What Are NFTs and How Can They Impact Our Lives?

Question: What do a piece of art, a medical record, and a top 40 song have in common? Answer: They can all be NFTs. In this episode, Mary, Kirk, and Haley, break down what exactly NFTs, or non-fungible tokens are, and their real-life applications outside of enthusiast communities. Why are NFTs so revolutionary, and how are they changing concepts of ownership and social interaction?

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Transcript

Intro/Outro (00:06)
From the Bill of Rights Institute. Fabric of History weaves together US history founding principles and what all of this means to us today. Join us as we pull back the curtains of the past to see what's inside.

Haley (00:20)
What do a piece of art, a medical record, and a Top 40 song have in common? Well, they can all be NFTs. In this episode, Mary Kirk, and I, Haley, break down what exactly NFTs, or nonfungible tokens are in their real-life applications outside of enthusiast communities? Why are NFTs so revolutionary? And how are they changing concepts of ownership and social interaction?

Mary (00:51)
Hey, Fabric of History listeners, this is Mary Patterson and today is a good day because we are going to start our conversation with one of my all-time favorite songs, timeless song, timeless message, The Times they are a Change in by Bob Dylan in which he says, quote, "come mothers and fathers throughout the land. And don't criticize what you can't understand. Your sons and your daughters are beyond your command. Your old road is rapidly aging. Please get out of the new one if you can't lend your hand for the times they are a changing." I've never in my life felt more like the mother and the old person in that Bob Dylan song than when we start talking about today's topic, which is NFTs. I just don't get it. I don't know, listeners, you can come along for the ride with Kirk, Haley, and I because we'll learn about NFTs. We'll try to figure it out. We'll try to think about these themes of technology and change and community and property and what the heck? So Haley, this was your idea. So you have to explain to us what is an NFT.

Haley (02:04)
Yeah. So it's kind of a complicated answer, but I'm going to make it very easy for you and your listeners because that's how I myself understand it, but kind of just backtracking. The reason why I wanted to talk about this was just because I really think that NFTs are not just part of one particular group's interest right now. I really think they will influence us as a society and become part of our history. They have that much potential. So I thought it was really just good for us to talk about this and get this out to our listeners to really just understand the basics of NFTs and start the discussion around them. But essentially, NFTs stand for nonfungible token, which means it's something that cannot be copied, substituted, or subdivided according to the Marian Webster Dictionary. And the way that I like to think about this is that let's say that you just bought the Mona Lisa, you just went to the Louvre and you gave them millions of dollars. Maybe not billions, but definitely millions. I'm sure it's worth millions. And they just said we don't need it anymore. We don't want to deal with the tourists, take the Mona Lisa. And you didn't really trust the Louvre about its authenticity. You needed some art historians to verify that it was real. So they spent weeks verifying it, testing the paint, looking at da Vinci's signature, making sure that everything was, in fact, real, the real da Vinci, and then finally they said, this is the only Mona Lisa in existence, and this is yours, and now you own it. That is essentially kind of a pretty simple analogy of what an NFT is, but it really is just a singular and authenticated piece of content, and it's digital. So one of the most famous early NFTs that you two might have seen is called a nyan cat and it is quite literally a cat with a Pop Tart as a body flying around with a rainbow trail. And it's animated. So you see them flying over and over and over again on loop. And this was sold for $580,000. But you might ask, what is stopping you from Googling and then screen grabbing this cat and installing it on a huge TV screen in your home to play over and over on loop, even though you didn't buy it for $580,000? The answer is nothing.

Haley (04:46)
But this is not the nyan cat. This is not the piece that can be verified via a system called blockchain that this is authentic and this is the real one. So there's only one cat that is kind of the real one. So that's kind of a quick definition of how I like to think of NFTs. Does that make sense?

Mary (05:12)
I think it makes sense. So I'm going to try to explain it back to Haley and Kirk, you can jump in, because Kirk is really good at explaining things much more eloquently than I. So we're in the digital world. That's the first thing we have to keep in mind. So the nonfungible token. I love that, by the way. That's super fun to say fungible. So that cat with the Pop Tart, now I want a Pop Tart, is like the Mona Lisa. There is one original. And so there is a nonfungible token of that cat. That's the original one, and it can be verified, just like the art historians verified the Mona Lisa. So that's what prevents people like myself from screen grabbing it, because I'm a Queen of screen grabbing things and showing it off and saying they own it. Am I on the right track?

Haley (06:01)
Yes. So there's nothing stopping you from taking a picture of the Mona Lisa or screenshotting that cat. But it is not the original cat that can be verified. It's not the authenticated piece of content. It is just a copy.

Mary (06:20)
So there's an element of the prestige, right. The prestige of owning Mona Lisa. The prestige of owning the Pop Tart cat.

Haley (06:27)
Yes.

Mary (06:30)
Versus a copy. A knock-off.

Haley (06:32)
Yeah, just the knock-off. And it takes people a while to understand that about the digital space, because it feels like everything's the same. You can't touch it you can't feel it. It's all the same level of authentic. Right. But it's not. And that's what NFTs are starting to say, and they are verified by this blockchain system. And you can kind of think of it as a bank because it keeps track of every transaction that this piece of content has gone through. So let's say Mary buys the cat from me and then Kirk buys it from Mary. So this system keeps track of where this cat is going. Very important, right? But it's essentially a system that is decentralized, so it's not owned by one company or one thing. And that's why so many people use it, because a bank can't suddenly implode and lose that system, and it's verified through many different networks so that it is very secure. I don't have to get into all of that right now, but.

Mary (07:43)
Holding on here, trying to make sense of it all. Okay.

Kirk (07:46)
Yeah. I think this is utterly fascinating, though. I tend to be somebody who I wouldn't call myself technologically skeptical, but I think most of my friends would, if that makes sense. But as a historian, we're always looking for these opportunities when we're living through a moment that is making history. And I think those of us who have been alive for the past 30, 40, 50 years have seen a lot of technological change that when we look back on it has been sort of a historical moment. And I think NFTs are sort of an outgrowth of that in an interesting way. And as historians, it's interesting because we don't quite know where it's going yet. There's a lot of excitement around them. There's a lot of questions that people like Mary and I seem to have about like, well, what is this? Does that really make sense? In 500 years, am I going to go to the Louvre and see a Pop Tart cat instead of painting of a woman from Italy? But that's interesting to me and the connection that I make to it, so sitting right outside of my office here at the Bill of Rights Institute is a framed copy of the Constitution in the United States, which includes the Bill of Rights.

Kirk (09:01)
And my dad bought it for me randomly at a flea market or something. And I think he paid like $20 for it because he knows I love the Constitution and thought I needed this giant picture of it. But it's cool, right? But it's also not the Constitution itself, right. It's not that priceless document sitting in the National Archives, but it looks a lot like it might even have a treasure map on the back. I'm not sure. I guess that was Declaration of Independence, but the idea of there being. Right, but the idea that there are replicas of something that exists, I can make sense of that. But to me, what's interesting, Haley, is some of the other things that you're pointing to, which is how these NFTs could change the way that we think about property ownership and change the way that we think about the ownership of things like records or how we prove identity. And that's all really interesting to me, as is the skepticism that I have for them is also interesting to me to kind of step outside of myself, I guess, because it makes me think of a lot of different moments in history, and maybe we can dig into some of those here in a little bit.

Mary (10:14)
Yeah, absolutely. So there definitely is the social element with NFTs, because the person who bought this cat is now looked on in the NFT world differently. They have a nice asset right now. It really is like this person bought them Mona Lisa in that world, that's how people acknowledge each other. And it is a bit of a status symbol. But also NFTs are blurring the lines between what is digital, what is kind of the physical world. Sometimes when you buy an NFT, you get access to other NFTs, and then you also might get access to a private party, exclusive online chat rooms with celebrities. So it's blurring the line of what to expect from a purchase, really in a sense. But I can go through a couple of examples of how NFTs are used in more of the real world. Like you were saying, Kirk, money transferring. It can be a lot more secure using NFTs and using kind of this blockchain system, because money can be transferred very quickly and efficiently and there's less room for opportunities for theft just because of how secure it is and how many different networks have to verify where this money is.

Haley (11:37)
And this money is cryptocurrency. It has a lot of real-life applications that I think people are not aware of. Everyone has a situation where if you go to a new doctor, the new doctor needs your health records from the old doctor, and then you have to call the old doctor. And sometimes it's a big deal and you have to email them some forms and things get lost. But with NFT really that your health records can become one consolidated piece of documentation of all of your health records that moves with you and update in real time so that you don't need to keep kind of manually getting your documents from the different health care facilities that you go to. So really you can just have one consolidated one stop shop of all of your health records that can be easily forwarded to doctors. And I saw some articles about how poor data management is a huge problem. And Americans spend millions of dollars each year on unnecessary treatments, some of which come from misdiagnosis or redundant treatment from poor data management. So just having that NFT system to move with someone could be very helpful and save lives potentially.

Haley (12:53)
So it's not just about people fighting over monkey cartoons online real-world applications. And even with music. A lot of musicians complain about how easy it is for their music to be distributed and as a result, for them to receive little or no profit, no matter how many downloads or purchases their music has. So usually artists will give up ownership rights to platforms like Spotify for them to distribute their music. But with NFT, musicians can own their music outright. And because the decentralized blockchain is so secure, they can eliminate that middleman, which can be studios even, and then sell their music directly to fans. I was looking into kind of the art experience in looking at what auction houses are doing like Sotheby's. And Interestingly enough, they own something called Sotheby's Metaverse, which is its own NFT art trade platform.

Mary (14:01)
Interesting.

Haley (14:03)
So after October 15, 2021, it launched its exclusive marketplace, and the most expensive NFT it has sold as of December 2021 is a cartoon of a green frog in a suit that looks rather sad. And it's sold for $3.6 million. And it's said to be based on Pepe the Frog, an Internet meme with a frog head and a human body. It has this whole elaborate backstory, which people are excited about. If you're in that community, it's a big deal. So things are changing, and these big institutions seem to be changing with it.

Mary (14:47)
I'm already thinking back to my Bob Dylan song, which I used to use in the classroom all the time because it's so great. And then you get to expose the kids to Bob Dylan. And even from what I quoted is don't criticize what you can understand. And when we first approach this topic, I didn't understand NFT at all. And even as you guys started talking about it, I had to interrupt and be like, what is an NFT? Because I'm like a crotchety old man. But already, from your explanation, Haley, I love the analogy of the Mona Lisa that was super helpful for me. And hearing that these have real like, there's sort of the prestige element of buying the art or having access to something, but there's also the utility of it. And I didn't know any of that. So by understanding it a little bit more, I'm less critical of it. And I think that is sort of a kind of a big picture, big theme takeaway for sort of history. And what we do writ large at BRI is trying to help people understand the importance of history, understand the importance of civics. It's kind of interesting in its own right because we're talking digital and things you can't physically touch, which is super interesting.

Mary (16:01)
But we're also talking about that timeless question of how do you respond to change? And my students, when we ever did this activity, I would ask them, who is an example of someone that's resistant to new technology? And they would always say their grandparents? And then we would talk about that. And then I said, well, how do you react to change? I love change. And they didn't because, for example, we changed our paper in the Copier, I don't know, years back at both of the schools that I worked at in my teaching career. And the kids flipped out like, Mrs. Patterson, this paper sucks. It rips so easy. I don't like it. And I would always like bring that up to them. And they're like, but even it's a small change, but it's a change. And it's just kind of interesting to think about both looking at myself from afar and my initial what what is this? I think of myself if you watch the Super Bowl or saw the Super Bowl commercial for a cryptocurrency, appropriately, with Larry David and how he's like ehhh to every major invention in human history, I feel like Larry David or I started as Larry David, but I'm starting to be less Larry David.

Kirk (17:08)
But Mary, I think you bring up such an interesting point, because every time we talk about disruptive technological change, I always think of our friend Ned Ludd of the Luddite and sort of the response in England to industrialization of textile mills and how it is that people responded to that because they were afraid probably isn't that they were concerned about what this new technology was going to mean for the communities that they were living in and for their livelihoods. And that's a very natural reaction in a lot of ways that in that sort of breeds this skepticism. I think as students of history is always good to kind of try to understand where people are coming from, but then also see where that skepticism may go too far in certain situations. And I think whenever you see these kinds of technologies come about, they are going to be revolutionary. So, Haley, I think it's fascinating what you're talking about when it comes to the ownership that you then have over your medical records. And to me, that goes beyond simply clarity of data, although that's important. But it also begins to make you ask a question, well, who then is maintaining this kind of thing, which is, I think what a lot of cryptocurrency groups are talking about.

Kirk (18:25)
If you have the ability to ensure that your identity is secured or that your ownership is guaranteed by something that is non-governmental, that begins to change the relationship that you have with these entities that we rely upon to secure us and to create stability and all that kind of stuff in society. That's not to say that government is going away by any means. And this is where I get very skeptical about some of these technological things. But you can see where people are thinking along those lines. Right. If my property is now guaranteed by something that's not a bank or not these traditional institutions that have guaranteed and provided these things for me, that begins to open up a lot of doors and interesting questions where people can make guesses about or guesses is probably disingenuous, but they can begin to think about and theorize on what then that is going to be for the way that we relate to one another, which I think is fascinating.

Haley (19:21)
Yeah. And I think also it begs a question, what is the role of a country really and what kind of borders are between different countries if you can easily transfer money quickly around the world many times over, it kind of just bends more into that kind of globalization, which is already happening because of the Internet. You don't have to be an American citizen to be part of this blockchain, which is not a bank. But it seems like initially this process, anyone can be part of it doesn't matter who you are or where you are. So there are a lot of possibilities with that. It definitely opens up a lot of opportunities, but also begs a lot of questions about how to regulate it and who's really in charge like you said.

Kirk (20:10)
It also makes me think the details of this really matter. And of course, we're talking about this in very generalized ways, and I'm sure that there's listeners out there who know more about NFT than we do, and that's great. But what I think is interesting is that it's the small things that are important. Like you're talking about the blockchain and like the way that the blockchain functions to then create this ability to own something else. That makes me think of, for whatever reason, Henry Ford. So I was thinking about because Ford obviously isn't the first person to invent the automobile, but he does get really good at making them really cheaply. But the way he does that is through sort of these detail things. Right. It's things like maximizing the division of labor. It's standardizing of parts. It's sort of working towards these economies of scale, which then allow him to sell things cheaper. And the reason I was thinking about that in regards to NFT is there's a lot that goes into NFTs that aren't just the NFT themselves in a lot of ways. They're an outgrowth of a lot of other technological advancements that are already having huge impacts on the way that people are thinking about and organizing property and all that kind of stuff.

Kirk (21:21)
And I find that really interesting because it, again, is mirroring the way that human beings have done things for a long time, and that is finding these smaller things that then build up to these larger conclusions. And where does it go from here? I don't know. It's interesting. It'll be exciting to find out.

Haley (21:37)
For me, it seems like it's really a standardization of the Internet in a sense, because right now it feels like everything just kind of floating, and it's a way to kind of create a world for individual people in it who have more investment in it. You can buy things, you can trade things, you can become part of communities in very standardized fashion that didn't exist before now. So it'll be interesting to see how it plays out and then how much time people spend on this versus in their own personal lives. Because as many of our listeners probably know, the Metaverse is becoming a reality. You can buy real estate. I have actually a friend who bought a childhood home in the Metaverse. I don't know how she did it. She owns her house somewhere in the Metaverse, and she'll probably want to spend some time there and bring some of her Metaverse friends. And you can trade. You can trade with cryptocurrency, you can go to school, you can run a business, bring your health records, maybe with you as you go about your day in the Metaverse. So, yeah, it'll be really interesting to see how that manifests itself and what the new reality becomes.

Mary (22:47)
So this is where it becomes very Matrixy for me. So if you buy your childhood home in the Metaverse, how do you actually go there? And if this is a really stupid question and there are stupid questions, they exist. I believe that 100%. But I mean, do you have to have those virtual reality glasses, like, be in it? .

Haley (23:10)
So I'm not sure, though. 

Mary (23:12)
Are you plugged into the Matrix?

Haley (23:14)
Although I'm on Zoom right now, and I have a background from the Metaverse.

Mary (23:18)
And it's really cool.

Haley (23:19)
We can discuss that. But I don't know. I think you do wear a headset. I think that's the main way I've seen people go into it.

Kirk (23:29)
This is where I guess the inner skeptic comes out of me. And that's not to say that I don't think that the Metaverse is that people are going to be drawn into it and there's going to be people that are investing and spending time in it. But for me, everything comes down to human interaction, and I think that is just transferring online. But I don't know if that necessarily means that that is where everyone will then exist, right? I don't know. I find it fascinating to me because I see all of the opportunities, but I also look at human beings and say, yeah, but aren't we still going to want to get together and physically see each other? We're all looking at each other on Zoom right now. I'm sure it would be different if we were sitting in person with one another. Even as we've been doing this for the past few years. We all notice a difference when we're actually physically around each other. So is that change inevitable? I don't know. But I think it's going to be a different future. And that's one thing you can bet on for sure, because change is a constant, and it's what keeps us historians employed. So that's always a good thing.

Mary (24:31)
One of my life gurus, Martha Stewart, former this is true. I love Martha Stewart. She said, when you're through, changing you're through. And I think that's such a really interesting quote because she's like in her mid-seventies and she's still way hipper than I am. I bet she has a place in the Metaverse because she has all these amazing homes anyway. But I think as with any change, we're human beings. We're always going to come up with tools to solve problems. And I think that's what an NFT is in a lot of ways. Like it can be your health records. It could be a way to show that you own this unique thing that Pop Tart cat or the NFT Mona Lisa. And I think that people will react to that change in a variety of ways. I think that's the constant, even though the change is always ongoing. And I think approaching these changes with a balance of skepticism because it's important to ask questions and try to understand how things work. So just having that balance of skepticism and a willingness to learn and not just immediately say, oh, that's crazy. I don't want to hear anything more about that. But in that balance or that moderation, what we would talk about at BRI, I think, is the happy spot

Haley (25:50)
We were talking earlier, Kirk was saying how a lot of new technological advances when they first came about were controversial, and a lot of people resisted them, like even the iPhone, the TV, even the Plow. So looking back, do you think that people who resist change in some way will be kind of laughed at? There's that question. Then there's also the question of does it really depend on your age because someone growing up with the iPhone now who was born in 2000 would take it for granted and be like, this isn't a big deal. This isn't controversial. I use this every day and I love it. So it's also about when you kind of come to age.

Mary (26:34)
Me personally, I want to buy an NFT of a weird cat now just to have one.

Haley (26:39)
Oh, there are a lot of them.

Mary (26:40)
Oh, perfect. Yeah, right up my alley. So I can say I have one then I'm trying to think of how to put like a bow on this conversation. I don't think that I can because it's so new and unfamiliar to me, but I think it's pretty new and unfamiliar to a lot of people. And it raises a lot of interesting questions and we just don't know. Like we're building the plane as we fly it. As a colleague here at BRI used to say, and I love that expression. But I think there's a lot to learn. There's a lot of interesting elements to it, but there's also that skepticism, again, I think is important and isn't going anywhere. But I would be curious to hear from our listeners. And what do you think about NFTs and the Metaverse? Do you think if people like me who are like this is kind of I don't know, although I do truly want to get some sort of silly cat. NFT just to say that I have one.

Mary (27:42)
I'm going to talk to my husband about this tonight because he's much more plugged into the matrix and how all this stuff works. Listeners, you've got to let us know what your thoughts are, what your experiences are. We'd love to hear from you. And Haley, thank you for schooling us on the blockchain and NFTs I know I learned a lot. And as always, it's such a pleasure chatting with you and Kirk. You're always really amazing at thinking about the big picture. So it was a pleasure talking with you guys. It was a pleasure to be with you, listeners, in your home, in your car, wherever you're listening to us, please leave us a review. Tell your friends, family about us. We'd love to hear from them as well. You can always find us on all the social media channels and until next time, keep asking questions.

Intro/Outro (28:34)
The Bill of Rights Institute engages, educates, and empowers individuals with a passion for the freedom and opportunity that exists in a free society. Check out our educational resources and programs on our website mybri.org any questions or suggestions for future episodes? We'd love to hear from you. Just email us at comments@fabricofhistory.org and don't forget to visit us on Facebook, Twitter or Instagram to stay connected and informed about future episodes. Thank you for listening.