If the FTX Crash and NFT Bubble Are All You Know About Web3, You're Missing the True Value of This Revolutionary Asset A lot of people think NFTs are just overpriced JPEGs that speculators spent millions of dollars on during the pandemic's heyday — but they're so much more than that.
By Matt Cimaglia Edited by Kara McIntyre
Opinions expressed by Entrepreneur contributors are their own.
When was the last time you looked at a work of art online and thought, even for a second, about what file type it was? Whether the image you see is a JPEG or GIF rarely matters to anyone except for professionals in the media industry, where file types have different properties, qualities and sizes. For the average content consumer, it doesn't matter at all.
Now ask yourself: Why are NFTs any different?
Of course, NFTs are different — but not in the way most people think. The mainstream understanding of NFTs is that they are overpriced JPEGs that speculators spent millions of dollars on during the pandemic's heyday. There's some truth to that. On the surface, the ongoing crypto winter appears to be justifying the alleged scam, as FTX filed for bankruptcy and once-skyrocketing bitcoin and NFT prices began nosediving.
If that's your only understanding of what's happening in the Web3 space, however, you're completely misunderstanding the revolutions taking place.
As I've written before, the onset of Web3 was plagued by buzzwords and superficial bandwagon-jumpers, followed by a crash and skepticism, not unlike what led to the original dot-com bubble — albeit in a much shorter timeframe. Certain companies and influencers tried to drive rapid mass adoption of Web3 technologies by relying on hype, expensive conferences, celebrity endorsements and little actual content.
But the technology underpinning those trends is fundamentally important — and, I believe, inevitable. Decentralization will replace monolithic corporations owning huge swaths of data. Crypto enthusiasts will find stable currencies to invest their dollars. And everyone — not just content creators — will begin uploading media files as NFTs.
The difference will be that we won't be calling them NFTs any more than we currently claim to upload photos "as JPEGs." NFTs will simply be a new way to share photos, videos and music with close networks and build strong communities of fans and followers — and this way will soon supplant the unsafe way we currently operate.
Related: Sam Bankman-Fried and the FTX Saga Could Be a Blessing in Disguise for Crypto and NFTs. Here's Why.
Sustainability is key
The true road to Web3's future must be one of sustainability. It must solve real problems and build products people use and need. Web3 businesses should operate like businesses always have, providing a genuine service to customers who appreciate the value and are happy to pay for it. The inflated economy of smoke and mirrors provides no benefit to anyone.
To this end, mainstream adoption of NFTs will likely happen more quietly than many of us realize. Instagram, Twitter and Facebook have already begun allowing users to upload NFTs as posts and avatars. Opera Crypto Browser, a Web3 web browser, recently announced a tool that will allow anyone to upload any image and instantly mint it as an NFT with a simple drag and drop — not necessarily to sell, but even just to share with friends and family or post online. This will dramatically demystify NFTs for a whole new audience.
The upside is evident. When you upload an image to social media today, you relinquish your privacy rights, allowing the company to scrape, harvest, share and sell that information without your knowledge or consent. Upload a photo of your dog and you could start seeing ads for dog food. But with NFTs, your privacy is protected and you retain full ownership of the media file.
If you explain NFTs in that context — as a technological advancement with a clear benefit, rather than as a pricey art trend — you'd find much more buy-in from the general public.
Related: It Takes a Village: How Blockchain, Crypto and NFTs Ensure Digital Trust
Education is the foundation
Web3 leaders need to be much more proactive about communicating the true benefits of the technology, rather than allowing crypto bros to hire celebrities for mass marketing campaigns. Public education is critical. Cogent messaging, well-networked business conferences and partnerships with post-secondary institutions will all play a role in laying the groundwork. States like Florida are leading the charge in this department, and it's not surprising to see Miami blossom into a major hub of technological investment and artistic opportunity.
Fundamentally, NFTs follow this logic: Web3 empowers everyday people and breaks down the traditional hierarchies of digital life.
For the public, this means slow and steady growth as the technology evolves. Only 13% of respondents to a Jan. 2022 poll even knew what Web3 was, even though they spoke critically of Web2, voicing concerns over privacy and personal rights. These numbers will shift over time, and companies should prepare for it. The ones with an interest in rushing the process are those looking to make a quick buck.
For content creators, this is good news. It means you don't have to learn about blockchains and cryptocurrencies if you don't want to. It means you should, as always, focus on your art. The term "NFT" has taken on a negative connotation in the last year, but the benefits of NFTs (as a technology) outweigh the criticisms (of the art trend). Having ownership and royalties baked into what you share online is critical for artists to thrive in a digital economy. The fact that NFTs are especially high among people of color speaks to their value as a democratizing force, representing new opportunities for artists of all backgrounds.
Web3 is not a fad. It is inevitable. And while the last year has been especially turbulent, no amount of headlines can mask the remarkable advancements being accomplished by dedicated developers, creators and thought leaders in the space.
