🎼 [Analysis] Sound digital goods – Tony Sheng

Just as Bitcoin ($BTC) is a promise for sound money, non-fungible tokens (NFTs) are a promise for sound digital goods. Bitcoin is the soundest money because of its decentralization and mathematical protection against inflation. A population naturally prefers sounder money as evidenced by Gresham’s Law, as people naturally spend the less sound money and hoard the sound money, effectively driving sound money out of circulation. &nbsp A commodity is more valuable (became a collectible) if it has at least the following desirable qualities:

1. More secure from accidental loss and theft. For most of history this meant carryable on the person and easy to hide.
2. Harder to forge its value. An important subset of these are products that are unforge-ably costly, and therefore considered valuable, for reasons explained below.
3. This value was more accurately approximated by simple observations or measurements. These observations would have had more reliable integrity yet have been less expensive. &nbsp Despite their soaring popularity, digital goods today are highly problematic as collectibles. The root cause: lack of decentralization. Pre-crypto digital goods are issued by central authorities that manage custody of the digital goods (risk to 1), can inflate the supply at will (risk to 2), and often limit the trade-ability of the items (risk to 3). A sound digital collectible should be worth at least an order of magnitude more. Blockchain could be a potential solution to that and can introduce sound digital goods.

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