NFTs are nonsensical hype that gets sillier the deeper you analyze things. Despite their value on the Internet and the undeniable hype that exists today, it is best to avoid them.
An NFT of a pixelated image of a blue man was bought on February 12, 2022 for the equivalent of $23 million. Gartner believes that as early as 2026 we will routinely be in the metaverse and will pay there with cryptos and NFTs. Salesforce works on an NFT Cloud. Anyone trying to put together the above puzzle pieces quickly comes to the conclusion that NFTs must be something serious. What exactly is probably still vague to you, but with such amounts and big names, NFTs must be the future, right?
Fungible or not fungible?
Let’s start from the beginning: NFT stands for Non-fungible token. A Bitcoin is fungible or convertible, just like traditional money. One Bitcoin is identical to another, just as every euro is equal to every other euro. Like cryptocurrencies, NFTs are held on a blockchain. Such a blockchain is a highly secure decentralized ledger that keeps track of who exactly owns what. On the Bitcoin blockchain, you can find out how much Bitcoin is attached to one wallet is connected, on the Ethereum blockchain you can, among other things, read who owns which NFT.
An NFT is therefore a unique token whose ownership is tracked via a blockchain. NFTs are now massively connected to digital elements such as images, videos, but also tweets or even completely random things from real life, such as Club Brugge goals. An NFT of such a target, video or image is a unique digital piece of paper that indicates that you are the owner of that item.
Nothing more than a token
It might sound useful at first glance, but it’s not. NFTs are unique, but the things they are supposed to prove ownership of are not. You can own the NFT of a print, but that print remains identical to any copy you make before or after. A goal by Vanaken remains a goal by Vanakwith or without sold NFT.
NFTs are known for facilitating digital art and helping artists sell their art. ‘Elephants’ by Salvador Dali is a unique painting. You can make copies and photos of it, but the original is easily distinguishable from a print and has intrinsic value. You can buy or sell it for millions, and in return you get a unique piece. This is more difficult with digital art: after all, the copy of the original corresponds to the original. Bits and bytes are the same. Linking an NFT to the original makes it unique, according to proponents.
It’s not true.
An NFT does not change the transcript or the video. The copies are still identical. If you want to keep an illegal or non-illegal copy of an image, you can do so regardless of whether an NFT exists or not. If you buy an NFT, you are buying exactly that: NFT, nothing more and nothing less. An NFT gives you no (copyright) rights and has no legally enforceable value. There is nothing to prevent an artist who sells an NFT of an image later selling another NFT of the same image. Conversely, you as a buyer have no influence on the distribution of copies of what you have purchased. And those copies are, as we mentioned earlier, completely identical to the ‘original’.
A token does not make unique
Thus, an NFT represents an attempt to make something that is redeemable and not unique (copies of digital content) non-redeemable (and unique) via a token. Because it is not possible per definition, NFTs are more a form of collective scam than the solution for digital property. Look at the above image of the blue man: the person who spent 23 million on an NFT of it has no better or different version of that image.
NFTs are an illusion and a poor solution to a non-existent problem.
NFTs are an illusion and a poor solution to a non-existent problem. A creation, digital or not, is already subject to copyright. You can perfectly sell usage rights to creations without NFTs. In fact, an email where an artist transfers the right to use an image to a buyer has legal value, NFT does not yet. It is also illegal to copy digital art without permission without NFTs, and the artist can also sell digital art without NFTs. Do you want a unique print or video? Then pay an artist you appreciate for a custom piece. Want to own a Club Brugge goal? Then spend that money on a psychologist, because that ambition naturally goes awry.
NFTs therefore do not solve the ‘problem’ of convertibility of digital art and do not offer any added value compared to traditional forms of selling digital objects. They have no legal value, so you cannot enforce rights with them in real life. Whoever buys an NFT can only brag about his possession of the NFT with other people who are interested in NFTs.
Worthless, but not worthless
Are they therefore worthless? Obviously not. Millions go back and forth so NFTs can change hands. NFTs are unique and therefore in short supply. If enough people are interested in a scarce item, a market will emerge for it, on which supply and demand can play. NFTs are redeemable for money because people want to give money for NFTs, not because NFTs “are” anything.
Also, because the tokens are on a blockchain, people seem to see them as the successor to Bitcoin. As with cryptocurrencies, there is a lot of speculation and the lucky ones make monster profits, but that doesn’t suddenly give NFTs an inherent value. Do you see NFTs as a harmless digital asset? Is NFT an unregulated toy for brave players?
No, NFTs are not harmless.
Misleading for ill informed people
There are several problems with NFT. The first has to do with deception. No one thinks that cryptocurrencies are more than that: digital coins with an unstable price that you can profit from. But many people believe that NFTs represent something. They are under the impression that they actually acquire certain rights when they invest in an NFT.
A good example of the confusion that NFTs sow are the anonymous naïves who bought Jodoriwsky’s Dune. They planned to digitize the rare book and then sell it as tokens. The original book would then be burned. The group paid $3 million for the book, only to discover that they only owned the item, not the associated copyrights. If they wanted to sell NFTs of the book, they would be allowed to face the rightful owner of the copyright in court. Real copyright has enforceable value, NFTs do not.
Terrible for the planet
Another problem is bigger: NFTs are destroying the planet. They live on a blockchain and blockchains are notoriously bad for the environment. We won’t go too deep into how blockchains work in this piece, but essentially blockchains work by thousands of decentralized sheet music (computers) it my. That mining ensures that the blockchain receives secure updates and generates money as a reward.
Unfortunately, it is a very energy-demanding activity. For the Ethereum blockchain alone, miners today use around 112.76 TWh: about the same as the total annual electricity consumption of the entire Netherlands. The associated carbon footprint is comparable to that of Serbia and Montenegro. NFTs are a major driver of activity on the Ethereum blockchain. As discussed, they have no value except as a speculative commodity, and as a digital speculative commodity they are highly polluting. Investing in oil is also bad for the environment, but at least oil gets a car from A to B. NFTs don’t contribute anything.
A risk to the economy
On the contrary: they endanger the economy. NFTs, like cryptocurrency, are an unregulated market. Money arises and disappears without rules. The current financial system is subject to some abuse, but at least there are (inadequate) regulations to limit things like fraud, manipulation or insider trading. Blockchain-based investments are not affected by this.
Salesforce wants to embrace NFT hype with new cloud service
NFTs comprise a growing market that already exceeds $10 billion, where people can make real money, but also lose. These people often do not know what they are really doing. If enough money is lost, in the worst case it can affect the real economy.
For all these reasons, it is important to take a sober look at the hype surrounding NFTs. As an analyst firm, Gartner has a lot of influence and it is acting irresponsibly when it says that NFTs will be part of the digital economy of the future. The agency itself cannot realize this claim. Logical, because the necessary substance does not exist. Gartner, meanwhile, is adding to the unwarranted hype.
That’s how we end up with Salesforce, which may jump on the NFT bandwagon, possibly bolstered by Gartner’s predictions. Salesforce can thus facilitate the sale of legally and practically worthless fried and highly polluting air. Everyone who jumps on the NFT hype is contributing to it.
Organizations are understandably afraid of missing out on the next big digitization wave. That’s why it’s tempting to join a hype, especially when other big players are doing the same. However, NFT is nothing more than a polluting and misleading bubble. Companies that stay away from it miss nothing. On the contrary: They show common sense.