Blockchain technology is widely associated with the creation of interchangeable digital assets, from payment systems like zCash and Libra, to platforms like Ethereum and Substrate, using what are known as fungible tokens.
An item that's fungible is interchangeable with another identical item. Your dollar bill and my dollar bill, your bitcoin and my bitcoin, are all worth the same amount. An item that is non-fungible, however, is not worth the same as any other, even one that may seem similar. For example, all airplane tickets on the same flight do not have the same value. First class is worth more than economy, and even within economy, people are willing to pay more to not sit in the middle seat.
Similarly, non-fungible tokens (NFTs) are “unique, digital items with blockchain-managed ownership.” NFTs include everything from collectibles to games and digital art.
Trinity Montoya, a protocol engineer at Bison Trails, has developed a particular interest in the development, evolution, and potential for NFTs. We asked her about NFTs and what to keep our eyes on as this market continues to grow.
A: I would say the interest was unwillingly drilled into me, ha. I had a “very online” friend who’s an early tech adopter and they talked about the blockchain nonstop for years. By the time I realized how often I was thinking about it, it was already too late for me!
The patience, openness, and excitement they, and other people in the space, had for discussing the blockchain, my questions, and my skepticism eventually led me to do dedicated research on my own. The accumulated days (probably weeks) I spent consuming blockchain-related articles, podcasts, anything I could find, led to my faith in the power of the space. And now here I am at Bison Trails, working on blockchain infrastructure!
A: Like many people I’d heard about Cryptokittes, but going to the Rare Digital Art Festival in NYC in early 2018 really made everything click for me. Art is an approachable and tangible application for people and I heard a lot of examples detailing the benefits of putting art on the blockchain. Proof of authenticity and chain of ownership solve many problems for auction houses like Sotheby’s and Christie’s who put serious resources into verification. The ability to attach smart contracts to the sale of NFTs can allow for infinitely paying royalties, a game-changer for creatives who are traditionally only paid once, while other people profit off future resales.
One speaker, Bea Ramos, talked of working as an animation artist on shows like Teenage Mutant Ninja Turtles. Even though the value she provided was obvious (the actual art without which the show was not possible), it was the network and other parties that own her creations, and still make money off it today. Had she been able to tokenize her art it’s possible she could’ve retained ownership and received more fair compensation than her annual salary. She started dada.art to allow artists to collectively create (and share the ownership and profits of) digital art.
A week after the festival I ended up buying a CryptoPunk and my collection continues to grow slowly! I’ve found art that I can show and gift my friends (even if it’s just through a screen) is an infinitely more consumable starting point for blockchain concepts than trying to explain Bitcoin through candlestick charts.
A: Although the most popular tokens currently on blockchains are fungible (think Bitcoin or Litecoin), there is a growing demand for NFTs. Though they can be bought and sold using fungible tokens, NFTs are their own asset class and because they are digital assets, they don’t only have to be, or represent, images. Anyone with the technical knowhow can create an NFT; they can be anything from a representation of gun ownership to proof of charitable giving for sea turtles to this graphic of Vitalik.
One of the more popular NFTs on Ethereum is CryptoPunks, a collection of 10,000 programmatically generated, unique characters. Only one address can own a single CryptoPunk (other NFTs allow fractional ownership) and they have varying physical attributes - from VR headsets to vapes to cowboy hats. Because each punk is unique, and some have rarer attributes than others, the market values them differently. The current price range for them is a little over $150 all the way to $2Y (quadrillion). They were even sold at Art Basel!
An Update on CryptoPunks from its founders, Larva Labs“In early June, CryptoPunks will be 3 years old! It's exciting to see that it's popularity has steadily grown since its launch. Just this past weekend, the highest sale price in ETH terms was paid for a "Zombie" punk. At launch in 2017, we didn't know if people would connect with the idea of an Ethereum contract representing ownership of unique assets. So, it's been very gratifying to see not only the CryptoPunks resonate with an enthusiastic collector community, but for the concept of a token representing a unique digital object be generalized into the "Non-Fungible Token" category that is now a major use case of Ethereum. It's exciting to see all the new projects and artworks launch in this space.”
A: Limited edition NFTs that represent ownership of physical objects are pretty neat. Unisocks, the SaintFame Genesis shirt, and CryptoPunk prints with attached, sealed paper wallets all come to mind.
As a software engineer who only recently learned in-depth about the craziness that is ICANN, ENS Domains, which provide human-readable names for both on- and off-chain resources, are very cool. There’s an unofficial Twitter Bot that logs new and expired ENS Domain registrations. billclinton.eth was just released back into circulation so now’s your chance!
CryptoJingles, though short-lived, tokenized sounds that you could mix and match to create NFT songs. To my mind, this opened the door for people to explore what other non-obvious things could be represented by NFTs.
A: NFTs may seem like a niche or novelty but people are spending a lot of real money on them. OpenSea, the largest NFT marketplace by trading volume, has done millions of dollars in transactions since launching in June of 2018 . All kinds of items are for sale - from traditional trading cards to in-game weapons for different dapps to limited edition art. CryptoKitties, one of the most well-known NFTs, reached a sort of media frenzy at their peak because people were selling them for 170k and flipping cats for a 60k+ profit. ZED RUN allows you to purchase, breed, and compete digital racehorses named after crypto luminaries like Satoshi Nakamoto.
A: People talk about traditional consumer brands getting involved in the space, which will inevitably increase the general public’s curiosity, understanding, and ownership of crypto assets. For example, last year Nike filed a patent for tokenizing shoes on Ethereum and Formula 1 held an auction for F1 car-branded NFTs.
I’m also fascinated by everything that comes out of the “tokenize everything!” camp (thus allowing those things to be bought, sold, and traded). I’ve listened to people discuss everything from selling your citizenship to your spot in line with NFTs as the possible technical implementation.
Regardless, I’m super excited for whatever comes next!
Trinity Montoya is a Protocol Engineer at Bison Trails, the leading blockchain infrastructure provider. A software engineer for seven years, she’s worked exclusively at early-stage startups in New York City and Boston. As a college dropout, former General Assembly TA, and Recurse Center alum she believes strongly in the power of self-directed education. A New York City native, she’s currently in Colorado with her monster dog, Zapp. They’re waiting for Bitcoin to hit 300k.