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NFTs, Explained - YouTube
Channel: unknown
[0]
now to the latest trend that's sweeping
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the internet they're called nft they're
[3]
now selling for huge bucks 69 million
[6]
dollars so what's behind this latest
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craze that is the question to ask okay
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so there's some super strange stuff
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happening online right now and i need to
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tell you about it first look at this
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tweet the first tweet ever tweeted in
[19]
the history of twitter the tweet was by
[20]
jack dorsey i'm one of the co-founders
[22]
of twitter and this tweet was somehow
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just purchased for two million nine
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hundred and fifteen thousand
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835 dollars and 47 cents
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[Laughter]
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you serious and it's not just a tweet
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just last month a single jpeg sold
[43]
469 million dollars oh my god the nba is
[47]
selling little moments of basketball
[49]
games for hundreds of thousands of
[51]
dollars this is all sorts of digital
[54]
things that people are purchasing a
[56]
version of them for lots of money
[59]
there are three simple letters that you
[62]
need to understand to understand what's
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going on here those letters are nft
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until the latest trend is sweeping the
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internet what exactly is an nft so
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called nft y'all in the chat understand
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what an nft is like does that stand for
[76]
not safe for work what is this what does
[78]
this mean why would you pay for an nft
[80]
when you can look at it for free is this
[82]
a gigantic bubble just waiting to burst
[84]
i believe in this space with my whole
[86]
heart i'm just fascinated by it all of
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it this story is much bigger than a six
[91]
hundred thousand dollar cat gif
[94]
or a three million dollar tweet
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it's a story about human psychology and
[99]
how the way we value things is shifting
[101]
because of technology
[104]
a technology that some people think may
[106]
revolutionize our society while at the
[109]
same time accelerating the climate
[111]
disaster it's really nuts it's all of
[114]
these things together and i want to
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explain it to you so let's do this
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[Music]
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officially insane lebron james
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nft
[131]
stands for non-fungible token
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okay there it is that's the explanation
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non-fungible token makes sense right so
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the video's over now
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no one of my issues with this topic is
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that people throw around things like
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blockchain crypto art
[147]
ledger nft and they just expect me to
[150]
understand what they're talking about
[151]
and i didn't
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okay i'm going to talk about a tesla for
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a second customized by unplugged
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performance to be the most unique and
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high quality tesla there is oh and it's
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not just a tesla it's also 20 000
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you can enter for a chance to win the
[169]
tesla and 20 000 by going to omaze.com
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johnny harris when you donate 10
[177]
or more your donation goes to support
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two non-profits 501c3 is the first one
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they are an organization that seeks to
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mobilize the next generation to fight
[187]
climate change by creating a global
[189]
community that embraces low carbon
[191]
culture
[192]
the other one is called give power which
[194]
seeks to give clean drinkable water to
[197]
the 2.2 billion people around the world
[200]
who do not have safe access to clean
[202]
water the nonprofit uses its deep solar
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expertise
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to power and provide clean water food
[208]
security and light to regions around the
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world so to potentially win a tesla and
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twenty thousand dollars and to support
[216]
these organizations go to omaze.com
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johnny harris to find out more so
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fungible let's talk about the word
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fungible it's this very specific word
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that economists use it has a very
[227]
precise definition
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i want to use a different word for
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fungible for a second let's just use the
[232]
word replaceable non-fungible means
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non-replaceable you can't replace it
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there's only one of them it's unique
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non-fungible let me give you an example
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of something i feel very strongly about
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let's say you want to buy
[249]
an orange jacket
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this is really absurd i've actually
[255]
never counted these before um
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stop it
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get some help you want to buy an orange
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jacket from uniqlo you go on the
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internet and a jacket costs 39
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if you purchase one of these jackets for
[268]
39
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you don't care what specific jacket they
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send to you they're going to make
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thousands of jackets in your size send
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them to stores send them to people and
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they will send one to you you don't care
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which one it is the jacket is fungible
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it's replaceable as long as you get one
[284]
that's identical to the rest it's worth
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the same to you they're interchangeable
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however let's talk about one uniqlo
[291]
orange jacket that has been with me for
[294]
a very long time
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[Music]
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this is the original and for those who
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don't know i sort of have a strange
[302]
attachment to this jacket i just love it
[304]
i love the color i like feel like an
[306]
identity with this thing and it's sort
[308]
of starting to disintegrate but i love
[310]
it and i kind of fell in love this
[312]
jacket
[313]
is not replaceable if i went onto the
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website and paid 39 for a uniqlo orange
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jacket that was this exact same model
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it would not be this jacket this jacket
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is non-fungible it is the only one on
[326]
the planet that exists it has emotional
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value it has significance it is a
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very valuable thing because it is scarce
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there's only one of them it's valuable
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to me at least and i kind of fell in
[337]
love okay we can put these down for a
[340]
second
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everything in our economy is one or the
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other fungible or non-fungible a sack of
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rice is fungible you just want a sack of
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rice you don't care which one it is the
[350]
mona lisa non-fungible there's only one
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unsurprisingly non-fungible things are
[355]
way more valuable than fungible things
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so that's the nf in nft non-fungible
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now let's talk about the t which is
[363]
token this is a very internety word
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and to explain this i have to explain
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something i have avoided explaining for
[371]
a very long time
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the blockchain
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luckily there's a way to understand this
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and i'm going to make it as painless as
[380]
possible
[381]
let's say i want to buy three slices of
[384]
pizza from my friend anna she charges me
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six dollars for these three slices i
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don't use cash anymore so i pull out my
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debit card my bank card and i swipe on
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her little terminal
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as soon as i swipe this card a message
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is sent to my bank and it says hey
[399]
johnny who has an account at your bank
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wants to spend six dollars on pizza and
[404]
that money needs to go to anna's bank
[406]
this is like the bread and butter of
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what a bank does all day they document
[410]
every transaction that comes in from all
[412]
their customers they send out money to
[414]
the other banks and at the end of the
[416]
day they have a tally of
[418]
all the money that went out of your
[420]
account and into your account and they
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can give you a number they can say based
[423]
on all of these transactions you have
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fifty dollars in your bank account and
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so when that request comes in as i swipe
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my card my bank is like okay so based on
[432]
all of your transactions you have 50 in
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your account i can send six dollars to
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anna's bank approved and they approve
[438]
the transaction once that money comes
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into anna's bank anna's bank is doing
[443]
the same thing they're like oh cool she
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had 80 and now she has 86 and they add
[447]
it to her record
[448]
more and more your money is just a
[451]
number on a screen it's the result of a
[453]
bunch of
[454]
transactions
[456]
you don't barter with physical things
[458]
and you don't use cash as much
[460]
so the bank keeping meticulous records
[463]
of every transaction becomes really
[465]
important we trust the bank to do this
[468]
correctly
[469]
so thank you banks banks and other
[471]
middlemen have been keeping stuff like
[473]
this running smoothly for centuries
[476]
i mean
[476]
kind of absolutely the nasdaq everything
[479]
and more has been the worst day on wall
[481]
street what in the world is happening on
[482]
wall street there have been a few bumps
[484]
in the road with the rise of the
[485]
internet people started to wonder is
[487]
there a way that we could do this same
[489]
thing coordinate this transaction of
[491]
transfer of money between two people
[493]
without the bank
[495]
the result is a very clever concept
[498]
called the blockchain
[501]
the blockchain fulfills the same thing
[503]
the bank was doing but instead of doing
[505]
this privately on my bank account and
[507]
talking to anna's bank all of the
[509]
transactions are actually recorded
[511]
publicly on the internet
[513]
[Music]
[516]
so let's redo this example in a crypto
[518]
world
[519]
anna charges me six crypto coins for my
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three slices of pizza i go to swipe my
[524]
proverbial bank card to say yes i want
[527]
to pay you six points instead of the
[529]
bank seeing that request for a
[531]
transaction
[532]
and trying to validate it it goes on to
[535]
this public record where a bunch of
[537]
people's computers all around the world
[539]
are keeping track of every single
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transaction of everyone always
[544]
if i don't indeed have the six coins in
[547]
my account to pay anna
[549]
all of the people's computers who are
[550]
keeping track of every single
[552]
transaction will notice that there's a
[554]
discrepancy they'll be like whoa whoa
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dude you don't have six coins we're
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looking at every transaction ever and
[560]
you don't have six coins your
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transaction is rejected if i do have six
[565]
coins all of the computers looking at
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the public record will see that request
[570]
for a transaction and they'll be like
[571]
yep approved you have six coins and now
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anna has six coins and they'll write
[576]
that transaction into the public record
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now anna having those six extra coins is
[581]
now
[582]
the business of everybody everybody now
[583]
knows that the point here is that the
[586]
group verifies the legitimacy of every
[588]
transaction by keeping an eye on every
[590]
transaction to make sure that it adds up
[592]
okay i'm getting hot at this point so
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i'm taking off my orange jacket
[596]
okay
[597]
so you're wondering what does the
[599]
blockchain and this public record have
[601]
anything to do with cat gifts that sell
[604]
for six hundred thousand dollars
[608]
well i'm about to tell you so in my
[610]
pizza example we talked about blockchain
[612]
as a way to verify
[613]
currency transaction i pay you this much
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you pay me this much and everybody knows
[618]
how much everybody has because it's all
[620]
public
[620]
but this is where it starts to bend my
[622]
mind a little bit what if we apply this
[624]
to something that isn't
[625]
money or currency
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let's say one day you're just looking at
[628]
the ledger and the ledger's like johnny
[630]
wants to give anna six coins okay he's
[634]
got six coins approved and then a
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transaction comes up that's like a
[637]
malaysian businessman wants to give
[639]
three million dollars worth of coins to
[642]
jack dorsey in exchange for
[644]
a little token or digital certificate
[647]
that says that the tweet is now somehow
[650]
owned by the malaysian businessman
[652]
the only thing that the blockchain cares
[654]
about
[656]
is does the malaysian businessman have
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three million dollars worth of coins
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and so a bunch of computers all around
[662]
the world look at the whole entire list
[663]
of transactions and say like yeah this
[666]
guy has more than three million dollars
[668]
worth of coins approved they approve the
[671]
transaction and now it is written in a
[673]
public record that is unalterable
[677]
that says that this malaysian
[678]
businessman
[679]
owns this tweet the token has been
[682]
transferred to somebody new non-fungible
[685]
token nft
[687]
and if there's anything that gets human
[689]
psychology to value something
[691]
it's if an entire group validates that
[694]
it's real and that there's only one of
[696]
them there are tens of thousands of nfts
[699]
of all kinds
[700]
some music is being given tokens
[704]
lots of art is being minted as tokens
[707]
and being bought and sold and then of
[709]
course there's uh nba top shot who's
[711]
taking advantage of this these highlight
[713]
moments these top shot moments from your
[715]
favorite nba players have been turned
[717]
into non-fungible tokens jesse made
[720]
headlines the other day when he paid 208
[724]
000 dollars for lebron james top shot
[726]
it's the weirdest thing
[728]
as soon as humans have enough abundance
[731]
and have their basic needs met food
[733]
shelter warmth etc the next frontier is
[736]
to create value in things that have no
[739]
inherent value
[741]
the value turns into
[743]
psychological
[744]
hype excitement around a certain thing
[747]
we've been doing that forever i mean
[748]
that's the whole art industry is based
[750]
on the idea of a bunch of people
[752]
deciding that this painting this little
[754]
bit of canvas and wood and paint is
[757]
valuable and thus it is valuable
[762]
the only difference about now is we now
[763]
have the technology to do this in a
[766]
non-physical way
[768]
using this very sophisticated internet
[770]
technology that is maturing very quickly
[773]
okay so this is a lot of hype and i know
[775]
you're probably thinking like cool
[777]
there's a bunch of rich people online
[779]
buying and trading digital art and
[781]
there's millions of dollars worth of
[782]
cards i thought you said that this was
[784]
going to have the potential to change
[786]
the world and i'm getting there but
[788]
first i need to talk about the crazy
[790]
flip side to the nft fad the reality is
[793]
that the technology that is the backbone
[796]
for all of this the blockchain stuff
[798]
that we've been talking about relies on
[800]
the public ledger thing that i talked
[802]
about like that is the sort of heart and
[803]
soul conceptually but mechanically like
[806]
physically what it relies on is
[808]
computers doing a bunch of little
[810]
calculations all day and night
[813]
forever
[815]
these computers aren't real computers
[817]
they don't have any memory or screens or
[818]
anything they all they do
[820]
is just make little micro calculations
[823]
all day all night
[825]
most nfts are stored on a blockchain
[828]
called ethereum
[830]
and as of now in early april 2021 when
[833]
i'm filming this
[834]
the ethereum blockchain is using
[837]
33 terawatt hours of electricity and
[840]
you're like what's a terawatt hour of
[841]
electricity that's the same amount of
[843]
power as the country of serbia a
[846]
reminder that generating electricity
[848]
usually comes from power plants that are
[850]
burning fossil fuels that are putting
[851]
carbon into the atmosphere which is a
[854]
big freaking problem a man-made disaster
[857]
on a global scale
[860]
the power consumption of the ethereum
[861]
blockchain is exploding it is just it
[864]
quadrupled in like eight months and it
[866]
is showing no sign of slowing down
[869]
it is a lot of energy and to think that
[871]
that much energy is not being used to
[873]
like
[874]
move people around or produce things
[876]
it's used to like crunch numbers in a
[878]
weird computer warehouse somewhere so
[880]
that somebody can buy a fake token of a
[884]
thing that we only oh man i just i can't
[887]
it's just it's mind-blowing it's such an
[888]
ironic
[890]
moment where it's like this is all
[891]
digital it's all fake it's not real but
[894]
it's having deeply real world effects
[898]
ouch
[900]
i just want to finish this video now
[902]
talking about what this might mean for
[905]
our world going forward
[907]
this is definitely hype and that's the
[909]
whole point i mean
[910]
these speculation markets are all about
[912]
hype we see this all the time with new
[915]
technologies and new things that people
[917]
get excited about and they swarm it with
[919]
their investments and the price goes up
[922]
and then
[923]
something happens for example come on
[925]
uncle phil this is the 90s man
[928]
what's a web page something ducks walk
[931]
on
[934]
equal value so cash in on today's new
[936]
account and it's the 90s it's hammer
[938]
time in the 90s the internet was taking
[940]
off and people were just realizing that
[942]
you could like make money on the
[943]
internet you could like make big
[945]
businesses on the internet the stock
[946]
market was surging 400 in five years
[950]
mainly fueled by so much hype and
[952]
excitement around
[954]
these new internet companies make the
[956]
record as america's longest boom the new
[958]
economy is it a boom without end this
[960]
rise peaked in march of 2000 and then
[964]
the bubble burst and
[966]
a lot of these companies either went
[967]
under or completely lost all of this
[970]
excitement valuation that they had sort
[971]
of it was down some but
[974]
did that mean that the internet went
[975]
away did that mean that internet
[977]
businesses
[978]
didn't come back
[979]
no companies went on to reshape our
[982]
world right now i think we are probably
[985]
in that stage of nfts it's hype it's
[988]
novel it's exciting but what it's doing
[990]
is it's pushing our minds to think
[993]
differently about how we validate and
[995]
verify things if i buy a house there is
[998]
a whole thick stack of paperwork and a
[1000]
bunch of middlemen to make sure that it
[1002]
is very clear who owns the house and how
[1005]
that money gets transferred from one
[1006]
person to another it is like a nightmare
[1008]
of an experience if suddenly technology
[1010]
existed that took away the centralized
[1013]
middleman and made transactions between
[1015]
people able to be authenticated
[1017]
verifiable
[1019]
and much smoother
[1020]
that could change our world i'm not here
[1022]
to say if the bubble's gonna burst or
[1024]
whatever i don't know
[1025]
i just know that this is a crazy moment
[1027]
where we're getting our heads around a
[1029]
new technology and what it means and
[1030]
eventually we'll adapt this won't be
[1032]
crazy this won't be novel anymore prices
[1034]
will go down
[1036]
but the technology that allowed it all
[1038]
to happen
[1039]
will probably stick around
[1045]
[Music]
[1060]
you
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