Bitcoins are like banknotes, NFTs are like snowflakes: Useful analogies to help explain the world
I love analogies. An analogy can really unlock your knowledge of a complex or confusing idea by relating it to something you already know.
Here are some that help explain recent concepts (& then a few others…)
I know that analogies are rarely perfect — and people can stretch them much too far until they break — but they can help you understand the basics.
Bitcoins are like banknotes, NFTs are like snowflakes. One bitcoin is exactly the same as another, so they are similar to £5 notes. It doesn’t matter which bitcoin you buy something with, just as it doesn’t matter which £5 note you use.
NFTs on the other hand are unique (‘non-fungible’) so are like snowflakes. No two will ever be the same. This is why one of them can be linked to a piece of digital content like a work of art or a tweet to then give it a uniqueness, and therefore a value.
NFTs are also like keys. An artist can issue a set number of NFTs relating to a piece of work, and only people who hold those keys can unlock or access the work. (Of course the analogy breaks down a bit here, because you can copy keys… Maybe those keys that you need special authority to copy…)
FLoCs are like university societies. FLoC — Federated Learning of Cohorts — is Google’s attempt to create a way of targeting advertising at users, without using their individual data. It groups together many (>1,000) web users who have shown similar browsing patterns. This feels a bit like university clubs; groups of people with similar interests who don’t know each other or have much else in common, but all banded together around a common pursuit. Like with university clubs, some groups are quite easy to identify if you see them in the bar together — the rugby team, or the fantasy role players for example — and this is how I also imagine FLoCs to work. It’s easier to see how the technology would work with groups that pretty much self identity like ‘luxury buyers’ than for many mass market FMCG categories. What does a Pepsi drinker look like?
Covid is like punk. Like the punk movements in music and fashion in the 1970s there will be a pre- and post- for Covid, reflecting how the pandemic will alter many things in the world for ever. You can argue that punk didn’t really change much in the long term — music and fashion rumbled on, and a band like The Police could have sold millions of records at any time after the 60s, but the world felt different. In fact many bands after the late 1970s like Culture Club had elements that would not have worked 10 years earlier.
Covid is also like punk because punk was a ‘back to basics’ movement, and many businesses will survive by going back to basics in what they do, and what services they offer.
The internet is like the car industry. The car industry created more millionaires in retail and property than in its own industry, and the internet will create more billionaires in industries like entertainment than in ‘the internet’ itself.
Food is like art. It’s been the case for a long time that artists discover neighbourhoods before other people because they can live cheaply and create their work. They give the neighbourhoods a sense of cool, which then attracts other people. Food, and especially street food is like this too. You find the really interesting stuff in the areas you would never normally think of going.
Restaurants are like publishers. With social media restaurants are in the content business as much as they are in the food business. Having great food is almost never enough, and the restaurants that grow have usually got the hang of this (or paid someone else to manage it for them).
Craft beer is like vinyl. Shopping and discovery is part of the experience. Yes, the taste is important, like the music was important, but it’s about having the cool stuff.
Spotify isn’t like Netflix. People go to Spotify expecting to find all the music, but people don’t go to Netflix expecting to find all the films. This is why, until the rise of podcasting, Spotify wasn’t investing in content exclusive to the platform.
