Why people hate *that* diamond tweet
We all remember the tweet. Take an expensive diamond, break it and mint it as an NFT. This tweet (rightfully so) disgusts many people. Why? Well, because you are destroying a part of the value of a diamond. These gems, while a majority of their value comes from purely collecting, needs a root for that collectability. That comes from its history and provenance. How it was mined, the fact that naturally occurring rare diamonds are rare prized possessions. It’s intrinsic usage in jewelery.
Existing value cannot be transferred so easily. By altering the initial components of the asset, you are altering its value proposition. You can’t wear an NFT diamond. You can explain it to the people who understand diamonds in their physical form and it’s likely they will spit on you / demand a duel depending on their age range. The people that perceive it’s value in the first place would think it’s a grotesque action to perform, and would not understand why this NFT thing would have any value.
Collectibles have demand that stems from collectors. How can you expect your collectible to be liked if you’re going against the core values of the collectors? Taking millennia of history and going “hey, we disagree with everything you believe in, but here’s a new shiny”
Does this mean I think NFTs as collectibles are doomed? Not really. Having a blockchain be the native home for collectibles makes infinite sense, much like having a blockchain be the native home for digital gold. Yet, bitcoin didn’t come about by tokenising gold. Instead it took an army of cyberphunks years to create something entirely new. Bitcoin wasn’t initially targetting gold investors. It was targetting cyberphunks. And well, throughout it’s journey it grew and grew to the behemoth it is today.
Collectibles should be treated in the same way. Instead of trying to morph something that already exists, creating a frankensteinen abomination that angers the very audience you intended to target, the collectible needs to be born with its core value base rooted in the ecosystem within which it resides. A collectible born out of crypto can (and should) have crypto at it’s root. This tension between physical and digital collectibles is at the heart of what we’re building at loomlock, an ecosystem where while the digital is the source of truth, the physical is the experience layer that lets you feel and touch something you value dearly.
For loomlock, our collectibles have physical representations. The locks NFTs come with physical locks. However, the physical isn’t the collectible. Lose the lock, have it destroyed, throw it into a blender. For existing collectibles, this would spell doom. Meaning you have an army of people with collectibles locked away in vaults and safety deposits boxes. Yet, for loomlock, it just means you have to pay a fee to reissue the physical. This is what we mean by truly phygital. The ownership of the asset is recorded on the blockchain, and for aslong as loomlock as a company is functional, your ownership of that NFT is respected. Probably afterwards also. Aslong as ethereum is pushing new blocks.
The physical is merely a representative of the digital, a product you can use and enjoy and appreciate in day to day. Bitcoin is digital gold. Loomlock is digital gems.
Well, what happens if someone steals my loomlock? They manage to steal a physical object that has no value in our ecosystem. Most luxury goods can be reproduced to an almost exact level of perfection. Luxury watches are the last bastion of defence for this, however anything below the $200k belt line is already falling behind. This isn’t a problem that’s going to go away. As production tech increases dramatically, reproductions and fakes are getting drastically better. in the case of stolen goods, Is there any material difference between them and reproduced good? Well, for that you’d have to ask the collectors. They ultimately dictate what they want to collect. It’s the same for our ecosystem. In the funniest way, you can treat the physical locks as… inverse screenshots. The NFT is the object to own, and unless the fakers have 100s of milions of dollars to spend attacking the network, Reproductions and fakes on-chain are simply impossible.
A common flaw in crypto is seeing it as a linear evolution on the past. We have countless products putting web2 things on crypto rails. They mostly fail, as these systems.. just don’t really benefit from being crypto. Do we really need uber on the blockchain, etc. The right way to innovate is to do something drastically different that can only be done with crypto.
tl;dr:
digital gems are better because
less theft fear
can actually use the product. let it out of the box. go on. do it.
no fake and reproduction fear
much easier to display (can be displayed digitally 24/7)