So perhaps you’ve heard of NFT’s. It was hard to avoid headlines about Beeple making millions on NFT’s and if you track anyone in the design space you’re probably getting bombarded with announcements of their drops. It’s also not hard to find anyone in the crypto space peddling how this revolutionizes digital art and the web.
Pretty much everyone in my circles has a pretty strong opinion about them. From thinking it’s the next big thing, to being against anyone who mentions them. This is true of many things in technology, politics and the world at large these days. It’s hard to find room for the discussion of nuance.
So what is an NFT?
NFT stands for Non-Fungible Token. Most currencies, including cryptocurrencies consist of Fungible Tokens, meaning you can exchange any one for any other one and they hold the same value (think dollars). NFT’s, however are unique, non-interchangeable tokens stored on a digital blockchain. This allows people to take something digital and sell it to someone, with a permanent receipt of the transaction and ownership. Artists and other professions have utilized this to create collections that fans of their work can own digitally. These collections often have limited supplies making them valuable in the eyes of some investors and collectors. Think rare baseball card printings, only instead of having a physical card, you have a hash in a blockchain, that references a url, which has some metadata, which points to a file.. It’s weird, I know. But people are paying genuine money, or cryptocurrency for this stuff.
Why do people hate it?
One of the big concerns with NFT’s and blockchain technology in general is their impact on climate change. For good reason. It’s no secret that we haven’t been great stewards of the planet and because of the climate predicament we are in any new technology that exacerbates this problem is rightfully criticized for it. Mining on some blockchains have been shown to use as much electricity as some countries (NYT). This is because many blockchains, including Ethereum, the original blockchain for NFT’s, have been “proof of work”. “Proof of work”, means the blockchain is verified by virtual miners which requires a large amount of processing power. Fortunately, newer blockchains are moving to “proof of stake”, where validators stake their tokens for a chance to validate, greatly reducing energy consumption. You can read more about these differences on coinbase’s blog. The difference between these two approaches also impact the “gas fee”, or the price it costs to mint an NFT, which is cheaper with “proof of stake” solutions.
Another reason people dislike NFT’s is the general inequity of it. Many of the people making money off NFT’s are already pretty successful or have a huge following and are then able to use that platform to make even more money. I don’t think this is unique to NFT’s, this is just how people who have an audience are able to leverage them. NFT’s become a multiplier due to the large amount of money some have made off of their NFT’s. This is also something the right platform could rectify by promoting and featuring up and coming or underprivileged artists.
As with anything involving crypto there’s the feeling that it’s all just a ponzi scheme full of grifters. There’s definitely bubbles here. There are going to be overvalued items and people are certainly going to waste and lose money. I think the tricky thing about all this is that perceived value is subjective. However there is legitimate concern over NFT’s being stolen or the urls of the content disappearing or being changed. Much of this has to do with the trust buyers put into the platforms or marketplaces they are using and the people they are buying from. There are definitely grifters and bad faith actors out there. I think you should know the wallet address you are buying from is trusted and clearly associated with a specific artist. Otherwise it could be anyone who found their work and posted it. Efforts to support artists ownership over their work, like the Content Authenticity Initiative, uses metadata embedded in content to prove ownership. Do your research if you want to spend money in this space on who you are buying from.
There are many reasons to dislike NFT’s right now, a combination of technological problems and social problems. The technological problems are solvable with better technology and ideas. The social problems are more a reflection I think of where society is right now which exists with or without NFT’s.
Why do people like it?
The primary reason people like NFT’s right now is probably money. As shown by beeple and other high profile artists, some have been able to make quite some money off of NFT’s. Many more people have poured money and effort into these and gained nothing. Others still have had their content stollen or been tricked into losing money. Still the prospect or hope of easy money to some is always going to be attractive.
There’s also an interesting thing happening with younger generations that is hard to articulate. But you see it on services like twitch and many games these days. Increasingly digital content, goods and services are given more value than they would have been given in the past. People donate to twitch streamers to feel part of a community. They purchase skins to personalize their avatars and experiences. They buy items and other goods to show status and rank. A good deal of money is often spend on these digital platforms which in physical terms are nothing more than an image or 3d model. To the buyer there’s more value to the content than the pixels on the screen.
There’s also a certain energy, an excitement, around NFT’s right now that makes the space very interesting. It’s reminiscent of the 2000’s era web, lush with playful experimentation. Many of the same creators who made the web an attractive place where I felt free to experiment with things, and fail, and try again, are the same who are now playing with NFT’s. You have experimental graphics very punk-futurist designs and animations.
Given the stigma of cryptocurrency, it’s easy to overlook the potential of the technology here too. By linking a website directly with your wallet you can avoid third party vendors for transactions. You could also use your wallet to authenticate and sign in reducing privacy concerns of third party accounts. There may be other use cases for the technology which have yet to be discovered.
What do I think?
There may be some areas of exploration that we as a society determine are off limits. In the case of technology there has to be room for nuance, curiosity and experimentation so long as doing so doesn’t hurt people. This last part is key, there are real problems to solve with NFT’s. But with their rise in popularity many efforts are underway to solve them.
It’s also neat to see pure art, not graphic designers, not advertisers, but illustrators, 3d modelers and animators, given a way in which they can make more direct money off of work where unless you printed it out or made a physical piece, is very hard to monetize. Many are taking the opportunity to show off their sense of humor and creativity like Two Bit Bears, where people can buy a two pixel piece of art representing a bear. Is it worth what people are paying for it? I don’t know, but if someone’s willing to pay it that has to mean something. I don’t think anyone’s exactly figured out what to do with this stuff, and maybe it fades out with so many other tech fads, but for now it’s fun watching what people do with it.
What do you think?