Video Of The Week: Dieter Shirley and Non Fungible Tokens

Non Fungible Tokens (or NFTs) are one of the most interesting things to emerge in the blockchain sector in the last year. Dieter Shirley came up with the ERC721 spec and the name and I talked to him about both and a lot more on stage at Token Summit last week.

If it seems like I am shouting every time I talk into the mic, I was. It was very loud in the room and I wanted to make sure people heard us. The video is about 30mins long and we covered a number of interesting topics.

#blockchain#crypto#digital collectibles#non fungible tokens

Comments (Archived):

  1. William Mougayar

    It was a good discussion. I liked “building experiences on top of experiences”. And importantly, CryptoKitties has inspired so many other projects in that sector. As a leader, everybody wants to copy them.

  2. kenberger

    Yes, good discussion (i was there too).Do I remember this being the one where it was asked if there might be a better name than “NFT” ? This blog is a place where we do that. Maybe I’ll go first:Uniquoins (unique coins)??

    1. kidmercury

      I feel like one offline equivalent is a certificate of authenticity….perhaps a name that helps people understand the analogy

    2. Vendita Auto

      Needs to be short & dot com is “perfect” ?

    3. fredwilson

      Let’s do a freemium!But the truth is I like collectibles or ecollectibes or digital collectibles

      1. kenberger

        “Freemium” is exactly the inspiration!Collectibles, which to my mind sounds like art, memorabilia and novelties (all of which are still indeed assets), feels a bit restrictive, if 721 takes off like we both think it will. “Assets” seems the only always-accurate term. For example: the asset could be something like an insurance record or Export certificate (maybe more boring than a “collectible”)– and maybe that use case for this becomes much bigger than “collectibles”. But I’m not sure e-assets sounds super sexy.This is what the folks are doing who I sent over to pitch you when you were being mobbed at Token Summit last week (Codex Protocol, I’ve been helping a bit). They have a good vision and traction for championing NFT.

        1. Jess Houlgrave

          I like digital collectibles for digitally native – I.e. where the NFT is a collectible itself. Where NFTs are used as representations of real world assets (part of what we’re doing at Codex) we think of them more as IDs or Records. I suspect there will be a huge variety of NFTs and the nomenclature will have to evolve to differentiate.

    4. Kirsten Lambertsen

      Permatoken :-DPersistokenDuratokenImmutokenPerpetokenEternitoken (ok, that’s just cheezy)

      1. kenberger

        that’s the spirit !!

      2. jason wright

        you say per mato, i say per ma to.

    5. jason wright

      Dreamium.Or, Periodic Table. Solid. 119 Di (Dieterium).

    6. David Semeria

      Uniquoins is pretty cool, well played.But hard to spell. Unicoins?

      1. kenberger

        maybe. but then the emphasis is off the unique part, and implies a “one” or united thing.this is a tough one.

  3. awaldstein

    Enjoyed this Fred.

  4. David Noble

    We have a nonfungible token that does something different. I agree with Ken (as usual) that NFT is an unhelpful nomenclature, but it should be readily apparent as to what we mean.This had me reflecting about the NFT that represent real items in today’s world (our case firearms) would be capable of incorporating into other experiences. So it isnt just limited to art. It could be my automobile collection is incorporated into a racing experience. Or my collection of toy trains could be tokenized and used in a train experience…then I could sell and trade my actual trains by transfering the token and the train.

    1. kenberger

      thanks David, and back atcha– we’ve hung out, and you definitely have a real-world practical grasp of Uniqoins !!

  5. sigmaalgebra

    Fred, starting right at the beginning and throughout, you asked good questions about the fundamentals of “crypto”. And major themes were (A) what the heck is useful to lots of people that can be done only with crypto, (B) what are some of the basic properties of crypto, e.g., extensible, that could be important for new applications where crypto is an example of the long, widely coveted, necessary “platform”.The whole 30 minutes looked a lot like other discussions of the considerations of research for some new technology, discussions I’ve seen before. From many such discussions, I’ve developed an experienced based, intuitive heuristic: Beware the solution still looking for a problem.The shelves of the research libraries in, what is really appropriate here, pure and applied math, are packed floor to ceiling and wall to wall with highly ingenious, rock solidly correct, often with astounding properties, solutions mostly still looking for problems.As I had to accept early in my career, a famous recipe for rabbit stew starts out “First catch a rabbit.”. Well, a recipe for applied math and much of technology needs to start out “First get an application.”.IIRC there was a TV ad that went something likeConsumer: Does your cereal have fiber?Vendor: Yes, lots of fiber. Consumer: Is fiber good? I believe I’ve seen some articles on fiber.Vendor: Yes, lots of articles.Well, is distributed good?Uh, to come up with (A) some new technology and (B) a valuable application for it, it is really not necessary to stumble around in the dark chasing mostly phantoms looking for pairs of (A) and (B). While generally the search for such a pair is not easy, the work is not chasing phantoms.

    1. LE

      and much of technology needs to start out “First get an application.”.Much but not all. There are many examples of this. I’ll use the simplest example. Airbnb was an idea that started with something of nominal practicality and market (people who needed to crash and would do so on an air mattress) and developed into something that now rivals or surpasses in an area they weren’t even targeting. So the blow up mattresses (in my parlance) is ‘the thing that led to the thing’.And there is one other factor at work. When the peanut gallery reads about what is going on (in news articles, blog posts or even the WSJ) they are not privy to what the investor knows. For example look at what Coinbase has rolled out and where it is headed. That may have been known to Fred quite some time ago (impossible to believe it wasn’t actually) but not to anyone else other than insiders or investors. Not to us. So we are making judgements (about market) w/o full information. We are trying the idea in the press not in the courtroom. So ideas and the path that people take can simply be a placeholder for something else. [1] And as anyone who works directly with companies (I do as do others who comment here) there is always confidential things going on behind the scenes. Obviously. (I don’t even tell my wife things I am working on personally for myself until they are literally done, much less anyone else ‘loose lips sink ships’.)[1] I will roll out the example again of a developer that I helped years ago with a proposal to build a casino. The casino was called ‘Carnival Club’. The developer did large housing in a metro area and was successful. But he wanted in on Casinos. However there were also many people doing the same. When we were doing the proposal I said to him something like ‘you don’t really plan to actually develop a Casino where parents can bring kids? It’s just a placeholder so you can get financing and build a traditional casino, right?” And he said ‘yep exactly. No way I can raise funds as ‘me to’ I need to (essentially) fool investors into something that gives them a reason to invest.

      1. sigmaalgebra

        For AirBnB, for as much as I know about it, they had (B) the “application” right at the beginning: Put a computer based reservation and recommendation system on top of traditional home-based “bed and breakfast”, maybe even with just air mattresses, likely be close to violating a lot of local laws, and, thus, enormously undercut the prices of Hilton, Holiday Inn, …, Motel 6. For the technology, it was essentially all just routine. So, AirBnB is an example of being successful in business but not really an example of being successful from finding a good pair of (A) new technology and (B) an application of it.A pair of (A) and (B) is not nearly the only way to make bucks, even big ones, in business; sometimes don’t need (A) and have just (B).But blockchain and its cryptography, tokens, etc. are new technology, say, in part a new approach to distributed, fault tolerant, database commit. Okay, that’s a case of (A), new technology. Here’s a hearty handshake award: That new technology and a dime might, on a lucky day, cover a 10 cent cup of coffee. Again, the research libraries are awash in new technology, often just amazing stuff, that so far has no application outside of research itself.Sure, for business success, sometimes a good pair of (A) and (B) is a good way to proceed. E.g., long work in the (A) technology of electrostatics, some properties of selenium, and a lot of relatively routine electro-mechanical work had a terrific (B) application, was a great way to solve a big problem, how to copy a document, and led to a big success, Xerox. For their barrier to entry they had patents and maybe quite a lot in trade secrets, e.g., for how to make their toner and light sensitive drum.Okay, (A) the technology of digital computers. Now, what the heck to do with it? For (B), first, scientific and engineering calculations heavily for US national security. Next, routine business record keeping. Next document preparation. … Nearly all the world’s content, libraries and more, instantly at the fingertips of nearly everyone in the more developed countries, special effects for movies, virtual reality, etc.For the more recent applications, need a lot of really cheap computing. Okay, have the (A) technology of microelectronic lithography for (B) the manufacture of microprocessors, e.g., the one I’m working with, the AMD FX-8350, 8 cores, 64 bit addressing, 4.0 GHz clock, from Amazon, quantity 1, $115. E.g., once I programmed in PL/I a “super-computer”, cost millions, one core, 60 ns cycle time. Well, in cycle time the AMD part is 240 times faster. With the eight cores, is 1920 times faster. Price per computation, millions of times cheaper.

  6. Frank W. Miller

    So this is what investing in the Internet has devolved to in 2018? Instead of providing a complex communications infrastructure that can be used to enhance productivity in real-world things like manufacturing or finance or whatever, the best we can do is to create some completely contrived set of bits spread around randomly in various machine called a crytpokitty that you can build games around? Wow, there really must not be much interesting to invest in these days…

    1. kenberger

      they laughed at Columbus too. (Or was it Edison?)

      1. Frank W. Miller

        So you’re comparing cryptokitties to sailing across an ocean and discovering a new continent or the development of the light bulb, electrical distribution, x-rays, and motion pictures. Thanks for proving my point.

        1. kenberger

          and curing cancer, too…i totally respect your point, it is well thought-out and reasoned. but it’s also my opinion (and certainly that of some others here, including probably this blog’s host) that there are some very serious potential benefits somewhere in here over long-term, even if they are currently tough to see when obfuscated by something with “kitties”.my difficulty in ability to cogently explain this resulted in my half-joking prior comment. but i do feel it’s even less than half-joking.

    2. sigmaalgebra

      Generally I agree with you on this point. To explain:First, at times starting with toy problems is an okay first step.Second, on yourthere really must not be much interesting to invest in these days…The investment community is stuck in the past, with feet locked two feet down in reinforced concrete. A lot of what they want to look at is from traditional accounting. What the investors would be happy with would be funding, say, some new rolling stock for a train line between, say, Pittsburgh and Cleveland. So, that rolling stock is a asset, real, tangible, useful, with financial value, to be deployed presumably where there is plenty of market demand. The accountants could evaluate the prospectus, give reports to the BoDs on the progress, have milestones, etc. That system had some efficacy.It’s still the case that maybe there are some opportunities to invest in, say, an equipment leasing company. Accountants could evaluate that. If the numbers worked, then some capital — equity, bonds, loans, whatever — likely could be found.For a while up to 2008, a lot of accountants thought that their numbers said that private label collateralized mortgage obligations (CMOs) looked good. Of course, the usual accounting rules didn’t have enough of the accountants actually looking in detail, e.g., in person, on the ground, at the individual loans in the CMOs.VCs have to invest mostly OPM — other people’s money. So, mostly the VCs raise the money from some very traditional, conservative sources, e.g., state employee pension funds, university endowments, etc. Those sources no doubt depend on traditional accountants, maybe some actuaries playing with death tables, and invest only a tiny fraction of their assets as “alternative assets”, e.g., VC.So the funding sources are stuck in the past.Then look at the VCs: Only a tiny fraction are very technical. So they can’t evaluate the technology of projects, and the “limited partner” (LP) funding sources wouldn’t want much dependence on such evaluations anyway.So, with these constraints on the VCs from their low expertise in leading edge (i.e., where the valuable stuff will be) technology and the LPs, surethere really must not be much interesting to invest in these days…But of course, if just set aside the VC/LP situation, this claim is nonsense: There’s a lot “interesting to invest in these days”, likely not by the VCs but by some players. E.g., there’s the pharmaceutical industry and their investments in new drugs — $100 million and $100 million there and it begins to add up to real money. Intel is going for 10 nm, and that takes big bucks. TSMC is going for 7 nm? For some internet of things (IoT) infrastructure, Intel is putting some field programmable gate arrays (FPGAs) on their chips close to their processors — likely that takes investment.I suspect that currently there’s a lot of “investment” by the US DoD in high end technology projects.In US research universities, there’s lots of investment in technology projects, especially in the STEM fields and bio-medical, with a lot of funding from the NSF and NIH.But here is a big gap in the system: Suppose a good student gets a good Ph.D. in a STEM field and based on their Ph.D. work has some ideas for some (A) powerful new technology with (B) some valuable, real world, business, the money making kind, application to solve a pressing problem in a large market. This student gets lists of VCs, private equity investors, etc. and sends them descriptions of the proposed project. Results: Silence, laughs, contempt, etc. No way. Not a chance. Even if their Ph.D. research was funded by the NSF, was approved by a high end committee at their research university, etc. Nothing, but nothing, not even zip, zilch, zero, will get investors interested at all in any such project. No chance, nichts, nil, nada. Won’t happen. Basically investors won’t read business plans for projects that involve research. Nearly no investors have the interest, qualifications, or freedom to make such an investment.So, for research, progress, and investment returns, this is a sad story. But, of course, with irony, the “flip side” is an opportunity: Whatever the Ph.D. wants to do with their research in business, they will have essentially no competition at all. And just sitting there is rapidly flowing oceans of cheap computing and the gigantic Internet with neither at all well exploited. So, there are some opportunities. That the existing investment community won’t touch such projects is part of the opportunity.So, net, there are things “interesting to invest in these days”, but the investment community won’t invest in them.So how can the investment community get by with their feet so deep in 100 year old concrete? Well, that’s just the way the LP, private equity (PE), VC communities grew up. There are some strong forces to keep those communities “conservative”, and the communities don’t have much interest or ability to do better. So, those communities are on average making some money and, thus, mostly stay in business and don’t change. Best I can tell, that’s the situation.

  7. jason wright

    NFTs are a technical innovation, but i sense that the power of cultural orthodoxy will be very difficult to overcome here (never underestimate the power of culture). digital collectibles, the capture for all time of a collection of electrons, faces an uphill (a mountain) battle to gain acceptance.NFTs may work as a novelty for those who have so much wealth that they don’t know what else to do with it, but to the rest of humanity it will be a hard sell.Airbnb.

    1. Lawrence Brass

      Your bank account balance is made up of electrons’ magnetic moments ordered in some way, somewhere. Logically weaker than NFTs in fact.People love electrons! πŸ™‚

      1. jason wright

        i will buy an NFT unit of Dreamium or 119 Di (see above) and go shopping at the supermarket. i may starve πŸ™‚

  8. jason wright

    18:50 – how they wish that it were so πŸ˜‰

  9. joewaltman

    Great talk….thanks for sharing.I was hoping that you would ask a follow-up question about Dieter’s awareness of potential applications that aren’t carbon copies of cryptokitties. Do you know of any examples?I am only aware of Ethergoo or Etherroll….but neither of them are technically NFTs.

  10. Tom Labus

    Dieter is a great explainer. You can follow his logic without heavy duty knowledge of the space. Not easy to do.

  11. cavepainting

    Great discussion and questions. I was there and enjoyed it very much.