Can NFTs become a new medium for social contracts?
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Can NFTs become a new medium for social contracts?
NFTs work because they can embody underlying social contracts.
Navigating Web3 tides with focused insights
Written by: Semui.eth
Compiled by: TechFlow
This is my summary of notes from the opening session of UNIC Open Metaverse Initiative's META-511, where Punk6529's insights will surely help the world better understand the benefits of NFTs.
NFTs work because they can embody underlying social contracts. We agree that an NFT represents ownership of an object, even in most cases where the object itself isn't on the blockchain. This social contract allows NFTs to effectively serve as "pointers" to the underlying object.
Society operates by manipulating these "pointers" rather than the underlying physical objects they reference. Take real estate as an example: deeds representing land ownership are documents accepted under social conventions, which are enforced by state mechanisms such as courts and law enforcement agencies.
NFTs are useful here because we can leverage existing social conventions to establish ownership of IRL objects. As a society, we already accept "pointers" indicating ownership—such as deeds or contracts—and NFTs can represent these pointers on-chain.
NFTs excel at demonstrating ownership of digital art because, as a social convention, artists and collectors have already agreed that each NFT represents a specific edition of a work. No enforcement mechanism is needed, since this is clearly defined within the metadata of the NFT itself.
As NFT use cases expand, "pointers" to IRL objects such as land rights or intellectual property will eventually be represented by NFTs. For these applications, certain mechanisms and trusted parties will be required to enforce the social contracts related to IRL assets.
Although still in experimental stages, NFTs have the potential to transform how ownership is conceptualized and enforced, making it more tangible. We’ll be able to reduce reliance on centralized institutions or intermediaries, relying instead more on cryptographically secure timestamps and verification.
NFTs may also enable new ways of organizing human activity—much like how television shaped how people spend their time through programming schedules, we now have the opportunity to coordinate activities in a decentralized manner.
In my own view, enabling accurate on-chain representation of IRL "pointers" will be a crucial step. The ability to do so transparently and verifiably will be a defining moment for real-world NFT use cases. But until then, extensive experimentation remains necessary.
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