now to the latest trend that's sweeping
the internet they're called nft they're
now selling for huge bucks 69 million
dollars so what's behind this latest
craze that is the question to ask okay
so there's some super strange stuff
happening online right now and i need to
tell you about it first look at this
tweet the first tweet ever tweeted in
the history of twitter the tweet was by
jack dorsey i'm one of the co-founders
of twitter and this tweet was somehow
just purchased for two million nine
hundred and fifteen thousand
835 dollars and 47 cents
[Laughter]
you serious and it's not just a tweet
just last month a single jpeg sold
469 million dollars oh my god the nba is
selling little moments of basketball
games for hundreds of thousands of
dollars this is all sorts of digital
things that people are purchasing a
version of them for lots of money
there are three simple letters that you
need to understand to understand what's
going on here those letters are nft
until the latest trend is sweeping the
internet what exactly is an nft so
called nft y'all in the chat understand
what an nft is like does that stand for
not safe for work what is this what does
this mean why would you pay for an nft
when you can look at it for free is this
a gigantic bubble just waiting to burst
i believe in this space with my whole
heart i'm just fascinated by it all of
it this story is much bigger than a six
hundred thousand dollar cat gif
or a three million dollar tweet
it's a story about human psychology and
how the way we value things is shifting
because of technology
a technology that some people think may
revolutionize our society while at the
same time accelerating the climate
disaster it's really nuts it's all of
these things together and i want to
explain it to you so let's do this
[Music]
officially insane lebron james
nft
stands for non-fungible token
okay there it is that's the explanation
non-fungible token makes sense right so
the video's over now
no one of my issues with this topic is
that people throw around things like
blockchain crypto art
ledger nft and they just expect me to
understand what they're talking about
and i didn't
okay i'm going to talk about a tesla for
a second customized by unplugged
performance to be the most unique and
high quality tesla there is oh and it's
not just a tesla it's also 20 000
you can enter for a chance to win the
tesla and 20 000 by going to omaze.com
johnny harris when you donate 10
or more your donation goes to support
two non-profits 501c3 is the first one
they are an organization that seeks to
mobilize the next generation to fight
climate change by creating a global
community that embraces low carbon
culture
the other one is called give power which
seeks to give clean drinkable water to
the 2.2 billion people around the world
who do not have safe access to clean
water the nonprofit uses its deep solar
expertise
to power and provide clean water food
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world so to potentially win a tesla and
twenty thousand dollars and to support
these organizations go to omaze.com
johnny harris to find out more so
fungible let's talk about the word
fungible it's this very specific word
that economists use it has a very
precise definition
i want to use a different word for
fungible for a second let's just use the
word replaceable non-fungible means
non-replaceable you can't replace it
there's only one of them it's unique
non-fungible let me give you an example
of something i feel very strongly about
let's say you want to buy
an orange jacket
this is really absurd i've actually
never counted these before um
stop it
get some help you want to buy an orange
jacket from uniqlo you go on the
internet and a jacket costs 39
if you purchase one of these jackets for
39
you don't care what specific jacket they
send to you they're going to make
thousands of jackets in your size send
them to stores send them to people and
they will send one to you you don't care
which one it is the jacket is fungible
it's replaceable as long as you get one
that's identical to the rest it's worth
the same to you they're interchangeable
however let's talk about one uniqlo
orange jacket that has been with me for
a very long time
[Music]
this is the original and for those who
don't know i sort of have a strange
attachment to this jacket i just love it
i love the color i like feel like an
identity with this thing and it's sort
of starting to disintegrate but i love
it and i kind of fell in love this
jacket
is not replaceable if i went onto the
website and paid 39 for a uniqlo orange
jacket that was this exact same model
it would not be this jacket this jacket
is non-fungible it is the only one on
the planet that exists it has emotional
value it has significance it is a
very valuable thing because it is scarce
there's only one of them it's valuable
to me at least and i kind of fell in
love okay we can put these down for a
second
everything in our economy is one or the
other fungible or non-fungible a sack of
rice is fungible you just want a sack of
rice you don't care which one it is the
mona lisa non-fungible there's only one
unsurprisingly non-fungible things are
way more valuable than fungible things
so that's the nf in nft non-fungible
now let's talk about the t which is
token this is a very internety word
and to explain this i have to explain
something i have avoided explaining for
a very long time
the blockchain
luckily there's a way to understand this
and i'm going to make it as painless as
possible
let's say i want to buy three slices of
pizza from my friend anna she charges me
six dollars for these three slices i
don't use cash anymore so i pull out my
debit card my bank card and i swipe on
her little terminal
as soon as i swipe this card a message
is sent to my bank and it says hey
johnny who has an account at your bank
wants to spend six dollars on pizza and
that money needs to go to anna's bank
this is like the bread and butter of
what a bank does all day they document
every transaction that comes in from all
their customers they send out money to
the other banks and at the end of the
day they have a tally of
all the money that went out of your
account and into your account and they
can give you a number they can say based
on all of these transactions you have
fifty dollars in your bank account and
so when that request comes in as i swipe
my card my bank is like okay so based on
all of your transactions you have 50 in
your account i can send six dollars to
anna's bank approved and they approve
the transaction once that money comes
into anna's bank anna's bank is doing
the same thing they're like oh cool she
had 80 and now she has 86 and they add
it to her record
more and more your money is just a
number on a screen it's the result of a
bunch of
transactions
you don't barter with physical things
and you don't use cash as much
so the bank keeping meticulous records
of every transaction becomes really
important we trust the bank to do this
correctly
so thank you banks banks and other
middlemen have been keeping stuff like
this running smoothly for centuries
i mean
kind of absolutely the nasdaq everything
and more has been the worst day on wall
street what in the world is happening on
wall street there have been a few bumps
in the road with the rise of the
internet people started to wonder is
there a way that we could do this same
thing coordinate this transaction of
transfer of money between two people
without the bank
the result is a very clever concept
called the blockchain
the blockchain fulfills the same thing
the bank was doing but instead of doing
this privately on my bank account and
talking to anna's bank all of the
transactions are actually recorded
publicly on the internet
[Music]
so let's redo this example in a crypto
world
anna charges me six crypto coins for my
three slices of pizza i go to swipe my
proverbial bank card to say yes i want
to pay you six points instead of the
bank seeing that request for a
transaction
and trying to validate it it goes on to
this public record where a bunch of
people's computers all around the world
are keeping track of every single
transaction of everyone always
if i don't indeed have the six coins in
my account to pay anna
all of the people's computers who are
keeping track of every single
transaction will notice that there's a
discrepancy they'll be like whoa whoa
dude you don't have six coins we're
looking at every transaction ever and
you don't have six coins your
transaction is rejected if i do have six
coins all of the computers looking at
the public record will see that request
for a transaction and they'll be like
yep approved you have six coins and now
anna has six coins and they'll write
that transaction into the public record
now anna having those six extra coins is
now
the business of everybody everybody now
knows that the point here is that the
group verifies the legitimacy of every
transaction by keeping an eye on every
transaction to make sure that it adds up
okay i'm getting hot at this point so
i'm taking off my orange jacket
okay
so you're wondering what does the
blockchain and this public record have
anything to do with cat gifts that sell
for six hundred thousand dollars
well i'm about to tell you so in my
pizza example we talked about blockchain
as a way to verify
currency transaction i pay you this much
you pay me this much and everybody knows
how much everybody has because it's all
public
but this is where it starts to bend my
mind a little bit what if we apply this
to something that isn't
money or currency
let's say one day you're just looking at
the ledger and the ledger's like johnny
wants to give anna six coins okay he's
got six coins approved and then a
transaction comes up that's like a
malaysian businessman wants to give
three million dollars worth of coins to
jack dorsey in exchange for
a little token or digital certificate
that says that the tweet is now somehow
owned by the malaysian businessman
the only thing that the blockchain cares
about
is does the malaysian businessman have
three million dollars worth of coins
and so a bunch of computers all around
the world look at the whole entire list
of transactions and say like yeah this
guy has more than three million dollars
worth of coins approved they approve the
transaction and now it is written in a
public record that is unalterable
that says that this malaysian
businessman
owns this tweet the token has been
transferred to somebody new non-fungible
token nft
and if there's anything that gets human
psychology to value something
it's if an entire group validates that
it's real and that there's only one of
them there are tens of thousands of nfts
of all kinds
some music is being given tokens
lots of art is being minted as tokens
and being bought and sold and then of
course there's uh nba top shot who's
taking advantage of this these highlight
moments these top shot moments from your
favorite nba players have been turned
into non-fungible tokens jesse made
headlines the other day when he paid 208
000 dollars for lebron james top shot
it's the weirdest thing
as soon as humans have enough abundance
and have their basic needs met food
shelter warmth etc the next frontier is
to create value in things that have no
inherent value
the value turns into
psychological
hype excitement around a certain thing
we've been doing that forever i mean
that's the whole art industry is based
on the idea of a bunch of people
deciding that this painting this little
bit of canvas and wood and paint is
valuable and thus it is valuable
the only difference about now is we now
have the technology to do this in a
non-physical way
using this very sophisticated internet
technology that is maturing very quickly
okay so this is a lot of hype and i know
you're probably thinking like cool
there's a bunch of rich people online
buying and trading digital art and
there's millions of dollars worth of
cards i thought you said that this was
going to have the potential to change
the world and i'm getting there but
first i need to talk about the crazy
flip side to the nft fad the reality is
that the technology that is the backbone
for all of this the blockchain stuff
that we've been talking about relies on
the public ledger thing that i talked
about like that is the sort of heart and
soul conceptually but mechanically like
physically what it relies on is
computers doing a bunch of little
calculations all day and night
forever
these computers aren't real computers
they don't have any memory or screens or
anything they all they do
is just make little micro calculations
all day all night
most nfts are stored on a blockchain
called ethereum
and as of now in early april 2021 when
i'm filming this
the ethereum blockchain is using
33 terawatt hours of electricity and
you're like what's a terawatt hour of
electricity that's the same amount of
power as the country of serbia a
reminder that generating electricity
usually comes from power plants that are
burning fossil fuels that are putting
carbon into the atmosphere which is a
big freaking problem a man-made disaster
on a global scale
the power consumption of the ethereum
blockchain is exploding it is just it
quadrupled in like eight months and it
is showing no sign of slowing down
it is a lot of energy and to think that
that much energy is not being used to
like
move people around or produce things
it's used to like crunch numbers in a
weird computer warehouse somewhere so
that somebody can buy a fake token of a
thing that we only oh man i just i can't
it's just it's mind-blowing it's such an
ironic
moment where it's like this is all
digital it's all fake it's not real but
it's having deeply real world effects
ouch
i just want to finish this video now
talking about what this might mean for
our world going forward
this is definitely hype and that's the
whole point i mean
these speculation markets are all about
hype we see this all the time with new
technologies and new things that people
get excited about and they swarm it with
their investments and the price goes up
and then
something happens for example come on
uncle phil this is the 90s man
what's a web page something ducks walk
on
equal value so cash in on today's new
account and it's the 90s it's hammer
time in the 90s the internet was taking
off and people were just realizing that
you could like make money on the
internet you could like make big
businesses on the internet the stock
market was surging 400 in five years
mainly fueled by so much hype and
excitement around
these new internet companies make the
record as america's longest boom the new
economy is it a boom without end this
rise peaked in march of 2000 and then
the bubble burst and
a lot of these companies either went
under or completely lost all of this
excitement valuation that they had sort
of it was down some but
did that mean that the internet went
away did that mean that internet
businesses
didn't come back
no companies went on to reshape our
world right now i think we are probably
in that stage of nfts it's hype it's
novel it's exciting but what it's doing
is it's pushing our minds to think
differently about how we validate and
verify things if i buy a house there is
a whole thick stack of paperwork and a
bunch of middlemen to make sure that it
is very clear who owns the house and how
that money gets transferred from one
person to another it is like a nightmare
of an experience if suddenly technology
existed that took away the centralized
middleman and made transactions between
people able to be authenticated
verifiable
and much smoother
that could change our world i'm not here
to say if the bubble's gonna burst or
whatever i don't know
i just know that this is a crazy moment
where we're getting our heads around a
new technology and what it means and
eventually we'll adapt this won't be
crazy this won't be novel anymore prices
will go down
but the technology that allowed it all
to happen
will probably stick around
[Music]
you