NFTs Have Had Their iFart Moment

Photo by David Behar on Unsplash (cropped)

Remember that farting app on the first gen iPhone? 
The iFart app was bringing in up to $10,000 per day for the developer, while the app’s success spurred on a giant wave of copycats on the App Store.
And what about that beer glass app? At its peak, this bad boy was making the developer $20,000 a day! The FOMO was so strong, that even established brewer Coors had to get in on the action with their own iPint app. 
These were the crowning achievements of the first smartphone era, towards the end of 2008, right when Bitcoin first became a thing.
It’s a far cry from the plethora of utility that rests in our pocket today. The criticism was heavy at the time, especially after the progress the industry had made in reducing telephone suitcases to something the size of a matchbox.
The first smartphones were: 

• Too large
• Too heavy
• Too expensive
• Too complicated

Mobile internet wasn’t really there yet and the battery life was abysmal.
Over time, our perception of these devices has flipped from being telephones with extra functions, to portable computers that just happen to have a calling app and a SIM card.
From convenient QR payments, to logging in with 2FA, or even snapping a quick pic in that unreachable spot behind your washing machine to get its serial number, smartphones have found their way into every aspect of our modern lives. For better or for worse.

NFT criticism and the echoes of novel iPhone apps

It was in the summer of 2021 when I first noticed a similar trend in the digital asset sector. In hindsight the similarities were so striking. Except instead of beers and farts, it was mundane monkeys and pixelated punks.
The value being traded during NFT Summer 2021 was nothing short of insane. Relatively unknown trading platform OpenSea pulled in billions in trading fees overnight, while copycat developers rushed to hire cheap labour on Fiverr and mint out 10,000 sets of JPEGs on the daily.
What could possibly go wrong?
NFTs as a whole took on much ridicule and who could blame the critics with the use cases that were on offer. Beyond the surface level madness of Twitter threads, Discord servers and Jimmy Fallon’s guest couch, emerged 2 distinct camps: 

1. Those who wrote NFTs off as yet another tulip hype 
2. Those who understood that this was merely the iFart moment for NFT technology

You’ll find plenty of critique online from camp 1. In this article, I want to explore camp 2's viewpoint. But first, here’s my rapid-fire point of view on what the underlying issues were with NFT Summer.
Saturation of community art. There simply was no need for all these different profile pic projects. Anyone stuck with a portfolio of illiquid JPEGs will forever remember the valuable lesson of supply and demand dynamics.
Off-chain storage. In most cases (not talking about inscriptions here) the token itself only acts as a receipt, with a link to a file on someone else’s computer. Sure, your receipt might last as long as the internet itself, but that’s no guarantee of the actual asset you thought you purchased.
Warm metadata. Warm, as in not frozen. If developers can go back into the code and change settings once buyers have purchased what is advertised as an immutable asset, then what’s the point? One story that stuck in my mind is that of the Racoon Secret Society, a project where the developers flicked a switch overnight, turning all their collectors' JPEGs into bones. 

And you know what? I’m no angel myself. 
I dipped into the craze in 2021 and bought a few JPEGs. Everyone and their mother was making money back then, so why shouldn’t I too? Like most other people, I’ve downloaded silly phone apps and taken a sports bet from time to time. 
However, there’s one thing that irks me to this day. I’ve made more money than I’ve lost in crypto over the years, but the time that I’ll never get back from researching JPEGs, rarity stats and community metrics is something I'm more than a wee bit salty about.
Time is money, but there’s no refund for misspent attention.
Right, let’s get into the camp 2 side of things.

NFTs have yet to reach mainstream utility, but it’s coming

It’s been two and a half years since the craziness of NFT Summer, so here’s a quick recap of what the term Non-Fungible Tokens means. 
A fungible item is freely interchangeable, like swapping my dollar bill for yours. By being a non-fungible item, a crypto token acts as a unique digital receipt. It belongs to the private key holder of that token’s blockchain address. As long as nobody else has access to your private key, the receipt in your wallet can only be handled by you (or by a smart contract you chose to interact with, but that’s a whole other can of worms).
Now, here’s where it gets interesting. Using NFT technology to prove ownership of a URL with a JPEG attached is child’s play; it’s a simple exploration of what’s possible with the tech. While the profile pic hype aligned perfectly with the previous crypto bull run, the true potential for NFTs is many years ahead of us. And like the mass adoption of smartphones, the scale for NFT utility is mind boggling.
NFT technology allows for:

• verifiable digital ownership,
• worldwide transactions,
• at the speed of light,
• in an addressable market of billions of people.

The use cases are indeed endless but the sour smell of influencer garbage still litters the scene.
Before we make further progress along the much-fabled adoption curve, we need to purge ourselves of the previous cycle’s hype, or at least smother the silliness in a larger blanket of utility, much like the evolution of the App Store offerings did to the iFart and iPint apps.
It needs to get, dare I say, boring…
You see, there used to be incredible hype around smartphone launches and minor upgrades to the hardware, but nobody really cares these days. An entry-level Samsung is miles ahead of the original iPhone. Like HTML, HTTPS and TCP/IP, smartphones are just commonplace backend tools to our dopamine-driven digital lives.
NFTs will need to arrive at a similar phase where the tech moves to the back and the utility comes forward. We won’t all be using NFTs until the moment comes when we aren’t talking about NFTs.
And if you pay attention, you’ll see some subtle signs of this happening.

• Donald Trump launched “digital trading cards”
• Starbucks launched “Odyssey points”
• Reddit launched “collectible avatars”

In reality though, these are still NFT collections that passed an extra round of copy editing. It’s a minor step forward.

My own NFT aha moment

The idea that sparked this article came to me as I wrote a guest post on DePIN Hub recently about a project called GEODNET. This innovative project aims to improve geolocation data through RTK correction streams. In plain English, users get paid crypto to put antennas on their roofs.
These antennas work together in a distributed network to improve the GPS positioning for real-world devices. Token rewards can be much higher in less dense regions, as GEODNET is focused on expanding its coverage. 
So what happens if you sell your house in the countryside and move to the city? You might end up in an area that’s packed full of other GEODNET users. Do you lose all the rewards?
No, because you earned an NFT when you set up your station and claimed that initial territory. No matter where you move, could be anywhere in the world, the fruits of your previous labour will not be forgotten.
NFTs offer us a unique, immutable and impartial way to protect digital value, assets and reputation. They provide us with an opportunity to support the backend of the products and services that make our lives fairer, no matter who we are or where we go.
Crypto, and ultimately NFTs, will finally “make it” when we don’t need to think about them any more.

Other use cases for NFTs

Personally, I’m interested to see how this technology can be rolled out to the music and publishing industries. Beyond that, there are plenty of other similar use cases include certificates, bookings, tickets, memberships and licenses, just to name a few.
But the tokenisation of real-world assets seems to be the big unlock that’s coming our way. And with Blackrock, the world’s largest asset manager, calling the shots on the block now, it’s just a matter of time before the rules get changed to meet their agenda. Think about it: Regulation exists based on prior circumstances, it’s inherently backwards facing. Forward looking technology moves the goalposts, time and time again. Love ’em or hate ’em, Blackrock and co. are moving the goalposts.
And as for the good ol’ 10k PFP drops, their days are numbered. Sure they may have their place for crowdfunding, but the projects should be more transparent (and accountable) about their intentions. That’s what it should be rebranded to; just another form of decentralised crowdfunding. It’s a fun alternative to Patreon. Heck, I’ve even sold some 1-of-1 NFT art to my newsletter readers, it adds a little bit of personal touch to the creator-consumer relationship.

Putting it into perspective

So, taking what we’ve witnessed over the last 15 years with smartphone utility, could it be possible to predict what’s coming next for NFTs? Let’s see where we are on the NFT adoption curve.  

1. Rise of mobile gaming (pre-iPhone). In the early days of Snake on a Nokia, gaming on mobile phones was very basic. But it was incredibly time consuming and addictive nonetheless. Few could have foretold the colossal impact handheld gaming would have on the entertainment market in the years to come. A clear distinction between this particular era and that of the first smartphones was that most games were pre-installed on the device. In NFT terms, we saw the epic rise of CryptoKitties in 2017, the sudden popularity of which throttled the bandwidth of the Ethereum blockchain. 
2. Introduction of the App Store (2008). And let’s not forget Android Market (now Google Play Store). The introduction of these application marketplaces not only revolutionised smartphone functionality but also created a whole new job sector for 3rd party app developers. An explosion of innovation occurred, bringing wave upon wave of copycat projects aiming to mirror the most successful aps. Novelty apps, like beers and farts, took front stage while more practical applications took much longer to be conceived and developed. This is in many ways similar to NFT Summer with the rise of OpenSea and the creation of innumerable NFT projects. It also opened the door to new job opportunities for both technical and creative profiles.
3. Expansion and functionality (early to mid 2010s). As smartphones gained adoption, developers served up apps to tackle every possible use case. Social media apps grew exponentially, productivity tools emerged, navigation and travelling became simpler and personalised. Every big company searched for reasons to launch an app (and force you to download it). This is where we are now, rising above the early novel use cases (JPEGs), attracting large companies and exploring new functionality for NFTs.
4. Smartphones as advanced and irreplaceable tools (late 2010s to today). By now it felt like we were finally living in the future. Creepy assistants like Siri, Hey Google, and Alexa were becoming commonplace in our living rooms, while apps like Pokémon Go showed us what lay ahead in terms of augmented reality. 5G coverage began rolling out, bringing our interconnected lives ever more online. Work, entertainment, health apps, mobile banking, home security, crypto wallets, you name it, it’s all on your phone. This is the next level for NFTs, and it will be a difficult one to reach. In fact, I believe it’s a more philosophical hurdle as opposed to a technical one. Just as the phone element of our mobile devices has become less significant, so too will the cryptoeconomic aspect of NFTs need to take a backseat to boring utility.
5. The Unified Future. A new era of crypto phones perhaps?

This article was originally shared with my newsletter readers. Subscribe to Deep Dives with Jase  and access my very best essays, case studies and deep dives on Crypto, Web3 and Emerging Tech.