In Part I of our series on NFTs, we took a look at what exactly non fungible tokens are and what potential they hold. In Part II, we dove deeper into the frenzied trading of basketball NFTs with a close look at Top Shot — the app that brought NFTs closer than ever to the mainstream.
But why should that matter to you?
The streets of Sumer and Akkad—or ancient Iraq—hold the answer.
The typical Akkadian tamkarum (or merchant) was a businessman of the most modern kind. They depended on the free exchange of goods for profit and, from the end of the 4th millennium BC, on silver-based prices.
Back then, their bank was the temple, which lent money at interest. So baked in was this association that the Uruk word for the high priest is the same as the word for accountant—talk about cross-disciplinary!
By 2000 BC, this snowballed into such a shockingly modern economy, that it is almost impossible to tell the difference between operations today and then.
Consider this: merchants from the area operated in enclaves in independent states like Anatolia (modern-day Turkey). Just like today’s entrepreneurs, they had head offices, foreign branches, corporate hierarchies, extra-territorial business law, and even something like foreign direct investment!
Goods were shipped in on caravans of 300 donkeys. Profit margins were 100% on tin and 200% on textiles—explained by unreliable transport and the high risk of theft.
In fact, Pusu-Ken, a merchant in the tax-free Anatolian city of Kanesh, lobbied the king in 1900 BC, paid fines for evading textile import rules, and shared profits with investor-partners!
What this proves is that profit has always ruled. And when people are left to their own devices, transactions, enterprise, and markets will be natural consequences. Back then, fertile river valleys made markets. Today, robust digital devices make them, too.
Same principles. Different economies.
Which brings us to this second economy—for creators.
It can be reasonably declared in any room today that one person can launch a company that can rival multinational corporations in scope, scale, and innovation. And that’s because the creator economy is tied to the person—making the individual the winner.
However, one can argue that people have always followed people, not companies. So haven’t people always been the winners?
Winners of hearts? Yes. Winners at the bank? No.
Companies form to provide goods and services at a scale that astronomically compounds individual efforts. As a result, they’ve always captured the lion’s share of the profits. Even most creator-driven platforms like YouTube, Tik Tok, and Instagram make a lot more than the people.
That is why more creators than ever before have joined the exodus to Decentralized Finance (DeFi) and creator economies. This puts us at the cusp of an enormous potential unlock. The power to create and immediately monetize is in the hands of individual content creators.
Creators make money today more easily than they ever did before. Powerful technical and financial tools have made them independent of large social networks. Even Jack Dorsey, the creator of Twitter, fleetingly became independent of it when he made an NFT of his first ever tweet and put it up for auction. It eventually sold for $2.9 million.
Individuals will soon launch and scale increasingly complex businesses. Lifestyle design guru Tim Ferriss posited this in his book ‘The 4-hour Workweek’ and journalist-podcaster Adam Davidson (of Planet Money) defined ground rules for creators in the passion economy — which he defined as intimacy at scale.
Some thinkers even believe that multiple trillion-plus dollar publicly traded companies with just one employee (the founder) will become real.
In other words, creators won’t beat companies. Creators will become companies.
But is that a good thing?
Well, sort of.
For the briefest moment, assume there’s a musician. Let’s call her Aretha.
Say Aretha uploads a song to Spotify and sees it play 1 million times. She now knows it’s a hit. But her bank account doesn’t. Because Spotify doesn’t give you a million dollars for a million plays. Only $4,000. And after your record label and management take their cuts, you’re left with only $800.
Intermediaries eat away the profits that accrue to creators. They also own the rights to your content — like how Scooter Braun owns Taylor Swift’s masters. These rules are so strict that you can’t even sing your piece live without your label saying ‘OK’.
They can also control how fans see your content — thanks to the all powerful Discovery algorithms they run. And at any moment they choose, your content can get taken down. Sure, intermediaries help you create content, earn money online, and reach fans. But they also gobble up most of the value you bring in.
That’s why influencers and creators today turn to NFTs.
Let’s look at Aretha again—but this time she’s more digital friendly. She makes a song but also makes an NFT for it. Her NFT says
Say a fan buys it for $50,000. The NFT marketplace takes 15% ($7,500) and you get 85% ($42,500). Now after some time, your fan resells this to another fan for $60,000. Aretha gets $6,000 from this sale in royalties.
Instead of the measly $800 Aretha made earlier, she has already made $48,500 in just 2 transactions.
The 1991 Nobel Prize in Economics went to Ronald Coase for his paper titled ‘The Nature of the Firm’. Whether we know it or not, this paper is fundamental to the way we think about companies today.
In it, he asks that if markets were truly efficient, wouldn’t they be able to automatically bring you the cheapest goods and services thanks to the supply-demand curve? And if that were the case, wouldn’t one find it cheaper to contract work out than to build a firm? And if people wanted to spend less and compound returns, why were they still building firms?
Shouldn’t the global economy just be a lot of self-employed people just contracting with each other?
No. Because firms help save on transaction costs.
Say you’re working to design a new product. Would it be feasible for you to hire outsiders and brief them from start to finish about your goals? And once they complete the work for you, wouldn’t the risk of them sharing your ideas with competitors come back to bother you?
That’s why entrepreneurs hire people—so each step doesn’t begin with a recruiting process. You get to own and compound expertise for your own gain. But Coase said firms have a way of limiting their growth—their own inevitable bureaucracy and overhead costs.
Now think back for a moment about the Tamkarums of Sumer and Akkad. They transacted with what they had for what they wanted. This simple arrangement soon manifested itself in 300-strong donkey caravans, lobbying, and bargaining.
Economies have a way of finding themselves in places that suit them.
So is the case with NFTs. One could argue that just like the donkey-powered economy of Sumer and Akkad, NFTs are a natural byproduct of a digital era. More humans than ever are transacting online, creating more digital assets than ever before that are changing more hands than ever before.
NFTs—especially in cohorts with tech like the ethereum blockchain or any blockchain in general—have evolved to lend sanctity to these online escapades. They are the tokens of authority you need to transact online and protect your value.
Ever since the dawn of the smartphone era, Mutual Mobile has grappled with the latest in technology to create value and open up unprecedented channels of revenue for our clients. Nothing excites us more than solving tomorrow’s problem today.
And with NFTs, we believe we are seeing the tip of the iceberg’s tip right now. Almost the entirety of its potential is unexplored today. But in the world of tech, early movers have all the pros and none of the cons.
By making your NFT play today—maybe it’s for that secret album you recorded out in the backyard that one summer or maybe it’s for some awesome spec work your team put together—your value and safety can only go up.
So if you’re looking to add non-fungible value to your business—hit us up here. Our team would love to hear from you and bounce ideas off together. Perhaps the next big thing is just one conversation between you and us away?