BTC to NFT: Wealth to Power

Hu Yilin
2022-01-20 16:37:38
Collection
What matters is not the image itself, but "power."

Author: Hu Yilin, Associate Professor at the Department of History of Science, Tsinghua University

In recent years, I haven't kept up with the new developments in the cryptocurrency space because researching them is time-consuming and labor-intensive, and it particularly affects my mindset, as one can easily feel like they've "lost a billion." So it's better to keep my eyes off it for "peace." However, the NFT craze and the so-called "metaverse" are significant events that have gained attention.

Even though I no longer focus on the cryptocurrency space, I cannot help but pay attention to them, so I am back to writing articles. (A few months ago, I wrote about NFTs and the Tulip Mania, believing that the NFT craze is worth noting, but at that time, I hadn't delved deeply into it myself.)

I had been following the Colored Coin technology a few years ago, and although I stopped paying much attention to the cryptocurrency space later on, I still knew about the launch of ERC721. Unfortunately, I missed the first wave of NFTs. In retrospect, it was partly because I didn't think deeply about it, and partly because my focus was somewhat misguided.

From the beginning, I imagined the application scenarios of NFT technology leaning towards text objects, such as contracts, agreements, certificates, and patents, and later I thought of papers and publications. I have always been looking forward to an NFT system in these areas, so I initially did not pay enough attention to this wave of NFTs dominated by "images."

Only recently, through further understanding, reflection, and preparation, did I finally realize one thing: what is truly important is not the image itself, but "power." CryptoPunks, Bored Apes, metaverse real estate—these things are essentially all about "power."

"Power" is often mentioned alongside "wealth" as something people eagerly pursue. The two can often be converted into each other, but they are not entirely equivalent. "Wealth" is homogeneous, or at least in modern market economies and monetary systems, wealth can be measured homogenously. Zhang San's 100 yuan and Li Si's 100 yuan are completely equivalent and interchangeable (Fungible).

However, "power" is not interchangeable. Even in places where "size" can be compared, "power" is non-fungible (Non-Fungible). For example, the director of the transportation bureau and the director of the drug administration are both directors; in some sense, they can be said to be "equally big," but the power of one director is not interchangeable with the power of the other.

A director is greater than a division chief, but several division chiefs together cannot equal one director. Even in places where prices can be clearly marked and power can be traded for money, each position can have a price, but as a "position," it is actually a unique thing.

Bitcoin has achieved the decentralization of wealth in the digital world, laying a foundation for the so-called "metaverse" (I will write more about the metaverse later). Bitcoin has detached itself from any anchor points of the old world, breaking the financial system of the old world and establishing a wealth measurement system that can operate spontaneously in the metaverse.

What NFTs have achieved is not just putting wealth on the blockchain, but putting power on the blockchain. It allows a non-interchangeable, hierarchical power system to also detach from any anchor points of the old world and operate spontaneously in the new universe.

Like wealth, power is also originally non-centralized. Each person exercises their power based on their own strength. However, in civilized society, power quickly becomes a centralized credit certification, with the power center establishing rules and granting status. The centralization and creditization of power occurred earlier and is more stubborn than that of currency.

This is the natural trend of power; even in the so-called metaverse, power is difficult to escape the trend of centralization. However, we still need to undergo a process of decentralization, or rather, "decentralization of the old center," which means at least to some extent breaking free from the power certification system of the old world, detaching from old anchor points, and carving out new territory in the new world.

So-called power is merely built on "identity" or "status." For example, I am a teacher at a certain university; this is my "identity," which carries a certain power (of course, it also includes corresponding obligations). To identify a person's "identity," we need to design a label, which may manifest as a seal, a badge, a business card, a certificate, etc.

But these superficial "images" acting as "symbols" are not the essence of identity. These images must ensure they are "real" and not "forged," and fundamentally, they must conform to a certain "record," such as an employment record on the staff list of a school, or a record of appointment on a list of officials in a department, etc. The validity of these records ultimately relies on the recognition of a certain authoritative center.

However, fundamentally speaking, according to democratic principles, the legitimacy of this authoritative center ultimately comes from the recognition of the public, so this authoritative center can theoretically be bypassed or diversified. As long as a group of people recognizes a certain identity, then the owner of that identity can possess a specific status or exercise specific power. For example, as long as people acknowledge that someone wearing a police badge has law enforcement power, then that person can have law enforcement power within the community that recognizes this.

However, achieving such decentralized recognition of power involves many challenges, one of which is a not insignificant problem—similar to the issue faced by Bitcoin—anti-counterfeiting. If anyone can wear a police badge, then in the digital world, a trillion badge-wearers could emerge at any time. The symbol of power needs to be backed by an unalterable "record," and if this record is not stored in a central institution, who should hold it?

Blockchain technology addresses this issue. Just as Bitcoin solved the problem of the rampant issuance of currency symbols, NFTs solve the problem of the rampant issuance of power symbols. As for how people might recognize certain symbols as specific power identifiers, that is not a problem that blockchain technology can solve, just as getting people to recognize Bitcoin as valuable is also a community issue.

But what blockchain technology can solve is that once people recognize the symbol of Bitcoin as valuable, the blockchain can ensure that this symbol is not issued excessively or counterfeited; similarly, once people recognize that various NFT symbols correspond to specific powers, the blockchain can ensure that these symbols are not issued excessively or counterfeited.

After understanding this, I quickly grasped why the hottest NFT projects are not what I initially envisioned as contracts, certificates, and the like, because I was still imagining the role of NFTs based on the old world as an anchor point for power, without realizing that such anchor points are fundamentally unnecessary, or rather, not the key point of revolution.

Why do CryptoPunks sell for so much money? Before mocking the bubble, we must understand: what exactly are people buying? Even if it is crazy, there are always some reasons beyond speculation. Even in speculation, there are always reasons for it to arise. What people are buying is certainly not that pixel image of over 200 bytes that anyone can download; what they are buying is an "identity."

This identity is currently still relatively hollow—it has not been filled with specific power. However, as long as people continue to respect "history" (as I mentioned in an earlier article, "Entrust value to history, entrust authenticity to mathematics"), these 10,000 historically significant "identities" will always be respected by future generations, and they will spontaneously attract certain privileges, even if it's just "bragging rights," which is almost eternal.

The reason Bored Ape Yacht Club can catch up later is not because it looks good, but because it straightforwardly reveals "power"—buying a monkey means joining this "privileged club" of 10,000, possessing an identity that exercises specific power.

Although the initial privilege was merely the power to slowly doodle on a graffiti board at a rate of one pixel every 15 minutes. How insignificant this power is, but perhaps the power held by the first human ancestor to gain privilege was also just doodling on cave paintings? This insignificant power constitutes a starting point.

Even games like Axie and The Sandbox are popular because the corresponding NFTs grant players "entry rights."

Just like the navigators of the Age of Exploration who opened up new continents, they first brought back wealth and then began to rebuild power and order in the new world. Those who made the first fortune in the new world understand the value of claiming territory in the new world better than the old money who have been comfortably enjoying themselves in the old world. Bored Ape's Graffiti Board

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