Armin Ronacher's Thoughts and Writings

A Non Fungible Future

written on Saturday, July 2, 2022

Through some unfortunate stream of events I ended up being the recipient to a lot of replies on Twitter that tried to sell the future potential of NFTs on me. So I figured I take their pitches to the logical conclusion and dream up the crypto people's NFT utopia.

NFTs and blockchains have now long been mainstream. It's no longer the early days of the web as they used to say. NFTs originally started out as a novel way to pay for digital art, and in many ways that is still where they are rooted, but they have some much farther.

They have three very vital properties: they are largely freely and globally trade-able, whoever owns them does in fact own them as a record on the blockchain overrides anything else, and revenue sharing can be baked right into the contract. The revenue sharing property is what allows the original creator of the NFT to receive a fraction of any future sale.

Everything turned into an NFT and because everything is now trade-able, there is a market for everything. This very advanced form of capitalism has also created many novel financial products that were previously unheard of. You can in fact create an NFT of a trade on the blockchain and you can create any financial product on the blockchain you might desire. Asset backed securities can now target the lives of people, the outcomes of their life choices as well as any artwork in existence.

NFTs came out of the art world and they have definitely revolutionized it. Aspiring artists, enrolling into arts programs, no longer have to deal with student loans or similar. Where previous generations had expensive loans, modern students and pupils have blockchain traded lifestyle smart lending contracts. These are different than loans on the blockchain but they are intrinsically linked to future earnings of that person. Since every person has a digital identity on the blockchain that is linked to their wallets and NFTs (obviously cryptographically secure and anonymous through proof-of-birth). With these digital identities, students can enroll into for instance a 12 months arts bootcamp. This arts school then can offer to pay their students living expenses for 12 months and their education is completely free. This is enabled because this arrangement is backed by a smart contract on the blockchain. Artists who enter a prestigious bootcamp will give 2% of all future proceeds of future NFT based artwork with the bootcamp. All powered by the blockchain.

Concerts now also often have artwork on their tickets which are NFTs and these tickets are often developing a life on their own. Unfortunately actually getting hold of tickets has become very hard as scalpers now control the entirety of the ticket market. Major artists are impossible to enjoy for the average person. Since artists receive a cut of any future ticket sale, the market is now completely dominated by the reselling process and dynamic pricing. Music tickets now sell for a month's salary even minutes after they go on sale. Financial firms also use machine learning models to predict the best prices for these tickets in real time and are both assisting in determining the initial sales prices and also actively trade them on exchanges in the time leading up to the concert. If one has to cancel their ticket last minute, these tickets become available on the spot market again. Specialized services buy them for a fraction and give out via last minute booking portals to eager customers which has become the main way in which poorer people get to enjoy popular concerts.

The largest musicians now also have complex smart contract deals where the tickets act both as a mean of conveying marketing messages in the form of ad placement — and as mentioned as a place to display unique artwork. Venues are also taking a cut of every sale and so do the publishers and organizers behind the scenes. Everything has turned into a revenue sharing model. Some famous venues where artists in the mid 1900s played take up to 40% of the gross ticket sale. Some painters became popular by artwork they put on these tickets and some of the used up tickets sell for many times their original value even years later.

Taxation has almost entirely disappeared since governments were completely unable to keep up with the ever growing world of smart contracts and blockchain businesses. The replacement for governments have become decentralized services people vote on with utility tokens. This is why almost every single service is now operated by private companies with smart contract based billing. Districts now put their services on the market for companies to bid on in real-time. A less well off district is paying a premium over a safe neighborhood for police and fire fighting services. The cost of this is varying a lot from day to day. To combat this, various methods of hedging are now also available. Various kinds of business models have appeared for these services. Since property value is obvious from trading history on the blockchain, firefighting departments are now often charging a percent of the property value for saving it.

Insurances also have greatly changed. The biggest form of modern fraud are in fact the abuse of bugs in smart contracts and identity or wallet theft. What is on the blockchain is what matters. Since that even goes to real estate it has become a common occurrence for people to lose their homes through this type of theft. A solution to this is forming where more and more property ownership records are smart contracts that loops in an independent authority as a form of notary. These have the power to repossess in case of unauthorized title transfer and non payment. They are also getting a cut of the sale of a property. Thanks to these, ownership of house records being NFTs themselves there are many more new and exciting derivatives. Houses of famous people now permanently carry that record on the blockchain which obviously controls future prices as well.

Some houses got built under smart contracts that guarantee them a cut from future sales. Some clever builders found ways to even take a cut from future NFTs created by inhabitants living in these houses. These schemes are becoming quite popular among students as they offer cheap housing for 25% of future earnings from any NFT created.

Not only are tickets and ownership records now NFTs, so are transactions and type of smart contract operation themselves. Not only is the ticket of a flight an NFT, but so is the flight itself. One would think that after a plane landed, their NFT value goes to zero but in fact a lot of people started collecting NFTs of crashed flights. The NFT for the deadliest airplane disaster is one of the most highly valued tokens today. Thanks to the blockchain and the associated smart contracts, relatives of the deceased got and continue to receive a cut from sales of the crashed flight's NFT.

The latest and greatest innovation are smart contracts on digital identities. Actors are now compensated by screen air time directly through the smart contract of the movie. The audience can further support their favorite actors by using the smart contracts to control which percentage of their streaming service subscription goes where. This also has made "cancelling" individuals much more efficient. No longer does someone have to vote with their (digital) wallet on the entire movie, they can buy the movie but refuse that their money goes to an individual they dislike.

This also works in other ways. The medical insurance industry is no more. The middle man was cut out. Now you can pay for your medical operations through smart financial products on the blockchain as well. Doctors and medical centers can directly put a record on the blockchain to recuperate the cost of the operation from future earnings or in case of risky operations, put a contract on the blockchain that others bet on. The "future NFT" of the operation to come can be traded similar to a future. Traders can now run trading algorithms to determine the likelihood of death and gamble on the outcome of that operation for a chance of future earnings of the person. Likewise they can be cut into proceedings of future blockchain run malpractice evaluations of the doctor in case of a problematic outcome. Finance being finance obviously also creates trade-able bundles of multiple of such operations. You can thus invest your future retirement on other people's health outcomes if you so desire by investing into these surgery backed securities.

The future is bright and full of potential.