HOW CAN BLOCKCHAIN GUARANTEE US A SCARCITY OF TOKENS?
Let’s talk about how blockchain allows us to have a guaranteed trust that there are only 21 million scarce bitcoins in the world. We can now see that one of the core benefits of blockchain is creating scarcity for anything impossible in digital assets because anything in the digital world is can be copied. And so anyone can copy and paste anything, right? Blockchain is the first time we can have digital scarcity for both currencies like bitcoin and also non-fungible assets like art. And so the core innovation of blockchain is to ensure that there is only one source of truth that everyone looks at this single global ledger to know what was done as a transaction and what not. This ledger, in the case of bitcoin, just records every single transaction anyone has ever made. And now, let’s take a look at exactly how it works. So what exactly is blockchain? Simply, it’s a sequence of blocks. So what exactly is a block? A block is just a bunch of data that can be tied together in this chain that grows over time every 10 minutes or in the case of bitcoin a new block is created and in it, you can store about two megabytes of data. In the case of bitcoin, what is the data we are storing? What is a checkbook ledger? We are storing all the credits and debits that people have made. Example: Alice sends 1 bitcoin to Bob. Alice used to have 10 bitcoins. Now Alice has 9 bitcoins. Bob used to have 8 bitcoins. Now Bob has 9 bitcoins. That’s bitcoin’s use case.
HOW TO MAKE SURE THE INFORMATION IS NOT FAKED? -PART 1
How can we ensure that this one blockchain is the only source of truth and no one can tamper with it? Is the core innovation of Satoshi Nakamoto that you need to generate a new block and it must be hard. People have to have some financial stake to create a new block, so people aren’t just trying to generate new blocks all the time. You can only have one source of truth. You have to make it difficult to create a block, and you have to make it easy for everyone in the world to agree that this is a real new block. That all other blocks people might be trying to put on the blockchain are fake. How do you do it? Math. That’s the answer. Specifically cryptography. That’s where crypto and cryptocurrencies come from. And so what exactly do we mean? To create a new block, you have to solve a rather difficult math problem. This is such a difficult problem that we can only solve it in one direction. This is called one way: hash function. This means that you can enter any arbitrary input into this map function.
Then, on the other side, it’s pretty easy to calculate what’s incurred. The output is this random alphanumeric string, which means a random string consisting of characters and numbers from the alphabet. That string is easy to compute with any information. But as far as we understand it today it’s not possible to go back to say: oh, this is the output we have. Find out what input produced this output. This is extremely important for creating a blockchain because this means you can now create a problem so hard that you just have to deal with it. You just need to try random inputs to get the correct output. Let’s give an example, an alphanumeric string that can start with any lowercase letter of the alphabet A to Z is 26 characters. Then it can also be numbers from 0 to 9, which is 10 numbers. So there are 36 different possibilities for the first character in this alphanumeric string that you get in this hash. And so if it’s completely random by luck, you just have to try 36 different inputs. And you know these inputs can be anything they can be. You enter the word Alice here and then they will generate a random block and these inputs can be anything. You can put the random word, Alice, in there and they will generate a random alphanumeric hash on the other side. Either you can put Bob’s name there or you can put the numbers 1, 2, 3, and so on. You just put a random piece of information into this hash and you see what comes out the other side, but you have to try 36 completely random things just trying to find an average of one output starting with what you want.
HOW TO MAKE SURE THE INFORMATION IS NOT FAKED? -PART 2
So the NFT in general is not really on the Bitcoin blockchain. So this blockchain concept is not exclusive to bitcoin. Back in 2008, Satoshi Nakamoto invented the first blockchain and that blockchain was bitcoin. We can think of the bitcoin blockchain. Now, the core innovation that makes NFTs is not the bitcoin blockchain. It is the Ethereum blockchain. Vitalik Buterin, one of the early believers in bitcoin technology, created the concept of Ethereum, and Vitalik Buterin Core revolutionary insight realized that we don’t need to just keep our ledger information in the blockchain. You can keep any arbitrary data type in the blockchain. Remember, each block is just a collection of data, and the data can be anything it can be, financial transactions in the case of bitcoin, but it can also be much more, it could be the code, it could be the certificate in this case of an NFT, etc.
Vitalik Buterin created the concept of a new blockchain called Ethereum, where virtually all NFTs exist today. Now with Ethereum, we can store a lot of things not just financial information, and financial transactions. We can store authenticity records that point to anything like images or video files or movies or anything else in the world and more. That is what makes NFTs possible today.
THE VALUE OF BRANDS
Let’s talk about the brand. I think I didn’t buy the branded goods. Because I don’t go out. I don’t buy Air Jordans. I don’t buy Louis Vuitton bags, it speaks to my culture. For me. I like. You can get a bag for a fraction of the price. Why are you paying for this branded stuff? Because it’s not my society, the people in my society don’t take those things seriously. I belong to the Silicon Valley type. The things we value vary widely, but I’ve found that we value other brands, and some of the brands we value are things like MIT diplomas, Harvard degrees, tickets to space, and success, founded a billion-dollar company as part of Y Combinator. This is another brand that I review Nas Daily. The reason we’re doing this on the NAS Academy economy and why we call it NAS Academy is because there’s real brand value there. There are 50 million people around the world who have heard of NAS Daily. If they see that we’re working on NAS Daily, they’ll trust that more than if I’m just some random guy on the internet.
- NFTs are just as valuable as memes and brands
- The value of NFTs is determined by the community that buys them. The more they value it, the more they will pay for it.
- The scarcity (How many people own that same piece)