoming ever more crucial to building an audience.
As Web3 grows, this is an area where better solutions are likely needed. We are seeing this with major exchanges like Opensea now requiring a verification process that authenticates true collections and they try to take down copy-cat collections. That being said, the risk of your work being stolen is greater if others publish it before you do–if anything, this is one more reason to get familiar with Web3 ASAP and start to build an established presence in the space so it is easier to take down copycat projects.
Blockchain is killing the environment.
Bitcoin uses about 0.08% of global energy. (For the most comprehensive study on Bitcoin’s energy usage, click here.) That needs to be balanced against the relative benefit of decentralized immutable transactions, which certainly has a non-zero value to society. Banning mining, the computational work that powers the blockchain, in one country just results in mining moving to other countries (potentially those with less green energy grids). The best solution for the planet is to encourage mining in areas with green electricity sources. Once our electricity generation is fully renewable, Bitcoin will be fully renewable.
All that said, this whole discussion only relates to proof-of-work blockchains such as Bitcoin and (currently) Ethereum. Proof-of-work blockchains use much more energy than proof-of-stake blockchains.
Bitcoin does not support NFTs. Ethereum, which does support NFTs, is transitioning this summer to proof-of-stake, which is an alternate way of validating transactions that will cut energy usage on the network by an estimated 99.95%.
And apart from Ethereum, virtually every other blockchain that NFTs use are already proof-of-stake. So regardless of one’s views on the net societal cost/benefit of Bitcoin’s energy usage, it’s pretty much a moot point for NFTs as they are all (or very soon will all be) on proof-of-stake networks.
When any disruptive, revolutionary technology hits the market, the initial popular response is skepticism, cynicism, and fear. Our brains want to keep us safe, and the easiest way for them to keep us safe is to keep us in predictable situations. But sometimes our predictable situations are broken. Sometimes our predictable situations are holding us back with the illusion of safety.
I remember being on the wrong side of new technology adoption when people were first starting to talk about ebooks. I was extremely skeptical of the idea of ebooks–how would this disrupt publishing? Couldn’t someone copy and paste your work and sell it as an ebook? Wouldn’t this ruin reading?–to the point that I wrote an entire paper about how we should resist their adoption. Fast forward to today and I frequently read ebooks, and enjoy many features about them, including the lack of shipping and paper needed to get the material delivered to me.
Only a small percentage of people are early adopters. But as time goes on, more people get on board with useful technology, and eventually we reach a tipping point where the vast majority have accepted the new technology and only a small percentage are the final holdouts.
The world is changing whether we like it or not. Blockchain is coming whether we like it or not. We can try to resist it, or we can choose to make it the best that it can be.
And from everything I’ve seen, it holds a lot of promise that we’d be foolish to ignore.
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