Even those stars who are educated and coherent about crypto and do seem genuinely passionate about the promise of Web 3 – Paris Hilton, for example – still struggle to tie NFTs back to the “real world.” Her recent appearance on the “Tonight Show Starring Jimmy Fallon,” alongside her Bored Ape NFT, has gone viral over the last couple of weeks for the awkwardness and disingenuousness with which she and Jimmy fawn over how “cool” their Apes are. It was her previous appearance on the show that stood out to me, however. She provided Jimmy and the audience with a very reasonable, high-level explanation of NFTs: “It’s a non-fungible token, which is a digital contract that’s on the blockchain. So you can sell anything from art to music to experiences, physical objects.”
I cannot fault her explanation. It’s not very specific, but then again she is speaking to an audience that is as mainstream as it gets. I have provided many skeptical friends with similar descriptions over my years of working in crypto. The retort they always level at me in different variations is a fair one: “What does any of that mean in the real world?” Unfortunately, Paris, there is little utility today in anyone minting digital versions of physical objects as NFTs.
Even those of us who are not skeptics, who have hitched our livelihoods to this experimental industry, regularly speak about crypto and Web 3 in contrast to the “real world” as if to express self-awareness that we are inhabiting another planet. We talk about tokens and NFTs versus “real world assets;” we talk about DeFi applications juxtaposed against “real world finance.” We all know that we have not yet delivered real products in the real world. Kanye West is right.One common critique of crypto applications is that they are self-referential. DeFi in particular largely functions this way: Stake your magic beans to earn yield in internet money that you can trade on margin for derivatives of yet more digital tokens. In a way, this is an incredible achievement. As an industry, we have created a separate, mostly functional financial system almost wholly unlinked from the real world.
On the other hand, that crypto is in a universe unto itself lends the whole space a fragile quality – as if it is all a collective illusion and, once the first person awakes, it could all evaporate.
Crypto has built castles in the air. They are very complex, compelling, sophisticated castles but they are, as of yet, without foundations connecting them to terra firma.