Part 2: The Basics of NFTs
From Tom Morkes interview with Jesse Krieger, the Chief Content Officer of PowerFan.io and founder of Lifestyle Entrepreneurs Press.
Tom Morkes: Let’s get into NFTs. What is a NFT? I have so much I’ve got to cover in such a time.
Jesse Krieger: It’s tough. And it is important in my view to share these definitions and be on the same page because there’s a lot of confusion out there. Ethereum or Bitcoin is what you would call a fungible [token]. Like currency, a smaller denomination is the same thing as a larger denomination, but a non fungible token [which is what NFT stands for] is a digital asset whose value exists and it being in a single form [all by itself].
Now, what does that mean? So like an artwork piece, right? A piece of art that’s worth a thousand dollars is worth $1,000 as a piece of art. You can’t cut it into 1,000 pieces and have each piece be worth $1. That would destroy the value of the piece of art in this case. So a non fungible token (NFT) is a digital asset that is almost limitless, what it can be, but what we’re using it for is for intellectual property.
So to sell and transfer ownership rights, assets, books, or limited edition collectibles in a [web] wallet, like if you used Coinbase, or MetaMask, you will have two parts to your wallet, [fungible] tokens, and collectibles. Sometimes they may be called something else, but [the] NFTs are those collectibles.
It’s a unique verifiable digital asset that you can build royalties into. So, if Tom does a limited edition series of one of his books as an NFT, you will be able to see the transaction history of everybody that buys and sells one. But more importantly, if there’s value and people want to buy and sell one on the secondary market, there can be a royalty that automatically flows back to [Tom] on every transaction.
And that [would be] automatic. So just think for a moment, Tom, you know, I run a book publishing company for many years. Even as an efficient book publishing operation, we’re collecting sales revenue on behalf of the authors. Republished months later, after all the returns and stuff are done, we can create a royalty statement and pay our authors.
That’s a month long process with an NFT. You mint it. You sell it. The transaction takes place instantaneously and directly into your own secure [wallet]. These are a couple of key features, instantaneous transaction and verifiable transference of ownership and royalties on secondary market sales, which as we well know, doesn’t exist in traditional book publishing or retail scenarios for selling books.
Tom Morkes: Yeah. I find that part, maybe one aspect of it as one of the most interesting for creators.
Jesse Krieger: And a big implication of it [is that]it unlocks value for creators. I like to say there’s intrinsic value in your intellectual property. That can be minted as NFTs in different ways. But if other people buy and sell them, you’ve got an automatic royalty stream on each transaction, which is kind of amazing.
I don’t think that’s existed [before]. So that’s a function of blockchain and NFT technology that makes this situation.
Tom Morkes: Yeah. I see the future potential for this. The blockchain stuff, meeting the physical [world] as well.
So we’re going to talk about one-offs, but then I think to myself, wouldn’t it be just so cool if I could sell my books the same way digitally. I sell my books, let’s say on Amazon. And every time I sell a book, [when] somebody gets the book, they have the digital version of it.
There are DRM or content rights associated with that. They can’t technically resell that book, but wouldn’t it be cool if they could resell like a digital version of it and I’d still get a royalty from it. But all of a sudden it kind of creates like a new one. [It’s a] potential that I don’t think that’s been fully fleshed out yet, but it seems like PowerFan is one of the companies that’s striving do a piece of that at some level.
And I could see this growing in the future. Do you see it heading out that way?
Jesse Krieger: I do. This is absolutely a way. It just requires physical logistics, but somebody could buy an NFT and then receive a physical book or a personally signed copy of the book.
And then beyond that, it’s kind of the honor system. If somebody resells that NFT, they would have to send the book if that was included with it. But that’s the only place that there’s a hiccup with the physical and digital overlap. For example, if you had a digital version of your book and the NFT unlocked a training course, And maybe access to a group call or even a one-on-one call with you.
[What could happen is] you could set the royalty percentage, such that every transaction justifies you having that call for example. You could set a floor price, like minimum 0.1 Ethereum would be approximately $2,230 today. So if you had a minimum of $230, somebody buys it for five bucks.
If you’ve got a 20% royalty or whatever it is, you just set it up so that if there’s something personal that you’re delivering, that, that you’re justified in doing it for each new person that holds the token.
(Watch the full interview here)
