NFTs, Explained


– Now to the latest trendthat’s sweeping the internet. – So called NFT. -[ Reporter] They’re nowselling for vast horses. 69 million dollars. – So what’s behind this latest delirium? – That is the question to ask. – Okay, so there’s somesuper strange stuff happening online right now, and I need to tell you about it. First, look at this tweet. The first tweet ever tweetedin its own history of Twitter. The tweet was by Jack Dorsey. – I’m one of the co-founders of Twitter. – And this tweet wassomehow time purchased for $ 2,915, 835.47. -( laugh) You serious? – And it’s not just a tweet. Merely last-place month a single jpegsold for 69 million dollars.The NBA is selling littlemoments of basketball games for hundreds of thousands of dollars. This is all sorts of digital things that people are purchasinga copy of them for lots of money. There are three simple lettersthat you need to understand to understand what’s going on now. Those words are NFT. – Now to the latest trendthat’s sweeping the internet. – What is exactly is an NFT? – So announced NFT. – Do you all in the chatunderstand what an NFT is? – Does that stand for not safe for drive? What does this represent? – Why would you pay for an NFT when you can look at it for free? – Is this a stupendous bubblejust waiting to burst? – I believe in this spacewith my entire heart.- I’m just mesmerized by it, all of it. – This story is much bigger than a $600,000 “cat-o-nine-tail” gif. Or a three million dollar tweet. It’s a story about human psychology and how the lane wevalue things is changing because of technology. A technology that some people imagine may revolutionize our society, while at the same timeaccelerating the climate disaster. It’s really nuts, it’s allof these things together and I wanna explain itto you, so let’s do this. Now what the hells an NFT Apparently cryptocurrency Everyone’s starting some coin -[ Announcer] Oh that was insane officially foolish Lebron James. – NFT stands for non fungible token. Okay, there it is, that’s the excuse. Non fungible token, attains appreciation right? The video’s over now. No, one of my issues with this topic is that beings throw aroundthings like blockchain, crypto art, ledger, NFT, and they just expect me to understand what they’re talking about, and I didn’t.Okay, I’m gonna talk abouta Tesla for a second. Customized by Unplugged Performance to be the most unique andhigh quality Tesla there is. Oh and it’s not just a Tesla, it’s also $20,000. You can penetrate for achance to win the Tesla and $20,000 by going toOmaze.com/ JohnnyHarris. When you donate $10 or more, your gift goes tosupport two non-profits. 501 C3 is the first one. They are an organization that seeks to mobilize the next generationto fight climate change by creating a global community that espouses low-grade carbon culture. The other one is called Give Power which seeks to give emptied drinkable sea to the 2.2 billion people various regions of the world who is not have safeaccess to clean sea. The non-profit works itsdeep solar knowledge to capability and render cleanwater, meat certificate, and brightnes to neighborhoods around the world. So to potentially acquire a Tesla and $20,000, and to support these organizations go to Omaze.com/ JohnnyHarristo find out more. So, fungible, let’s talk about the word fungible.It’s this very specific word that economists use, it has a very precise definition. I wanna exert a different wordfor fungible for a few seconds. Let’s just use the word replaceable. Non-fungible signifies non-replaceable, you can’t replace it, there’sonly one of them, it’s unique. Non fungible. Let me give you an example of something I feel very strongly about. Let’s say you want tobuy an orange coat. “Its certainly true it is” absurd, I’ve actually never counted these before. – Stop it, be helped. – You wanna buy an orangejacket from Uni Qlo. You go on the internet, and a fur costs $39. If you are buying one ofthese furs for $39, you don’t care what specificjacket they be transmitted to you, they’re gonna construct thousandsof casings in your size, send them to accumulations, send them to parties, and they will send one to you, you don’t care which one it is.The skin is fungible, it’s replaceable. As long as you get onethat’s identical to the rest, it’s worth the same to you, they’re interchangeable. However, let’s talk aboutone Uni Qlo orange casing that has been with mefor a very long time. This is the original, and for those of you who don’t know I sort of have a strangeattachment to this jacket. I simply affection it, I desire the colouring, I feel like an name with this thing. And it’s sort of starting to disintegrate, but I love it. And I kind of fell in love. This shell is not replaceable. If I went onto the website and paid $39 for a Uni Qlo orange skin that was this precise same prototype, it would not be this jacket.This cap is non-fungible. It is the only one onthe planet that exists. It has feelings significance. It has significance. It is a very valuablething because it is scarce. There is only one of them, it’s valuable to me at least. And I kind of fell in love. Okay, we can kept these down for a few seconds. Everything in our economyis one or the other, fungible or non-fungible. A sack or rice is fungible, you time demand a sacking of rice, you don’t care which one it is. The Mona Lisa , non-fungible, there’s only one. Unsurprisingly , non-fungible the picture is action more valuablethan fungible things.To that’s the NF in NFT , non-fungible. Now let’s talk aboutthe T, which is token. This is a extremely internet-y word. And to explain this, Ihave to explain something I have avoided explainingfor a very long time, the blockchain. Luckily, there’s a way to understand this, and I’m going to make itas painless as is practicable. Let’s say I want to buythree slices of pizza from my friend Anna. She accuses me six dollarsfor these three slice. I don’t use money anymore, so I pull out my debit card, my bank card, and I swipe on her little terminal. As soon as I swipe this carda message is sent to my bank and it says hey, Johnny, whohas an account at your bank wants to spend six dollars on pizza, and that fund needs to go to Anna’s bank.This is like the bread andbutter of what a bank does, the working day, they document every transaction that comes in from all their clients, they send out fund to the other banks, and at the end of the day they have a tally of all the money that went out of youraccount and into your history and they can give you a number. They can say based on allof these transactions, you have $ 50 in your bank account. And so when that requestcomes in as I swipe my card my bank is like okay, based on all of your transactions you have $ 50 in your account, I can send six dollarsto Anna’s bank, approved. And they approve the transaction. Once that money comes into Anna’s bank, Anna’s bank is doing the same thing.They’re like oh cool, she had $ 80 and now she has $ 86, and they supplement it to her record. More and more your money isjust a number on a screen. It’s the result of abunch of business. You don’t barter with physical things, you don’t use cash so much better. So the bank preserving meticulous records of every transactionbecomes really important. We trust the bank to do this correctly. So expressed appreciation for banks. Banks and other centre humankinds have been obstructing stufflike this running smoothly for centuries.I mean kind of smoothly. -[ Reporter] The NASDAQ, everything and more has been completely wiped out. -[ Reporter] It was theworst period on Wall street. – What in the world ishappening on Wall Street? – There have been a few bumps in the road. With the rise of the internet, beings started to wonder. Is there a room that wecould do this same thing, coordinate this same transaction of transfer of money betweentwo parties without the bank? The ensue is a very cleverconcept called the blockchain. The blockchain. The blockchain fulfills thesame thing the bank was doing, but instead of doing thisprivately on my bank account and talking to Anna’s bank, all of the transactionsare actually recorded publicly on the internet. You’re going surfing on the internet So let’s redo thisexample in a crypto macrocosm. Anna charges me six crypto silvers for my three slice of pizza. I go to swipe my proverbial bank card to say yes, I want to pay you six coins. Instead of the bank seeingthat request for a transaction and trying to validate it, it goes on to this public record where a assortment of people’s computers all around the world are be tracked of every single transactionof everyone always.If I don’t indeed have thesix coppers in my account to pay Anna, all of the people’s computers who are keeping track ofevery single transaction will notice that there’s a contradiction. They’ll be like whoa whoa whoa dude, you don’t have six silvers. We’re looking at every event ever and you don’t have six coins. Your transaction is rejected. If I do have six silvers, all of the computerslooking at the public record will see that request for a transaction and they’ll be like yep, approved. You have six silvers andnow Anna has six coins. And they’ll write that transactioninto the public record. Now Anna having those six extra silvers is now the business of everybody, everybody now knows that. The pitch here is that the group confirms the legitimacy of every deal by sustain an nose on every transaction to make sure that it supplements up. Okay I’m getting hot at this site, so I’m taking off my orange jacket.Okay, so you’re wondering what does the blockchainand this public record have anything to do with cat gifs that sell for $600,000? Well I’m about to tell you. So in my pizza sample wetalked about blockchain as a practice to verify currency transaction. I compensate you this much, you pay me this much and everybody knows how much everybody has because it’s all public. But this is where it starts to bend my attention a little bit, what if we apply this to something that isn’t coin or money? Let’s say one day you’rejust looking at the ledger and the ledger’s like Johnny wants to give Anna six coins. Okay he’s got six coppers, approved. And then a transaction comes up that’s like a Malaysian businessman wants to give three million dollars worth of coins to Jack Dorsey in exchange for a little token, or digital certification that says that the tweet is now somehow owned by the Malaysian businessman. The only thing that theblockchain to be concerned about is does the Malaysian businessman have three million dollars worth of silvers? And so a cluster of computersall around the world look at the whole entirelist of transactions and say like yeah, this guy has more than three million dollarsworth of coins, approved.They approve the transaction, and now it is written in a public record that is unalterable that says that this Malaysianbusinessman owns this tweet. The sign has beentransferred to somebody brand-new , non-fungible token, NFT. And if there’s anythingthat gets human psychology to value something, it’s if an entire groupvalidates that it’s real and that there’s only one of them. There are tens of thousandsof NFTs of all kinds. Some music is being given tokens, lots of art is being minted as tokens and being bought and sold, and then of course there’s. – NBA Top Shot. – Who’s taking advantage of this. – These spotlit instants, these Top Shot instants fromyour favorite NBA actors have been turned into non-fungible tokens. – Jesse realise headlines the other day when he paid $208,000 fora Lebron James Top Shot. – It’s the weirdest thing. As soon as humans have enough abundance to have their basic needs met, food, protect, friendlines, et cetera, the next frontier is to create value in things that have no inherent value.The value turns into psychological publicity. Excitement around a certain thing. We’ve been doing that forever, I convey the whole art industry is based on the idea of a assortment of parties deciding that this painting, this little bit ofcanvas and wood and dye is valuable, and thus it is valuable. The only different about now is we now have the technology to do this in a non-physical way exploiting this very sophisticatedinternet technology that is growing very quickly. Okay, so this is a lot of promotion, and I know you’re thinking like cool, there’s a knot of rich people online buying and trading digital art, and there’s millions ofdollars worth of placards, I thought you said that this was gonna have the potentialto change the world. And I’m getting there, but first I need to talk about the crazyflip side to the NFT furor. The actuality is that the technology that is the backbone for all of this, the blockchain material thatwe’ve been talking about relies on the public ledgerthing that I talked about.That is the sort of heartand soul conceptually, but mechanically, like physically what it relies on is computers doing a cluster of little calculations all day and night forever. These computers aren’t real computers, they don’t have any storage, or screens, or anything. All they do is just makelittle micro-calculations all day, all night. Most NFTs are stored on ablockchain announced Ethereum. And as of now, in early April2 021 when I’m filming this, the Ethereum blockchain is using 33 terawatt hours of electricity.And you’re like what’s aterawatt hour of electricity? That’s the same quantity of capability as “the two countries ” of Serbia. A remember that produce electricity frequently comes from power plants that are burningfossil-fuels, that are putting carbon into the atmosphere which is a big freaking problem. -[ Narrator] Facing a manmadedisaster on a global scale. – The power consumptionof the Ethereum blockchain is exploding, it quadrupledin the like eight months, and it is showing no signal of slowing down. It is a lot of energy.And to think that that much energy is not being used tolike, move beings around or make things, it’s used to crunch numbers in a odd computer depot somewhere so that somebody can buy a forgery token of a thing that this is the only way, oh guy, I can’t, it’s knowledge blowing. It’s such an paradoxical moment where it’s like this is all digital, it’s all hoax, it’s not real, but it’s having seriously real world effects.I precisely wanna finish this video now, talking about what this might mean for our world going forward. This is definitely hype, and that’s the whole point. I imply these speculationmarkets are all about publicity. We see this all the timewith new technologies and new things thatpeople get excited about. And they crowd it with their speculations and the expenditure goes up, and then something happens, for example. – Come on Uncle Phil, this is the’ 90 s human. – What’s a web page, something ducks amble on? – How nice of you to join us. – On equal value, so cashin on today’s brand-new economy. – It’s the’ 90 s, it’s hammer time. – In the’ 90 s the internet was taking off and people were just realizing that you could make money on the internet.You could fix bigbusinesses on the internet. The stock market wassurging, 400% in five years mainly fueled by so muchhype and excitement around these brand-new internet fellowships. -[ Reporter] Break the recordas America’s longest boom. – The brand-new economy, is a boom without end? – This rise peaked in March of 2000, and then the bubble erupt, and a lot of thesecompanies either exited under or completely lost all ofthis excitement valuation that they had. – Saw it didn’t you, it was down some. – But, did that mean thatthe internet went away? Did that means that internetbusinesses didn’t come back? No, companionships went onto reshape our world. Right now I think we are probably in that stage of NFTs. It’s publicity, it’s novel, it’s exciting, but what it’s doing isit’s propagandizing our attentions to think differently about how we validate and authenticate things. If I buy a home, there is a whole thick stack of paperworkand a assortment of middlemen to make sure that it is very clear who owns the house, and how that coin does gave from one person to another.It is a nightmare of an experience. If suddenly technologyexisted that took away the centralized middle “mens and” cleared business between beings able to be authenticated, verifiable, and much smoother, thatcould change our world. I’m not here to say ifthe bubble’s gonna burst, or whatever, I don’t know. I just know that this is a crazy moment where we’re getting ourheads around a new technology and what it means, and eventually will change. This won’t be crazy, thiswon’t be story anymore, premiums will go down, but the technology thatallowed it all to happen will probably stick around.( soft music ).

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