Most will recognize the title of this article as a throwback to a piece from Newsweek back in 1995 where the author, Clifford Stoll, wrote this about the internet:
The truth is no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works.
This is laughable now, but in the early days of the internet, the value wasn’t readily apparent. There were lots of ugly, utilitarian homemade sites on esoteric topics. Online shopping hadn’t hit yet. There was no Wikipedia, no Amazon, no Google, no Facebook. People lacked the imagination on how this new tool would be used, because it was still being explored.
Like the Internet back in 1995, NFTs are still being explored in how they will be used and applied. Like the Internet, NFTs are not a passing fad.
While speculative attention and mania has shifted to meme coins, I believe NFTs will claim their place as the digital front end to the creative economy that we’ve been looking for.
What I believe we'll see next out of the NFT space is a maturation from NFT founders and further exploration as to what "utility" means and exploring the intersection of creation, ownership and fandom.
First, let's cover the more standard associations for NFTs.
NFTs - the standard stuff
Self Expression
Everything we do is about expressing ourselves. The clothes we wear. The things we read and consume. How we decorate our home.
With the advent of social networks, this has extended to normal activities. Who cares what you’re eating or what you had for dinner? Who cares if you’re walking your dog in the park? Yet, these moments are being shared.
Why is the Twitter blue check mark important? Why are the number of followers and likes important? Your digital self expression and social currency is inextricably bound to social approval.
NTFs are no different. They are an expression of community, being part of a group, and expressing your interests.
Art
Many early famous artists had patrons who supported their work financially. NFTs are a scaled version of that.
NFTs can be a way to both be “discovered” and build a community around an artist and what they are producing.
Collectibility
Collectibility is an easy concept to latch on to. Baseball cards, comic books, and even sneakers have all shown to be collectible.
People thought that Andy Warhol’s or Jackson Pollocks shouldn’t have value. People thought that sports cards shouldn’t have value. People thought that sneakers shouldn’t have value. The market will decide if something has value.
The collectibility of NFTs like CryptoPunks and BAYC makes sense, as some of the pioneers in collectible digital assets.
Utility
When discussing NFT “utility”, what we most hear about most are things like social identity, memberships, and gaming assets.
I find the PFP / social identity aspect to be the least interesting and NFTs as a membership was a problem that didn't really need solving.
Gaming NFTs are the most straight-forward and applicable. Assets earned in game (through hours of game play) could be bought and sold.
There is already a lot of money spent on Call of Duty weapons, Minecraft skins, and a range of other goods.
Assets as NFTs on the blockchain would allow for easy exchange, creating entire consumer marketplaces and in-game ecosystems that have real world value.
The last part of "utility" falls under "ownership" (which I consider to be the holy grail of utility), but I'll cover that later.
So, what are NFTs about?
NFTs are about raising money.
If you're purchased a 1 of 1 NFT, you're supporting an artist...with money.
If you're talking about a collection of NFTs, you're often you're supporting a project (and artist)...with money.
I think the comparison is to Kickstarter is an apt one. Instead of just product though, you’re getting shared upside.
A comparison could also be made between startups and NFT projects— you are pitching a viable product that someone wants, your team (and ability to execute on it), and the roadmap for your product.
However, the comparison ends there.
With startups, you are typically forced to raise money from accredited investors (people with a net worth over $1M). There are SEC regulations (reg A) that allow for smaller investors, but it requires you to deliver K-1s to all of those smaller investors…so, most startups don’t deem it worth their time.
With NFTs, you are raising money from thousands of peers who will be your first-movers and brand advocates.
For startups, you are intensely focused on building your Minimum Viable Product to test the market fit.
With NFTs, you are intensely focused on building your Minimum Viable Community (to borrow the phrase from Alexis Ohanian). It is removing boundaries for creatives, and leveraging their community to help them grow.
What is more, it super-charges the referral part of the funnel, because those giving the referrals aren't just fans - they stand to benefit.
What are the current issues?
What is the money being used for?
We've all heard the phrase "Underpromise. Overdeliver." and it has its merits.
However, The NFT space has been drowning in projects using “underpromise” as an excuse for not sharing details on what is being built (if anything). Some never get to the "deliver" part of phrase.
How will we make money?
This is also something that many NFT projects don’t ask, possibly because it is also inextricably tied into the previous issue.
The truth is that a lot of NFT projects treat their consumers (holders) as their revenue stream. Floor price is driven by hype and speculation, and founders see it as their job to fuel that.
If they require more money, they create another collection to mint.
Maturation
I believe what we’ll see next out of the NFT space is a maturation.
Rather than churning out the next Noah’s ark NFT, relying on “underpromise” to avoid talking about the deliverables, or using your holders as a revenue stream, more NFT projects will:
- BUILD an MVP (deliver something first)
- GROW a minimum viable community (generate interest)
- MINT a collectible front-end
The NFT space has been working in reverse.
The path to sustainable revenue streams should also be apparent, prior to minting the NFTs.
This builds a sustainable community and activates the referral part of the funnel, with the community acting as brand ambassadors (with skin in the game).
The intersection of creation, ownership, and fandom
I saved this one for last, because I consider this to be the holy grail.
Where the act of creation intersects with community ownership and fandom is where we’ll see momentum. When a holder's interests are aligned with true fandom, we'll see brand ambassadors like never before.
We’ll start with an example:
Let’s say that there is a musician. You have attended her concerts, and you think that she is a phenomenal talent. What if she used an NFT project to raise money for her first album and touring? By holding this NFT, get to share in her success — through free concerts, exclusive songs, and other rewards (that could be monetized)?
There is a shared upside with the community members. This means that your members become true brand ambassadors. With NFTs, you get art. You get community. You get IP ownership. You are a partner in what they are producing, just by holding the NFT.
Your members have a financial incentive to bring more people to your NFT, product, or platform.
The community becomes part of your brand.
Community - if you're not building it, you're gonna have a bad time over the next decade.
Web3 is going to be a huge disruptor for entrenched brands and traditional marketing. The best marketing will be when your community does your marketing for you. Traditional marketing will become as outdated and inauthentic as purchasing email lists.
This is why big brands are all desperately trying to enter the space, seem authentic, and find their place in it.
To me, it mostly feels like this:
For me, the magic of NFTs is that it gives voice and audience to creatives, to discovery of new talent, and for ideas and experimentation to flourish.
This is the energy that I want out of NFTs, and also why big brands feel like the antithesis.
Examples of the "build first" approach
What does "build first" look like in practice?
Fig, the onchain novel
A new project from keridwen and Crypto Coven is Fig, an onchain novel, and I unabashedly LOVE it.
You can collect all 25 chapters of the novel, with some benefits - unlocking future chapters, chapter art, and access to discussion in discord.
I have already minted the book. I did it without any further expectation, other than supporting the author in her creation. In short, I have signed on to be a “patron”.
This is a great example of “building in the open”. The mint didn’t happen first, but in parallel. They are delivering it chapter by chapter. You can start reading at the beginning, and determine if you would like to support the project (you should).
As you can imagine, this approach hurts the initial momentum of the project, though. It isn’t hyped by a social influencer with lots of clout. It isn’t driven by rampant speculation as to what it will deliver. It isn’t driven by collectibility through “rare” traits.
It will be a slow burn, driven solely by a beautifully crafted story. And I believe this project will succeed just on the merits of her writing.
That being said, I believe there is plenty of room for them to explore the “benefits” of ownership. Any “holder benefit” ideation could accelerate the momentum of the project, grow the fanbase, and activate community members to be rapid brand ambassadors.
Could they create additional drops? Solicit other established artists to create drops based on the current art and characters. What if XCopy do a glitch art version of the Chapter 5 art? Anyone who minted chapter 5 gets to mint the new art that would immediately have value.
Maybe provide a benefit for minting and “archiving” each chapter art? When she publishes (and she will), perhaps a collectible signed “archivists only” version could be distributed to those who collected the art? If they opt for comics as their medium (always an option), perhaps archivists receive special editions?
This sort of ideation and exploration is what makes “NFT utility” both difficult to define and wildly exciting - because its use cases are only limited by your imagination. It is up to the project to determine what that looks like.
Living Campaign - where web3 and DnD meet
Dungeons & Dragons was the game that defined my childhood and, if I’m honest, adulthood (I even took a medieval studies minor in college so that I could write more thematic adventures). I have been obsessed with the game for over 40 years now.
I'm working on a fantasy campaign world that is rule set agnostic. It will focus on story, plot hooks, & compelling NPCs. It will be available for free online, and the campaign world will change based on NFT holder participation.
We’ll deliver a campaign website and adventure first. We want to grow interest and community FIRST. We’re producing something fungible and demonstrating value, while creating the community for an NFT mint that follows after.
Everything from the NFTs to our website is meant as a nostalgic homage to AD&D module covers.
The website is a nod to the AD&D module, "Against the Giants" - from some of the subject matter to the garish green and yellow colors.
The NFT collections will be non-player characters drawn in the aesthetics of old school AD&D modules — an homage to the early D&D artists like David Trampier, Erol Otus, Bill Willingham, and others.
The collection artist was chosen based on comparisons of his work with that of Trampier.
What we’re interested in exploring is the intersection of collaborative creation, ownership, and fandom.
Imagine owning characters from other campaign settings — Mordenkainen, Vecna, Elminster, Tasha, Tenser, Emirikol the Chaotic , or Fafhrd and the Gray Mouser.
Now imagine if you owned the rights to their inclusion in 3rd party published works, to use their image, to negotiate perks and financial incentives.
We’re also introducing gamified holding of these NFTs through an on-chain narrative that plays out through non-dilutive drops, upgradeable tokens and prompts.
It will be a narrative game on its own, and the results of these challenges will effect the campaign setting. It will be a truly dynamic and evolving campaign setting, because the characters have their own motivations and owners who participate.
We’re coining the phrase “participatory NFTs” to describe what we have in mind, and we want it to be an experience for our holders.
What we’re looking to create is something more sustainable and our potential revenue streams will be more traditional and more…well…fungible — a published campaign world, modules, DM screens, etc. It will have a life and monetization outside of the NFT collection mint.
NFTs will be the digital front-end to the creative economy
Speculation and hype have been the primary drivers of the previous cohort of NFT projects. The next cohort of NFT projects will deliver early and often, and fans will be able to get behind the project with conviction.
The people who mint are your first-movers - the pillars of what will be your most dedicated fan base.
Whenever a holder’s interests are aligned with fandom is where we’ll see magic. When you are able to surprise and delight your holders, you can capture interest, retain attention, and super-charge the referral part of the funnel.
Far from being a passing fad, whose only relevance were as a PFP status flex, NFTs will become the digital front-end to the creative economy we've been waiting for.
I would greatly welcome comments that direct readers to NFT projects that are experimenting and building in the open.
Connect
- Farcaster @dirthippy— https://warpcast.com/dirthippy
- Farcaster channels /dungeonmaster /creators
- Twitter @dirthippy —https://x.com/dirthippy
