Did you know that thanks to NFTs? People have managed to sell a recording of them farting for over $400, even a simple five-word tweet from Twiter CEO Jack Dorsey for $2.9 million. I’ve not seen a single trend catch on in the way that NFTs are doing right now. So, here’s what the fuss is all about. Why NFTs are both a phenomenal dimension and becoming a problem. And then the right way to invest in NFTs. So, it starts with this. The way that our economy has always worked is we earn money. And then we use that money to buy goods. But the more time that we’re spending on digital apps like Instagram, and the more time we’re spending on digital games like fortnight, the more our purchases are shifting away from physical goods and more towards digital goods.
But that poses a problem, digital goods are harder to monetize. Like let’s say that I make a beautiful physical painting and I try to sell it to people at a it. Now, even if someone tries to copy my painting, or even if they go as far as to take a photo and then make a print of my design, it doesn’t really affect me too badly because you’ll be able to tell from the brushstrokes that I have the original, but if I was a digital artist who painted that same piece on my iPad, for example, then the second I released art publicly as a JPEG image, I would lose almost all control over that asset. It can be copied with something as simple as a right click. And those copies will look 100% identical to my original. So, my art will no longer be a scarce resource. And thus, its value drops dramatically. This is what NFTs are trying to change. See the word itself stands for non-fungible token. If something is fungible, it means it’s interchangeable like cash where your $10 note can be completely interchanged with my $10 note.
What is NFT?
And so, if something is non fungible, it means it cannot be interchanged. NFTs are using blockchain technology to be able to verify who has the original of a digital product. There are a one of a kind token off ownership that has a value. And so, when people are buying and selling NFTs, what they’re really doing is buying and selling they’re virtual ownership over something. And to be honest, there are five distinct advantages to these tokens.
Pros.
Sreamlined contracting.
Like if you are a designer, you’ve got a new way to earn. And for fans of your art, they’ve got a new way of supporting you instead of just transferring you a donation by PayPal, they’re actually getting a piece of your history in exchange NFTs, put an end to really long written, boring contracts, replacing them with smart contracts, which in a really streamlined way, define the rules by which the NFT operates. So, for example, a designer can set a rule such that every time their item is bought or sold, they get a 20% Cuts are a dream for a lot of collectors. I get the fact that they don’t really do anything, might sound kind of dumb, but there are plenty of people who gain
Pleasure just from knowing that they have something rare. I mean, just think of trading cards. Why did this Charizard Pokémon card sell for $220,000?
It wasn’t cuz it was good at battling. It’s just hard to find.
Authentic art.
And so, through NFTs, the fact that you can be the sole owner of the token for a digital piece authenticated via system, that’s complete fraud proof. You can see how it might give collectors a similar thrill and then four, it’s not just creators. Anyone can make money off NFTs because they can be traded. Each NFT has a market value and we’ve seen plenty of cases like the one of this crypto punk face over here, which was originally bought for less than $30 and has recently sold for $11.75Mil. And I guess even more importantly is that the NFT market is seen as a fairly accessible place to invest.
Sense of belonging.
It’s not like the stock market, which can be intimidating for a lot of people. And it’s not like the housing market where you might need hundreds of thousands of dollars to just get started. And then finally NFTs give people a sense of belonging. I think a big part of why people buy them it’s to feel like they’re in a club. For example, there’s one collection of entities called the board ape yacht club, 10,000 unique ape images for which the cheapest one is actually going for over $200,000 right now.
But the point is you’ll regularly find that the people who own these entities will use these photos everywhere. Kind of like a, a symbol of pride that they’re part of this exclusive group. And then on top of that, the creators of this board, eight yacht club, they even organize physical, get togethers for people who own board eight NFTs. Although this is the exception more than the rule though,
But this leads me onto the problem, the extremely problematic problem.
Cons.
You cant fully own an NFT.
I totally believe in the core technologies and the potential benefits of NFTs, but the more I’ve learned about how they’re actually being used, the more I’m genuinely scared about what’s to come. So just to start with NFTs are not what a lot of people think they are. If you own the NFT of a piece of work, whilst you do have ownership, you’ll still not the owner, having an NFT of something isn’t giving you rights over that design. It doesn’t mean you can then start printing t-shirts with it on and selling them. All it does is just proves that it’s your property, but just through one specific way of measuring what counts your property usually for little more than bragging rights.
NFT is a cash grab business.
And even though NFTs may have started out being all about respecting the artists. As of right now, the majority of them are not being made by the lone creator, pouring their heart and soul into their work. They’re actually being made by opportunistic business. People just see them as a very quick way of making money. Like just as an example, take the lazy lions, another collection of 10,000 unique, unbelievably expensive avatars, just as ugly as the apes, but now in lion form. And if you look closely at this collection, you’ll start to notice something that certain facial features keep rehearing. And that’s because lazy lions are not the work of a passionate individual. Who’s genuinely trying to design creatures with real character they’re mass-produced, computer-generated cash grabs.
Someone has realized that NFT apes are selling like crazy. So, they’ve just picked another random model drawn 50 or so individual pieces. And then used a simple piece of code that says, make me 10,000 unique avatars using a combination of these pieces. There’s no soul here at all. It’s just, how do we take advantage of this trend to make piles of cash or another example? One of the most ridiculous concepts I’ve seen people talk about recently is this idea. Era of buying digital land. There’s a real site that you can go to called next earth, who mapped out the entire planet. And for the right price will allow you to buy any area of land you want. And no joke. Hundreds of thousands of people have swarmed to this platform with the simple logic that well, physical land is worth so much now. And if the world is moving digital, then digital there’s gonna be worth loads, right?
But they’re forgetting a very simple fact, the physical land has a purpose. You might wanna live there. You might wanna set up a factory or a server. What exactly am I going to do with my digital land? Go online, camping. It, it doesn’t make any sense. And I mean, this next earth, people who are they do, they own the earth. Is it really in their power to sell other people’s plots of land? No. Anyone can set up one of these platforms. As a matter of fact, there are already loads of them. And so if you are buying, let’s say the THJ Maal or next earth, which by the way, would cost me close to $20,000. That doesn’t mean you own the THJ Maal it doesn’t mean you even virtually own the Dodge. Maal all it means is that you have a token that proves it’s your property on one of these unlimited number of platforms.
It’s the literal equivalent of paying an entire year’s worth of savings to buy land in a video game, except it’s not even a game and things get far worse. When you see the way that some celebrities have used and been used by NFTs.
Dead Celebrities have “joined the marketplace”.
Twitter is full of thousands of famous people dropping NFTs, left, right? Incentive, offering incentives to fans who buy the super expensive ones, like getting to meet them for example. And that might sound fine, but you can tell that it’s coming from a place of just trying to cash in almost all of these celebrities. NFTs a little more than just repurposed photographs from the past. And the perks that come with them are really things that should be worth hundreds. But through the current height of NFTs, they’re trying to get fans to pay tens of thousands for, but this is nothing compared to what I saw the other week.
So, Stan lee they’re now deceased creator of Marvel. A currently came back from the debt to promote an NFT collection. And at this point it is just set. This guy died in 2018.
I highly doubt his final words were please sell this stupidly expensive set of JPEG images to extort my closest fans. People are trying to use NFTs to get rich off the fact that he’s dead. And they’re almost trying to make it seem like because Stanley loved embracing new tech that this is what he would’ve wanted. Yeah. Fun fact Stanley also loved charity to the point where he set up his own foundation. How about raising money for that? It would definitely be a better way of preserving his legacy. That’s for sure. The exact same thing happened with the painter Bob bros. He was known as the guy who inspired the joy of painting with his beautiful sweeping landscape art.
And what do you believe it, his legacy is now being honored with well this by the Funko figure company. And to be honest, I think this goes against everything. The guy stood for the company claims his legacy was about investing in paintings. No, it wasn’t. He wanted people to buy paint and make the art. He would openly say that he didn’t want his name to be used for mindless generation of profit. And yet after his death, they’re using every bit of Goodwill that his name had left to effectively print money. And most importantly, he was a huge fan of nature and the environment and NFTs are not helping that. And this is my next thing. So you might know that there’s a whole load of different cryptocurrencies that you can own. There’s Bitcoin light coin Ethereum. Well, almost all NFT transactions are made using Ethereum and Ethereum is pretty bad for the environment.
NFT is bad for the environment.
It uses a security mechanism called proof of work, which is incredibly thorough and is a big part of what makes NFT so fraud proof. But the problem is that this kind of security requires a lot of computers around the world to be contributing their power to this network.
And that uses a lot of energy. However, there even more fundamental question around NFTs, as you’ve seen there, basically just a way to create artificial scarcity for something to make something that was previously unlimited limited, but in the vast majority of cases, is that really a good thing? I’ll give you an example. So a few months ago, the gaming company Ubisoft came out with a brand new scheme, UBI quarts. They’re telling players that in their future titles, they’ll be able to earn one of a kind in game items that are also tradeable NFTs. And you could say, well, that’s great.
That gives me something really tangible to aim for while playing. And that’s awesome. I can sell their NFT for money because it is a completely unique item that no one else will have. But if you think about it, there’s two possible outcomes here. Either these NFT items are really limited and they do become valuable. At which point you are basically dangling a carrot in front of millions of players to encourage them to play for an unhealthy amount of time, just for a chance to win and making the games less inclusive and fun for the people who can’t afford to do that. Now the other alternative situation is if there’s tons of these NFT items to go around for everyone, and they’re all kind of similar just with one slight unique change, which I think will be the more likely outcome, but then the NFT aspect of it becomes meaningless.
Now I get that there’s a brag factor of owning an NFT for let’s say an in-game weapon. And if this NFT made you the owner of that weapon and it meant that you could take that weapon from this game to the next game and still keep ownership of it, that’s a legitimate value add, but it won’t do that as much as companies try to make it seem like it, an NFT is not like owning a physical product. If I own a real hoodie, I can wear that hoodie at home. I can wear that hoodie while playing sports. I can wear that hoodie on holiday, but the complex nature of different games using different engines and physics systems and bases of code means that there’s no way in hell that I be able to take my gun that I earn from playing 10,000 hours of one corner of duty game. For example, into the next quarter of duty game, its value will live and die in the game that I’ve earned it from. Just like if it wasn’t an NFT item and was just a normal in game one, the reason it’s an NFT is just so that UB soft can make more money by taking a percentage cut every time the NFT is bought and sold. And it’s not just unethical tactics.
Copyright laws infringement.
NFTs are all so riddled right now with illegal activity. For every NFT you see from a legitimate artist, you’ll find 10 from people who’ve never made a drawing in their entire life. And who’ve basically just taken an already copyrighted piece of work and tokenized it. Maybe pixelating it on the way to try and sell it off as retro art. Like I found a Marvel collection the other day where you can buy a one of a kind superhero from the Avengers.
There’s only one of each. And so you can end up paying the equivalent of $3 million just for one character except Marvel didn’t make these, these aren’t officially licensed products. So if I actually bought this gift for $3 million, not only would I be immediately bankrupt, but I would also be 18 copyright infringement law, all that said, if you do still want to buy NFTs, but just have no idea where to start. This is not financial advice by the way, but this is the way I look at it. I think that for a lot of NFTs right now, the majority of their perceived value is coming from the technology they’re based on as opposed to what they actually are. I think people are these entities because they’re trending right now. And because there’s a good chance that the future of web and the potential metaverse, we’re moving towards, we’ll use this technology to be able to prove who owns what digital goods, but in the exact same way that it’s difficult to transfer an in game item from one game to the next game.
NFT may be a short term trend.
I think there’s an extremely slim chance that any NFT you own now will still have a use at all. In these theoretical future worlds, there will likely be a point soon where NFTs are not trending. People might get bored. There might be a next thing they move on to these NFTs of JPEG images might just reach a saturation point because of the sheer amount of people making them right now. And assuming that that does happen at some point, all of that value that’s coming from cool factor, that speculative perception of what an NFT should be worth, just because it is an NFT will fall by the wayside and you will be left with your virtual ownership of a JPEG image. So as of right now, I am personally staying well away. People do make money off NFTs, don’t get me wrong, but the sheer volatility of them makes buying them right now, much more akin to gambling than investing.
What most art experts would say is buy an NFT. If you like a piece of art and you specifically want to support that artist, if you’re gonna buy something, buy something that if the whole market crashed tomorrow, still be glad to own as it made you a part of that community and that history. But seriously, I mean, in an age where you can literally pay someone $20 on fiber to design any art that you want, and then the art actually belongs to you as opposed to paying 20 million, just to be able to say that you have technical ownership, but not even be the real owner of a piece of art. That is one of 10,000 similar pieces. This NFT craze definitely feels like a bubble that is about to pop
