We’re also the latest trend. That’s sweeping the internet called NFT now selling for huge bucks, $69 million to what’s behind this latest craze. That is the question to ask. Okay. So there’s some super strange stuff happening online right now. And I need to tell you about it first, look at this tweet, the first tweet ever tweeted in the history of Twitter, the tweet was by Jack Dorsey.
I’m one of the co-founders. And this tweet was somehow just purchased for $2,915,835 and 47 cents.
You’re serious and it’s not just a tweet. Just last month, a single JPEG sold for $69 million. The NBA is selling little moments of basketball games for hundreds of thousands of dollars. These are all sorts of digital things that people are purchasing a version of them for lots of money. Three simple letters that you need to understand to understand what’s going on.
Those letters are, and we’ll take the latest trend is exactly in an Ft. So-called you all in the chat. Understand what an NFT is. Is that Stanford not safe for work? What is this? What does this mean? Why would you pay for an NFT when you can look at it for free? Is this a gigantic bubble? Just waiting to purse.
I believe in this space with my whole heart, I’m just fascinated by it. All of it. This story is much bigger than a $600,000 cat GIF or a $3 million tweet. It’s a story about human psychology and how the way we value things is shifting because of technology. Some people think maybe. Revolutionize our society while at the same time, accelerating the climate disaster, it’s nuts.
It’s all of these things together. And I want to explain it to you. So let’s do this and MTE apparently
and if T stands for a nonfungible token, There it is. That’s the explanation. A nonrefundable token makes sense. Right? So the video’s over now. One of my issues with this topic is that people throw around things 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 going to talk about a Tesla for a second, customized by performance to be the most unique and high-quality Tesla there is. Oh, and it’s not just a Tesla. It’s also $20,000. You can enter for a chance to win the Tesla and 20 toughened dollars. By going to omaze.com/ Johnny Harris, when you donate $10 or more, your donation goes to support two non-profits 5 0 1.
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The nonprofit uses its deep solar expertise to power and provide clean water, food, security, and light to regions around the world. So to potentially win a Tesla in $20,000 and to support these organizations, go to omaze.com/ Johnny Harris to find out more. Fungible. Let’s talk about the word fungible.
It’s this very specific word that economists use. It has a very precise definition. I want to use a different word for fungible for a second. Let’s just use the word replaceable. Nonfungible means nonreplaceable. You can’t replace it. There’s only one of them. It’s unique. Nonfungible. Let me give you an example of something I feel very strongly about.
Let’s say you want to buy an orange jacket.
This is absurd. I’ve never counted these before. Um, stop it. Get some help. Do you want to buy an orange jacket from Uniqlo? You go on the internet and a jacket costs $39. If you purchase one of these jackets for $39, you don’t care what specific jacket they send to you. They’re going to make thousands of jackets in your size.
Send them to stores, send them to people and they will send one to you. You don’t care. The jacket is fungible. It’s replaceable. As long as you get one, that’s identical to the rest, it’s worth the same to you. They’re interchangeable. However, let’s talk about one unique, low orange jacket that has been with me for a very long time.
This is the original. And for those you don’t know, I sort of having a strange attachment to this jacket. I just love it. I love the color. Like, feel like an identity with this thing, and it’s sort of starting to descend. But I love it. And I kind of fell in love. This jacket is not replaceable. If I went onto the website and paid $39 for a unique little orange jacket, that was this same model.
It would not be this jacket. This jacket is nonfungible. It is the only one on the planet that exists. It has emotional value. It has significance. It is a very valuable thing because it is scarce. There’s only one. It’s valuable to me at least. And I kind of fell in love. Okay. We can put these down for a second.
Everything in our economy is one or the other fungible or nonfestival. A sacrifice is fungible. You just want a sacrifice. You don’t care which one it is. The Mona Lisa is non-financial, there is only one unsurprisingly nonfungible thing that is way more valuable than fungible things. So that’s the NF and NFT nonfungible.
Now let’s talk about the T. Token. This is a very internet word. And to explain this, I have to explain something I have avoided explaining for a very long time, the blockchain. Luckily, there’s a way to understand this and I’m going to make it. As painless as possible. Let’s say I want to buy three slices of pizza from my friend, Anna.
She charges me $6 for these three slices. I don’t use cash anymore. So I pull out my debit card, my bank card, and I swipe on her little permitted. As soon as I swipe this card, a message is sent to my bank and it says, Hey, Johnny, who has an account at your bank wants to spend $6 on pizza. And that money needs to go to Anna’s bank.
This is like the bread and butter of what a bank does all day. They document every transaction that comes in from all their customers. They send out money to the other banks. And at the end of the day, they have a tally of all the money that went out of your account and into yours. And they can give you a number they can say, based on all of these transactions, you have $50 in your bank account.
And so when that request comes in, as I swipe my card, my bank is like, okay. So based on all of your transactions, you have $50 in your account. I can send $6 to Ana’s bank approved and they approved the transaction. Once that money comes into. And as the bank does doing the same thing, they’re like, oh cool.
She had $80 and now she has 86 and they add it to her record more and more, your money is just a number on a screen. It’s the result of a bunch of transactions. You don’t barter with physical things and you don’t use cash as much. So the bank keeping meticulous records of every transaction becomes important.
We trust the bank to do this, correct. So thank you, banks, banks, and other middlemen have been keeping stuff like this running smoothly for centuries. I mean, kind of sweeping the NASDAQ, everything and more has it completely stay on wall street in the world? What’s happening on wall street? There’ve been a few bumps.
With the rise of the internet, people started to wonder, is there a way that we could do this same thing, coordinate this transaction of transfer of money between two people without the bank? The result is a very clever concept called the blockchain. The blockchain fulfills the same thing the bank was doing.
But instead of doing this privately on my bank account and talking to Anna’s bank, all of the transactions are recorded publicly on the internet. You go on surfing on the internet. So let’s redo this example in a crypto world. Anna charges me six crypto coins for my three slices of pizza. I go to swipe my perverse.
Bank card to say, yes, I want to pay you six points. Instead of the bank, seeing that request for a transaction and trying to validate it, it goes on to this public record where a bunch of people’s computers all around the world are keeping track of every single transaction of everyone. If I don’t indeed have the six coins in my account to pay Ana all of the people’s computers who are keeping track of every single transaction.
We’ll notice that there’s a discrepancy. There’ll be like, whoa, whoa, whoa, dude, you don’t have six coins. We’re looking at every transaction ever. And you don’t have six coins. Your transaction is projected. If I do have six coins, all of the computers looking at the public record will see that request for a transaction and they’ll be.
Approved you have six coins and now Anna has six coins and the right that transaction into the public record. Now, Anna having those six extra coins is the business of everybody. Everybody now knows that the point here. The group verifies the legitimacy of every transaction by keeping an eye on every transaction to make sure that it adds up.
Okay, I’m getting hot at this point. So I’m taking off my orange jacket. Okay. So you’re wondering, what does the blockchain and this public record have anything to do with cat gifts that sell for $600,000? Well, I’m about to tell you. So in my pizza example, we talked about blockchain as a way to verify currency transactions.
I pay 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 mind a little bit. What if we apply this to something that isn’t money or current. Let’s say one day, you’re just looking at the ledger and the ledger is like, Johnny wants to give Anna six coins.
Okay. He’s got six coins approved and then the transaction comes up. That’s like a Malaysian businessman wants to give $3 million worth of coins to Jack Dorsey in exchange for a little token or digital certificate that says that the tweet is now somehow owned by the Malaysian businessman. The only thing that the blockchain cares about is.
Is does the Malaysian businessman have $3 million worth of coins. And so a bunch of computers all around the world, look at the whole list of transactions and say like, yeah, this guy has more than $3 million with the coins approved. They approve the transaction. And now it is written in a public record.
That is unalterable that says that this Malaysian businessman owns this tweet. The token has been transferred to somebody new non-funded. Token N F T. And if there’s anything that gets human psychology to value something, it’s if an entire group validates that it’s real and that there’s only one of them, there are tens of thousands of 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 an NBA top shot. Who’s taking advantage of this. I like moments. These top shot moments from your favorite NBA players have been turned into nonfungible to Jesse made headlines the other day when he paid $208,000 for LeBron James, the top shot.
It’s the weirdest thing. As soon as humans have. Enough abundance and have their basic needs, met food, shelter, warmth, et cetera. The next frontier is to create value in things that have no inherent value. The value turns into psychological hype, the excitement around a certain thing we’ve been doing that forever.
I mean, that’s the whole art industry is based on the idea of a bunch of people deciding that this painting this little bit of canvas and wood and. Is valuable and thus it is valuable. The only difference about now is we don’t have the technology to do this in a non-physical way, using this very sophisticated internet technology that is maturing very quickly.
Okay. So this is a lot of hype and I know you’re probably thinking. Cool. There are a bunch of rich people online buying and trading digital art, and there are millions of dollars worth of cards. I thought you said that this was going to have the potential to change the world and I’m getting there. But first I need to talk about the crazy flip side to the NFT.
The reality is that the technology that is the backbone for all of this, the blockchain stuff that we’ve been talking about relies on the public ledger thing that I talked about. Like that is the sort of heart and soul conceptually, but mechanically like physically, what it relies on is computers. Bunch of little calculations all day and night forever.
These computers aren’t real computers. They don’t have any memory or screens or anything. Big. All they do is just make little micro calculations all day. All night, most NFTs are stored on a blockchain called Astrium. And as of now in early April 2021, when I’m filling. The Ethereum blockchain is using 33 terawatt-hours of electricity.
And you’re like, what’s a terawatt hour of electricity. That’s the same amount of power as the country of service. A reminder that generating electricity usually comes from power plants that are burning fossil fuels that are putting carbon into the atmosphere, which is a big freaking problem. A man-made disaster on a global scale.
The power consumption of the Ethereum blockchain is exploding and it’s just quadrupled in like eight months. And it is showing no sign of slowing down. It is a lot of energy. And to think that that much energy is not being used to like move people around or produce things it’s used to like crunch numbers in a weird computer warehouse somewhere so that somebody can buy a fake token of a thing that we only, oh man, I just, I can’t, it’s just it’s mind-blowing.
It’s such an ironic moment where it’s like, this is all digital. It’s all fake. It’s not. But it’s having deeply real-world effects.
I just want to finish this video now talking about what this might mean for our world going forward. This is hype and that’s the whole point. I mean, these speculation markets are all about hype. We see this all the time with new technologies and new things that people get excited about and they swarm it with their investments and the price.
And then something happens. For example. Good one uncle Phil is in the nineties, man. What’s a webpage, something ducks lock-on
time in the nineties, the internet was taking. And people were just realizing that you could like make money on the internet. You could like make big businesses on the internet. The stock market was surging 400% in five years, mainly fueled by so much hype and excitement around these new internet companies as America’s longest boom, the new economy.
Is it a boomer? And this rise peaked in March of 2009. The bubble burst. And a lot of these companies either went under or completely lost all of this excitement, valuation that they had. But did that mean that the internet went away? Did that mean that internet businesses didn’t come back? Companies went on to reshape our world right now.
I think we are probably in that stage of NFTs it’s hype, it’s novel. It’s exciting. But what it’s doing is it’s pushing our minds to think differently about how we validate and verify things. If I buy a house, there is a whole fixed stack of paperwork and a bunch of middlemen to make sure that it is very clear who owns the house and how that money gets transferred from one person to another.
It is like a nightmare. If suddenly technology existed that took away the centralized middleman and made transactions between people able to be authenticated, verifiable, and much smoother that could change our world. I’m not here to say if the bubble’s going to burst or whatever. I don’t know. I just know that this is a crazy moment where we’re getting our heads around new technology and what it means.
And eventually, we’ll adapt. This. Won’t be crazy. This won’t be novel anymore. Prices will go down, but the technology. I allowed it all to happen. We’ll probably stick around.