When CryptoKitties came out, it was fun for me. Wait a second, I thought. “So you mean this JPEG can have sex with this JPEG and make a new baby JPEG? What what?” When CryptoPunks started in 2017, it seemed silly to many. They were only 128 X 128 pixels. Who cares about that? They weren’t really great until Gary Vee had a mastermind call with influencers and he said “The cryptopunks are going to be huge, go get a bunch of them.” They came in and cornered the market and pushed prices up.
Bored Apes was around the same time Gary was launching his project. They got big influencers together and said, “Let’s get these.” And everyone bought them, prices went up over time. At one point, these cost 2 Ether (ETH). That was a lot back then! Now the floor is like 80 ETH. All of these NFTs (CryptoKitties, CryptoPunks, and Bored Apes) made a lot of money.
Related: Which NFT collection has been the most profitable?
When I chatted with Gary in early 2021 when he was thinking about NFT, we discussed launching on Wax, which is a blockchain specifically for NFT. It’s like WalMart but for NFTs. NFTs are much cheaper on Wax than on Ethereum. Gary would go on to do a great job raising $90 million on his account by putting it into ETH. I just don’t like those gas fees on ETH that much, it’s a huge loss.
I started to see the implications of what could happen with NFTs. Many people see NFTs as mere images; they are just jpeg files, no different from a screenshot. There’s a lot more to NFTs than that, because they can really unlock experiences for you. NFTs represent the next level of digital rights management. Essentially, your NFT can be video, images, text, audio, links, AR, VR, 360 video, and it can be a combination of all of these. They can unlock certain locations based on geographic proximity, etc.
An NFT can also evolve over time. You can have a little NFT baby, maybe a little baby egg, which then turns into a baby dinosaur. Then it turns into a small dinosaur, an adult dinosaur, and can mate with other dinosaurs and have a baby dinosaur. The cycle begins again. The stronger and more powerful the dinosaur, or a certain lineage of dinosaurs, the more valuable. Believe it or not, there are plenty of real-world applications for that.
There are also more utilities for NFT. If you have this NFT in your wallet and can prove it’s yours, maybe you can go backstage at a concert. There are many loyalty rewards that can be made with these NFTs. If a gang comes to your town, they might leave something in your wallet, giving you an extra experience.
Related: We haven’t even begun to harness the potential of NFTs.
An NFT is basically a programmable smart contract that can do anything you can imagine. It’s not just a JPEG file, it’s proof of ownership that an item is yours. The surface has yet to be scratched when it comes to NFTs.
When you have an NFT, you are now part of the community of people who have these particular NFTs. You can enter the blockchain and see everyone who is in this community with you – your fellow NFT holders. Then I could leave them something besides that. These communities are best organized as DAOs.
A DAO is a decentralized autonomous organization, which has no employees, no boss, no headquarters (physical location), no place where you can call and speak to someone to complain. Sorry Karen, it’s a DAO.
The code handles a DAO. Let’s say there are three DAO members. Each of us has the right to vote and participate in the DAO, because we have that NFT. We can participate in the government of that particular organization. Not all DAOs need an NFT. Similarly, not all DAOs need a crypto token. Either way, if you have X number of tokens, you can have a certain level of voting power. Alternatively, if you have a certain NFT or a certain amount of NFT, you can also have a level of voting power. It’s a foolproof voting method of governing an organization unlike anything the world has ever seen before.
Related: The DAO is an important concept by 2022 and will affect many industries
These kinds of organizations won’t just have three people in them. They will have thousands. If you have a particular NFT within that organization, you will have more voting power, which will correlate to your NFT holdings (either a specific NFT level or the number of NFTs you hold). DAOs will operate completely differently than traditional organizational hierarchies, which from the bottom up have an employee, a manager, a director, a vice president, a president, a CEO, and perhaps a president. In a DAO, none of that exists.
A DAO is an organization governed by code rather than leaders. That’s a paradigm shift when you consider the fact that it’s algorithms and smart contracts that are replacing those traditional corporate structures. They are self-executing in many ways; if this happens, then this.
Smart contracts need to be automated and enforce certain rules. For example, smart contracts can be useful if you are a freelancer trying to finish work for a client. What if, when the work is done, the smart contract generates itself, executes, and you get paid right away? How big is that compared to having to wait 30 days for January in accounting to finally get to you thirty days later?
Currently, the largest platform for NFTs and DAOs is Ethereum. After all, it was the first smart contract platform ever built. You can execute code based on what you write in the contract; if this, then that. It eliminates many problems experienced in the digital realm, especially. It eliminates the need for trust and intermediaries. Most companies will want some kind of smart contract to run within their business.
There will be no fraud in a DAO because it is on the blockchain and it is programmed in the code. We know who has what NFTs or tokens, and the vote to which it belongs. It is undeniable, it is distrustful. It is the way of the future to vote in organizations.
A driverless car is like a DAO. It is autonomous, it moves alone through the city. You can tell him to go to a certain place. It will follow instructions and monitor the path to keep you safe, all managed by code. As long as you are clear in your code, it will execute what you have proposed. The DAO brings a community component to NFT projects. You can collaborate and contribute to the project.
If you are going to create a DAO, make sure you have the proper legal governance framework in place. AndreessenHorowitz has a DAO legal framework that you can learn from. Make sure to check it out.
Related: Decentralization, DAO, and Current Web3 Concerns
Roadmaps are important. The utilities for your NFTs are important. If you’re just creating an NFT series and the art looks great, few people will care. A roadmap shows people that you have the necessary long-term plan for your project. Roadmaps show that you care about a project, that you have long-term goals for the project, and ultimately that it’s not about stealing money. Many of these NFT projects are quick money grabs. People see others make millions of dollars from NFTs and they want a piece of it and then they walk away. That’s not good for the community.
A roadmap lays out quarter by quarter where the project will lead. In the first trimester, we’re doing this. In the second trimester, we will. And guess what? You will not believe what we are doing in 2023. Having ideas of where you are going will show your community that you are serious and that it is not a scam. Sometimes projects that seemed very legit got huge audiences, sold out, and delivered nothing. They just took the money and ran away. That’s a rug pull, and they’re horrible. Big NFT projects in 2022 will have roadmaps.
In the future, projects will not only have a roadmap, but will also have a utility beyond the artwork. We are already starting to see NFTs with better capabilities than the first generations. For example, the concept of how NFTs fit into the metaverse has become popular. They are going to be more than just a profile picture, as many NFT projects have been.
Related: Increased Metaverse NFT Adoption Will Drive Next NFT Growth Cycle
Note to investors
If you are an investor, only invest in NFT projects where the team is known and has misled itself. You can go to the social media profiles of individual team members and see if they are public and active, including senior executives and developers, in particular. But, also, the marketing team, etc. Many current NFT projects hide behind avatars and fake names, and I think that’s going to change.
Whether you’re launching an NFT or investing, you don’t need to know every NFT out there – take a deep breath. Many may not be relevant to you and your business model. However, there is this element of loyalty and ownership that could attract many audiences, and you don’t want to miss out on what could be a valuable opportunity.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
The views, thoughts, and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
travis wright is a prominent marketing technologist, author, keynote speaker, blockchain advisor, tech journalist, and growth hacker. He is the former Symantec Global Digital and Social Strategist for the Norton brand. Wright is the author of Digital Sense: The Common Sense Approach to Effectively Blend Social Business Strategy, Marketing Technology, and Customer Experience. With Joel Comm, Wright co-hosts two of Apple’s top 100 technology and business podcasts, evil cryptopodcast Y the witty show. Wright is on Wax’s advisory board.