Internet Cats, Virtual Worlds, & the Future of Collecting
A whirlwind tour of the history of collecting: some anthropology, some programming, and an overview of how smart contract technology (Ethereum in particular) makes collecting globally digitally scarce items a reality via non-fungible tokens (NFTs).
History of collecting: 3,000,000 years ago to present ▸ The rise of the Internet and electronic collectibles ▸ Digital scarcity and the blockchain ▸ The Internet of auctions: what we’re building at AUX ▸ What’s next?
DIGITAL ▸ Historically limited by physical resources (skilled artisans, precious/rare materials, time, &c) ▸ More of our lives and personal data exist digitally and/or online than ever before ▸ The Internet not only introduced a new way for us to share information about real-world collections, but an entirely new reality in which to collect
OF THE INTERNET ▸ Parallels between the early Internet and current blockchain development ▸ Packet switching (1960s) and TCP/IP (1970s) ▸ World Wide Web (1980s) ▸ Web browsers, including Mosaic/Netscape (1990s) ▸ Rise of the global Internet (1990s - present)
OF THE INTERNET ▸ Parallels between the early Internet and current blockchain development ▸ Packet switching (1960s) and TCP/IP (1970s)* ▸ World Wide Web (1980s) ▸ Web browsers, including Mosaic/Netscape (1990s) ▸ Rise of the global Internet (1990s - present)
OF THE INTERNET ▸ Critical for us to get things right while we’re still in the protocol phase ▸ TCP/IP ✓ ▸ BGP, DNS ✖ ▸ Transparently transporting value cross-chain signals (to me, at least) that we’ve “made it” ▸ We’re moving faster because the Internet is already here!
DIGITAL SCARCITY ▸ As opposed to artiﬁcial digital scarcity (e.g. the library only has “one copy” of an ebook) ▸ For the ﬁrst time, digital assets are truly scarce: cryptographic protocols ensure a limited number of any given item ▸ End to the tyranny of DRM
DIGITAL SCARCITY ▸ Scarcity of both fungible and non-fungible stores of value ▸ Enter Ethereum, where the largest number of blockchain assets are currently available ▸ Ethereum does come with its own set of challenges (e.g. gas, UX, scaling)
INTERNET OF AUCTIONS ▸ Founded one year ago ▸ Network of marketplaces/auction houses ▸ Houses conduct auctions (connecting buyers & sellers) ▸ Houses leverage (create and lease) auction template contracts (ATCs) ▸ Templatization of auction logic fosters innovation and leads to community-driven standardization
INTERNET OF AUCTIONS ▸ Intersection of decentralized exchange, online marketplace, and auction logic ▸ Primary value-add: price discovery ▸ In (relatively) illiquid markets, auctions are an ideal mechanism for price discovery ▸ Game theoretic assumptions (e.g. users have private valuations and are interested in the lowest price for their desired item)
PRICE ERC721 AUCTION ▸ Auctions are multiplayer, non-zero-sum games of hidden information ▸ May have multiple Nash equilibria with bidders seeking out strictly dominant strategies if they exist ▸ Interesting data that can be gleaned over time include distribution of valuations and bids (pricing data), risk tolerance for different cohorts of bidders, common strategies, and trends in auction formats/asset types
▸ Near-term: proposed Ethereum improvements (e.g. sharding, PoW → PoS) ▸ Medium-term: new asset types and standards (e.g. ERC-1400) and fractional ownership ▸ Long-term: imagine your property, identity, &c all part of smart contracts that pay taxes for you; simpliﬁcation of codes and governance for modifying
Humans have been collecting for millions of years and won’t stop any time soon ▸ The Internet revolutionized how people view and transmit value, and blockchain technology is poised to do the same ▸ Auctions are ideal for price discovery in new/illiquid markets, so we’re building a network of houses at AUX ▸ Improvements to Ethereum, new asset types, and wider adoption could lead to some really cool futures