NFTs are like Beanie Babies, the blockchain is like a Google Doc, and you are not dumb
By Rebecca Ackermann
One of my favorite things about witches is learning about and from everyone’s areas of expertise. Today Rebecca Ackermann breaks down some terms and ideas that, if you’re like me, you don’t really understand beyond the fact that they make some people put lasers in their Twitter icons.
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I’ve worked in tech for over a decade and there are a few things that people “inside” know in our bones that I wish everyone else had access to.
First, there is no “good” or “bad” technology. Every new innovation can only be evaluated related to its goals. Are algorithms better than just showing all your feeds chronologically? Sure, if “better” means making the funniest tweets go viral. It’s also “worse” if “worse” means making teenage girls hate their bodies. So it’s all about what the goals are.
Second, technology is made of people. It’s just people making decisions! Thus, technology has the same problems and gifts of people—some of whom were the smartest kids in your math class and some of whom definitely were not. But many of whom are very rich now. Remember that part.
Third, because no tech is good or bad and the industry is just made of people, people can make any decisions they want about tech. The industry could shut down all social media companies tomorrow and start working on a way to turn all food blue if enough people inside believed it would achieve goals they care about. Nothing is inevitable or unavoidable. It’s just a bunch of rich (and often well-intentioned!) people deciding which way to turn the steering wheel.
And right now they’re turning it hard into Web3/crypto/blockchain. I know your eyes glazed over at that blob of words and I have to say, I’m starting to wonder if that’s the point. But anyway, the reason why they’re pushing into this area is all about goals. The number one goal is: take back the internet from the Facebooks, Googles, and Amazons of the world. There’s a lot of talk about trust in the Web3 circles, and how big tech companies can’t be trusted with our data and can’t be trusted to be the guardians of the entire internet. And they have a point! Right now, if you want to sign into anything on the internet, you have to use a connected social account. If you want to search anything, you have to use Google’s ranking system, and if you want to access your favorite website, guess what? That website is probably using Amazon Web Services (AWS), which means it’s paying regular fees for physical space on Amazon’s stacks and stacks of machines in big warehouses all across the country. (I’m sorry if I just ruined your day.) And there’s good reason to worry about trusting these companies with our personal data and our precious, precious content.
So what’s the solution?
Web3 fans say the solution is a totally “decentralized” internet, which means no Big Tech oligarchs girlbossing, gatekeeping, and gaslighting us anymore. Just individuals out there Venmoing each other back and forth forever for everything from houses to art to medicine to concert tickets. This is “Web3” and it’s a theory, not a *thing.* Blockchain technology is the *thing* that is necessary for Web3 to happen, and you know what that is? It’s essentially a Google Doc. It’s a shared, public “ledger” that all individuals who opt in can use, which records every transaction they participate in on the internet. The Google Doc/ledger is full of “links” to the digital things you bought or sold (a certificate of ownership for a car, not the car itself, which would exist IRL). So instead of using PayPal to pay for something, you buy it directly and your purchase is written onto the ledger for anyone to check for all time. This is what’s called a “backend protocol” which means that you as a regular internet user might not even notice many changes. It’s the plumbing, not the paint.
So, who even cares?
Because it’s Money: Making It Weird Since Avarice Was Invented! The first thing the blockchain was used for was currency: Bitcoin. In 2008, around the financial crisis, people were pissed about banks, which makes sense. So a person no one even knows the identity of (really! It’s weird!) invented Bitcoin as an alternate form of digital money, or cryptocurrency. The point was to cut out the banks and the Fed, and independently store all the exchanges (Venmoing) on the public blockchain (Google Doc). This unknown person invented a way to “mine” (create from nothing) the new currency by making computers solve really hard puzzles. It’s like if a ton of computers (using a ton of energy) were working on Wordles and whenever they solved one, the person who owned the computer that did the solving got a dollar. (I told you it was weird.) The blockchain doesn’t *have* to be used for money, but it *is* being used for money now by a lot of different companies. You’ve heard of Bitcoin and maybe even Ethereum but there are over 10,000 different cryptocurrencies floating around right now using different approaches to mining. People are just inventing money and hoping it becomes more valuable! How does it become more valuable? If people want to use it to buy stuff then it has, well, currency. “What can you buy with crypto?” you might ask. Right now? Mostly NFT art (and illegal stuff like drugs, but that’s a different story).
Sorry to add another term into the mix, but it’s probably the one you’re most curious about. An NFT is a piece of information that could represent anything and can be bought and sold—like that certificate of car ownership I mentioned. But markets for cars and houses haven’t quite gotten off the ground yet. What is absolutely soaring is NFT art. Art has no intrinsic value which makes it perfect for a speculative market—and right now the NFT art market is hella speculative. Think of Beanie Babies. I remember when you could buy a Beanie Baby at the local drugstore for like $6.99. Sometimes they even went on sale when no one was interested. But people got really into them, and suddenly Beanie Babies were selling and trading for thousands of dollars. They were the same useless stuffed animal, but it was the hype that made them *seem* more valuable. Because they *seemed* more valuable, they suddenly *were* more valuable! This is the same as what’s been happening with NFT art like Bored Apes. They are only as valuable as people believe they are. And if people think they’re really valuable, they’ll want to get enough cryptocurrency to buy them. Remember all those rich people making decisions in tech? Well, they own a lot of cryptocurrency and they want it to have, well, currency. So they’re shouting very loudly that NFTs are valuable and crypto is important (and spending a *lot* of money to do it, like tens of millions of real dollars).
“Is that legal?” you may be asking. Uh, we’re not sure. The SEC is working on figuring out what should be regulated and how. In the meantime, some rich people are making more money by yelling about how rich they’re getting. Celebrities are telling everyone to buy NFTs (maybe to increase the value of their NFTs, and maybe they’re even getting paid by previously mentioned rich people) and regular people like you and me might be feeling kinda dumb for not getting in on this cash grab.
But you’re not dumb. You’re extremely smart to hang back! Lots of regular people are getting scammed and losing money, and it’s actually very technically difficult to participate in the crypto economy right now. Plus, the ultimate question is: what will be left after the government starts regulating crypto, and tech companies work through the actual benefits and drawbacks of blockchain technology (and not just the *theory* of Web3)? I am not convinced that anyone knows the answer yet. So there’s no reason you should either.
Rebecca Ackermann, a mom of one, has worked in tech for 10+ years at Google, NerdWallet and other places. She’s worked on AI for healthcare, VR for education and consumer tools for financial literacy. You can find her writing here and her Twitter here. Also you should really check out her amazing Instagram page.
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Some other cool things guest contributors have touched on include talking to your kids about death, moms with ADHD, and going to Disney by yourself.
One witchy thing
Thanks for this, it was very clear!
Great explainer. Very helpful