By KIM BELLARD
I must admit, after I wrote about digital currency last week, I did not expect to be writing about crypto anytime soon. Then I heard about “non-fungible tokens” (NFTs) and got a sense of the hype they were causing — how I could I resist?
There may even be a connection to health care.
You may have seen the Nyan Cat (pictured below), which is not new; it turns 10 in April. What is new is that last month its creator “sold” it. You may be thinking, wait, the GIF is everywhere, anyone can download it, so in what sense could he “sell” it?
That’s where NFTs come in. As you may know, “fungible” means that two things can be interchanged; one dollar is just like any other dollar, one bitcoin is like any other bitcoin, one electron is like any other electron. Non-fungible, then, means the item in question is unique, and this is where the “token” comes in. Basically, NFTs use digital certificates via blockchain to mark that something is one-of-a-kind, a claim of digital ownership.
Nadya Ivanova, chief operating officer of research firm L’Atelier explained NFTs to The Wall Street Journal:
Think of it like a digital passport that comes with an asset. They allow for this trust and authenticity to be established in a way that we haven’t been able to do before, whether it’s with physical assets or digital assets.
Artists have been using NFTs for a few years now, and auction house Christie’s is auctioning off the “First Purely Digital NFT-Based Work of Art Ever Offered by a Major Auction House,” featuring the digital artist Beeple (aka Mike Winklemann). Christie’s promises:
…the buyer receives the artwork file containing a digital signature from the artist and all vital details including time of creation, edition size and a record of any prior sales. These details are permanently attached to the artwork, providing an enduring guarantee of value.
NFTs have gone beyond art. The NBA is all over this, with NBA Top Shot selling highlight clips; one of Lebron dunking just went for $200,000. Maverick’s owner Mark Cuban is a big proponent. “The tech is real,” he told CNBC. “The impact is real, and permanent.”
Kings of Leon is releasing their new album as an NFT, believed to be the first group to do so. Jack Dorsey is selling his first ever tweet as an NFT, and bids are already in excess of $2.5 million. Singer Grimes has made $6m selling her mixed media artwork as NFTs. Even Lindsay Lohan is cashing in.
If you’re having a hard time discerning the underlying theme, join the club. We’re in early days yet, and what NFTs prove best for remain to be seen. As Kate Haun, a partner at Andressen Horowitz, admitted to NPR: “At the time the iPhone was created, nobody would’ve thought that one of the killer apps was going to be hailing a ride.”
She went on to add:
Remember those days where people would line up for the newest Nike Air Jordan sneakers at the physical store? This is the new digital equivalent. It’s everything that brings together culture, and it’s also a bet on the future of e-commerce.
Luke Heemsbergen, a professor at Deakin University. wrote in The Conversation:
NFTs are a cultural answer to creating technical scarcity on the internet, and they allow new types of digital goods… [they] bring code and culture together to create a form of control that doesn’t rely on the law or sabotaging existing systems. They create a unique kind of “authenticity” in a[n] otherwise shareable world.
All this means that NFTs are potentially revolutionary. Bloomberg’s Leonid Bershidsky points out:
You could also see it as a new concept of property, which communist dreamers of centuries past would have found to their liking: It’s communal in all practical applications even as it feeds the creator and honors the supporter.
Anybody hooked by the news of (pretty unremarkable) videos and collages selling for lots of money will quickly find out that the NFT concept can be applied to property rights on everything under the sun (or, as the community would hope, that Bitcoin moon).
A new concept of property, applied to property rights on everything…yeah, I’d call that revolutionary.
What makes NFTs even more intriguing is that some content creators are specifying that, as the NFT is resold, they get paid, giving them a future revenue stream and a share in any appreciation in value.
So, what might this have to do with healthcare?
There are undoubtedly lots of potential applications, but mine thoughts immediately went to health data. It has long been a bitter fight in healthcare: whose data is it, anyway? Patients believe it is theirs, but they don’t hold it, don’t always have access to it, can’t control it from being shared or even sold, and generate no economic value from it even as it produces real economic gains for companies using it.
All of that is maddening, yet not much of it is likely to change under the existing paradigms.
If our health data was an NFT, we could have more control when it was shared. We could auction it off. We could ensure that we benefit financially as others use it or resell it. And, by the way, all the parties using it could have more assurance that the data was authentic.
There has been much talk about use of blockchain in healthcare, as in many other industries. Mr. Cuban says, speaking specifically in reference to NFTs, “[B]lockchain and smart contracts and marketplaces are here to stay.” NFTs could be blockchain’s killer app in healthcare.
A big drawback to NFTs, as with blockchain and cryptocurrency more generally, is that they require a lot of computing power. NPR points out: “By some estimates, one crypto transaction could gobble up more power than the average U.S. households uses in a single day.”
But, as Dr. Heemsbergen points out: “Other than their tonnes of CO₂ emissions, what’s real about NFTs is how their creation of technical scarcity enables a new cultural agreement about how something can be authentic and who controls that authenticity.”
We can use NFTs to do that with digital art and dunk highlights, or we can do something meaningful by applying them to our health data. If anything needs a “new concept of property,” it’s health data.
Kim is a former emarketing exec at a major Blues plan, editor of the late & lamented Tincture.io, and now regular THCB contributor.