At Pinata, we like to relate Web3 concepts to everyday objects that people can easily understand. For this analogy, we’ll look at the idea of digital coffee shops to stay grounded. In real life, most business owners of coffee shops don't own the actual building. They most likely own an LLC that leases the building, buys the coffee, and then sells it to you. Now consider NFTs as a digital coffee shop. What's confusing is that NFTs can actually represent the building, the lease, the LLC, and a single cup of coffee.
This causes a lot of friction when discussing NFTs because some might only think of NFTs as the building, while others might think of NFTs as the individual cups of coffee.
To eliminate this friction, we’ve created an internal framework that places NFTs on a spectrum of assets to consumables. In our digital coffee shop, the LLC of the coffee shop is an NFT that’s an asset, while the cup of coffee is a consumable NFT. It’s obvious that an LLC and a cup of coffee are very different in what they consist of and provide to the person that owns them. Nobody expects a cup of coffee to maintain value, since its purpose is temporary for the simple means of consumption. On the other hand, no one expects an LLC to be served in a cup to go. In the real world, it would be silly to confuse the two. But in the digital world, many often confuse this and believe that both should last forever. This is the dilemma we face in defining the different types of NFTs in the space today.
Understanding this framework for NFTs is not only crucial for the success and growth in the Web3 space, but it also enables teams to push the boundaries and build new use cases for NFTs. We know that Web2 fails in giving users zero opportunity to own any of these concepts. But Web3 fails if we believe that ALL NFTs are assets and none are consumables. Leveraging insights from our 75,000 users building NFTs, Kyle Tut, CEO of Pinata, offers a deeper dive into the nuances of NFTs including whether they should appreciate or depreciate, what the reasonable lifespan of NFTs should be, and more in our blog here.
Pinata is making NFT media easier than ever for creators and builders. To learn more about how to get started, visit https:/pinata.cloud.
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