My first experience with cryptocurrency was back in 2017, when a couple vets in the locker room tried to convince me to convert a portion of my signing bonus to crypto. Other than preparing for a zombie apocalypse or risking it all on the Silk Road, there wasn’t a compelling enough reason for me to take that risk – so I passed (which is a bummer, looking back.)
My true understanding of crypto didn’t come until 2020, when I was troubleshooting One of None with a couple of finance friends who thought that cryptocurrency’s underlying technology had some parallels with what I was pitching them. That led to a few weeks worth of research, and what I learned then changed my life forever – blockchain technology has utility far beyond currency. Let me try to explain blockchain as simply as I can:
Blockchain is essentially a database that uses a distributed network of computers to validate and store information in a chronological sequence. Kind of like how Uber relies on a “distributed network” of drivers to offer their vehicles and driving capabilities in the form of a taxi service, blockchains rely on a distributed network of computers to offer their computing power and storage in the form of a secure record-keeping system. This technology essentially removes the middleman and allows the users to power their own service – a concept I learned in business school as “shared economy”.
In my experience, a lot of people think of “blockchain” as synonymous with “bitcoin,” but it’s really just the underlying technology that is used to power the currency. Bitcoin is a type of cryptocurrency that is built on blockchain technology, but there are plenty of other things that can also be built on blockchain – like NFTs (non-fungible tokens) for example.
What does non-fungible mean? Currency is “fungible” because a dollar can be traded for another dollar with an equal exchange in value, even if one is crisp and the other has a tear in it. They are both able to buy items worth one dollar, even in their varying conditions. The idea of a “non-fungible” blockchain-based token is that two tokens that look the same cannot be traded for one another because they are inherently different, sometimes based on their chain of custody (AKA, where they’ve been in the past). They’re simply not meant to act like a currency, so you can’t use NFTs to check out at an online store that accepts bitcoin in the same way you can’t barter a pair of shoes for tickets to the movie theater.
I had a real breakthrough when I realized that blockchain allows NFTs or “digital assets” to display their unique ownership history for all to see. It’s similar to having the “Carfax” for every item you own, and I saw that blockchain, a digital tool, could also be the perfect mechanism to track the provenance of extraordinary physical items.
When I started my research on NFTs, I figured that it would take about three years and the involvement of some dope artists for enough people to understand the benefits of this technology. Three years quickly became three months. During that time, NBA Top Shot changed the sports collectibles game with their new digital trading card platform; Fewocious, an 18 year old artist, collaborated with RTFKT, a digital fashion company, and sold out in eight minutes for $3.1 million; and finally, digital artist Beeple shook up the world in March, dropping his piece “The First 5,000 Days” at Christie’s auction house for a quick $69 million.
Shortly after the Beeple drop, the One of None team decided to come together to discuss what was happening in the crypto world. Up until then, we had been building a Web2 social network for products and were gearing up for launch in the late Spring. What I proposed in that meeting was to pause on what we were building and consider bringing blockchain into our initial launch strategy. The only way to follow a single physical product would have to be through a token that couldn’t be broken down into pieces (a non-fungible token.) The one-to-one nature of NFTs allows their creators to represent an asset on the blockchain. This public ledger would be the perfect way to display the history of extraordinary items, and we could still use all of the Web2 functionality that we were building for our original version of One of None to incorporate a social network that would track and display each digital asset.
The pivot discussion lasted for about two days, and in the end, we all decided that the idea of creating “hybrid assets” could be much more impactful than just a social network for products. So we decided to call a timeout, huddle up, and game plan the best way to launch this disruptive business. The idea was for Mike to dive into the tech, Pat to figure out the best way to marry the physical to the digital, and me to position and brand our business to make tomorrow’s technology approachable for today’s collector.