Something is only worth what someone is willing to pay for it. In the digital age, “something” includes things made entirely out of electronic zeroes and ones.
In May 2010, Florida man Laszlo Hanyecz paid 10,000 Bitcoin for two pizzas. The fledgling cryptocurrency was worth less than a penny then, setting him back about $40.
With a Bitcoin now worth about $50,000, Hanyecz’s pizzas would be valued at $500 million today.
The point he was trying to make has certainly been cemented in technology history: Digital currencies can have real-world value.
But when it comes to Bitcoin and myriad other cryptocurrencies in circulation (dubbed “altcoins”), that value can vary and can change in an instant.
Less than two months ago, Bitcoin prices fell 20%, or by $8,000, in one day. And skeptics still point to 2018, when Bitcoin fell from a high of $19,000 to $3,600.
This volatility has prompted financial institutions and government regulators to urge caution and implement restrictions. On Friday the state Office of the Securities Commissioner declared “schemes pitched through the internet and social media” involving cryptocurrencies to be a top threat for investors.
To be sure, Hawaii is not as hostile to digital currencies as it once was. The Hawaii Technology Development Corp. is now hosting the Digital Currency Innovation Lab, which allows exchanges like Gemini, bitFlyer and CEX to finally serve Hawaii clients. And the program is looking to enroll more partners.
While this is good news, getting into cryptocurrency is still risky and intimidating. When you connect digital currency to fiat currency, things can get serious fast.
What if, instead of trading currencies, you could start with trading digital Poke-mon cards?
Enter NFTs, or nonfungible tokens. This clumsy term covers a wide range of cool tradable digital assets that many have given the more accessible label of “nifties.”
Similar to a Bitcoin or altcoin, an NFT is a digital asset whose ownership can be verified in a blockchain, or a mathematically secure public digital ledger. But these assets are more than addresses in a string of numbers. They represent other things. And by “other things,” they can represent anything.
The first NFTs were themselves an experiment to see whether the concept of a blockchain-authenticated collectible item could work. Called CryptoPunks, they were a limited series of 10,000 unique digital drawings created in 2017. They were given away for free, to see whether anyone would do anything with them.
As with Pokemon cards, |or ye olde baseball cards, digital collectors snapped them up. They displayed them with pride. They talked about them. They traded them. And, yes, they sold them.
Today only a subset of CryptoPunks are available for sale, and those that are available fetch prices of nearly $30,000 each.
Inevitably for the internet, someone added cats to the recipe, and CryptoKitties were born. One million of these virtual cats have now accounted for $40 million in transactions, selling for an average of about $60 but for as much as $300,000.
As with any collectibles market, some people are collecting NFTs for the simple joy of it, while others hope to sell them at a profit. Not surprisingly, actual baseball card companies and celebrities are getting into the act.
What’s especially exciting about NFTs, though, are not these huge, hyped releases that have made headlines with big-name artists and serious investments.
Because anything can be an NFT, anyone can create one: cartoonists, 3D digital designers, photographers, musicians, even you. Even something as ephemeral as a Twitter post has been offered as an NFT.
Local marketing professional Jason Walter introduced me to NFTs on Hawaii Slack, where he’s been sharing his digital art creations. Under the creator handle soulxwhat, he’s offering everything from beach photos to digital illustrations to psychedelic animations on Rarible, an NFT trading site.
Hawaii’s Eric Nakagawa, whose I Can Has Cheezburger site was among the first to capitalize on the internet cat craze, is meanwhile offering up the site’s “original” cat photo as an NFT on OpenSea.
What’s to stop someone from saving these digital artworks and posting them on Facebook? Nothing, really. Nothing stops you from taking a photo of the Mona Lisa and printing it out for your wall, either.
But now you can support a digital artist like you would a painter, owning something that can have its provenance confirmed and its value quantified. There’s a whole new world of collecting out there.
And frankly, a photo of a derpy cat is far more satisfying to look at than a fraction of a Bitcoin.
Ryan Kawailani Ozawa is the founder of Hawaii Hui LLC, focused on online community and collaboration. He recently co-founded the Hawaii Club on Clubhouse.
