A friend was asking about NFTs and I used a metaphor that helps me understand them better. While obviously Bitcoin gets a lot of the buzz, I believe NFTs are a widely misunderstood and confusing use of blockchain technology.
As you can see above, I have a blueprint signed by Steve “Woz” Wozniak. It was a gift from my wife, and a treasured one.
While I could sell it to you without any involvement from Woz, and the certificate shows that it is in fact real, there is an amount of trust involved. It could be a photocopy, for example.
Part of the idea of NFTs is they intend to remove that need for trust. You can look up and see who owns the piece, and verify that ownership has transferred to you. While there might be many signed pieces, you know that yours is “real” and it is the only instance.
As well as a paper-trail of ownership, and scarcity increasing the value, it allows “digital goods” to have presumably highly-secure contracts. It could be used for high-value physical deals such as real estate, down to fun things like Magic the Gathering digital card trading. Even commercial art usage licensing.
Here is the rub, however. An NFT really doesn’t give you much more than the image embedded above.
Actually, it is even less cool than even that – you get a digital receipt containing a URL to an image that could stop working. On the other hand, provided I am careful, I could have my physical Woz print forever …
For now I think I will stick with the actual thing.