NFTs and crypto are all about beliefs

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South Park lately did an important skit on NFTs, and one line actually resonated with me:

The explanation the road works so properly is that cash and finance, markets and corporations, international locations and legal guidelines, are all about beliefs. That’s the essential underlying elementary. When you consider this contract with this foreign money authorised by this authorities will work, then it does. When you don’t consider it, then it doesn’t.

Now, I’ve identified this for some time and weblog about it quite a bit, however I hold coming again to the theme as it’s a crucial underlay of the whole lot within the monetary system.

What’s it we worth? Why does it have worth? How is it traded? Who are you able to belief to commerce it?

These questions strike on the core of cryptocurrencies, however in addition they strike on the core of banking. Why do you want somebody to retailer worth? Who are you able to belief to retailer worth? The place are you able to commerce your retailer? How do you commerce your retailer?

The questions at all times come again to the identical fundamentals, however the fundamentals are altering. For many years and even centuries, we’ve constructed a system of belief primarily based on authorities laws of trusted intermediaries. That is altering. We at the moment are constructing a brand new system of belief primarily based on networked laws of trusted platforms.

That is ground-breaking and revolutionary and, for all of those that assume it’s simply SSDD, it’s not. I’m seeing a fast change from bodily belongings to digital belongings; from authorities currencies to networked currencies; from conventional banks to open finance; from industrial constructions to digital improvements.

Our world is altering quickly earlier than our eyes and it’s all about what we belief; who can we consider in; what can we consider in; and why.

It’s not a spiritual factor, however I’ve been shocked by the influence Elon Musk has made on Dogecoin, Shiba Inu and others. We immediately create ecosystems out of nothing, as a result of just a few consider that this ecosystem is price believing in … and that’s what NFTs and crypto is all about. The brand new generations consider it has worth.

In fact, like most central bankers and been-around-the-block elders, I fear that they are going to all lose their cash in a Ponzi type networked rip-off however hey, should you consider in it and I consider in it then they are going to consider in it.

It’s all about beliefs.

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