On October 29th 1929, the New York Stock Exchange crashed, stock prices decreased by 25 percent and the market lost $14 Billion. In what would be forever known as Black Tuesday, panicked investment brokers who crowded the New York Stock Exchange floor kept shouting “Sell! Sell” so loudly that nobody could hear the ringing of the bell. Frantic investors from across the country tried to reach their brokers but most couldn’t get through and so they tried to send telegrams. Western Union noted a triple of volume that day.
Black Tuesday kicked off what would become a decade of depression that would see many people lose their jobs, go broke, and even commit suicide. It was the most prolonged and most impactful economic depression of the 20th century.
We have gone through several economic depressions since then. Most notable is the banking crisis of 2008, and the COVID pandemic. But each time the economy recovered much quicker. So what was different about the ‘Great’ Depression? Part of the problem was the U.S. government, in charge of the biggest economy in the world, couldn’t increase the supply of money without increasing its gold reserves. The U.S. dollar was tied to the gold standard.
In theory, the gold standard works because it holds governments accountable for overspending and keeping inflation in check. However, according to most economists, in times when there is a severe downturn in the economy, the best practice is to borrow more money while keeping interest rates low which stimulates economic activity.
President Franklin D Roosevelt recognized the limits of the gold standard and began to move the country away from the practice, creating a fiat money system, meaning the dollar’s value was not tied to any specific asset. This allowed the government much more flexibility to control the economy.
For someone who grew up with the dollar tied to the price of gold, it can be difficult to grasp the concept of fiat money, a currency that is only backed up by the goodwill of the government. However, now we just accept that money has value and we can trade it for goods and services without hesitation.
How NFTs Are Changing the Way We do Business
Like a fiat currency, people can have a difficult time imagining the worth of NFTs or their possibilities. Buying and trading something digital – something that is just a bunch of ones and zeros – is really no different than buying and trading a government’s goodwill. When the pandemic upended our way of life, more people realized how the value of money is just made up by governments.
This realization, lockdowns, in addition to more institutional investors buying bitcoins, and the rise of decentralized finance earlier in 2020, might have created the perfect storm that sent cryptocurrencies prices soaring.
With newfound wealth, those who invested in crypto turned into digital collectibles and helped fuel the rapid rise of the NFT market leading the transformation of several industries.
Digital Marketing
It is so difficult to reach an audience these days. Luckily with so much recent interest in NFTs, they can be used to tell a brand story in new and interesting ways. Creating and selling NFTs is a clever way to generate a lot of buzz both on social media and through more traditional media outlets.
When you think about innovative brands Taco Bell is probably not among them. However, Taco Bell has created a taco-themed NFT GIF to support one of their scholarships. Within 30 minutes of putting their 25 NFTs up for sale, they were sold out. This not only has raised money for their scholarship but also awareness.
Gaming
The global gaming industry is worth over $152 billion. It’s safe to say people are spending a considerable amount of money on games. Back in the early days of gaming, you just had to buy the console and the game. However, games have become much more interactive with a focus on world-building. Gamers can now buy digital assets – such as weapons, armour, transportation and so forth – that will help them defeat their opponents.
Part of the reason why NFTs are such a natural fit for the gaming industry is that gamers are used to owning something digital. Currently, one significant problem is that, although you may own the assets within the game, you are at the whims of the game creators themselves. If the developers shut down, stop updating or significantly change the game, the digital assets become essentially worthless. Not so with NFTs. Owning gaming NFTs allows gamers to open up the market and gives them more control over their property.
Insurance
Insurance is one of the oldest industries in the world, stretching back thousands of years. While at the moment there are no NFTs insurance policies, it’s possible that this industry will be shaken up by the NFT market. At first glance, it might seem strange, but what is insurance really but a digital agreement between two parties?
Your insurance is unique to you. It can be bought, traded, and transferred depending on life circumstances. An NFT gives everyone an added level of protection and security. It can also be used to designate what percentages are paid out and to whom.
Art
NFTs have made the most significant progress in the art world. Since early history, artists have struggled to find ways to make a living with their art. The Renaissance was probably the best period for artists as wealthy patrons would commission artists for pieces of work. However, it’s always been an industry where a few have become exceedingly wealthy while the rest make next to nothing. With NFTs, that might change as they can provide artists with an additional revenue stream.
Will NFTs Transform The World?
NFTs are still in the very early stages. They will probably affect the way you work, play, and ultimately live, we just don’t know how or when yet.
When we first got the internet, people predicted video conferencing. It took us 40 years and a global pandemic to get some decent video conferences going.
What no one predicted was the rise of Facebook, Twitter, Uber, Airbnb, Bitcoin and many other innovations that impacted almost every aspect of our lives.
Powered by blockchain technology, NFTs create opportunities for new businesses that didn’t exist before and hold much promise because it gives more power to the people.
NFTs have the power to liberate us from the chains of the current economic system that benefits only a few, so we are finally creating, sharing, engaging, and earning within our global communities of interest, across boundaries, with complete disregard to everything that separates us today.
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