Are NFTs Hyped Up Bullsh*t?
Let’s break it down so we can move past the glorification.
NFTs are falling from the sky.
They’re literally everywhere. You may have noticed on platforms like Twitter that everybody’s profile picture is changing into badly drawn cartoons, inspired by pixelated Minecraft-style graphics.
This is no accident. Cryptocurrencies created blockchain. Blockchain enabled Ethereum. Ethereum led to the NFTs revolution. An NFT is simply a digital representation of creative work. Soon an NFT will be a digital representation of items in the physical world like concert tickets.
The popular website YCombinator posed the question: Are NFTs bullsh*t?
Signs of NFT hyperbole
You know NFTs are hyped up when you see headlines from CNBC like “This 12-year-old coder is set to earn over $400,000 after about 2 months selling NFTs.”
Headlines like this make me run in the opposite direction. We’re still early with NFTs. Right now they’re being peddled as an investment and a way to make huge amounts of money.
I don’t buy it.
When a technology is so new it’s best not to get caught in the hype. The hottest NFTs are CryptoPunks. Credit card company Visa paid $150,000 for one (idiots). When these mediocre illustrations were released they cost between $1 and $34. Now they can easily cost millions of dollars. Why?
CryptoPunk NFTs have become a status symbol just like a Lambo has become a wanker status symbol. Don’t buy status symbols as they’re a waste of money.
The huge risk is this: You could end up buying an NFT jpeg for $5 million and have it be worth $1 in the future. Fail.
I’m still going to experiment with NFTs, I just worry people are falling for ads disguised as content on Twitter, telling them they’ll get rich.
NFTs do a lot of good
A few years ago a friend of mine came up with a technology to fix copyright issues for content creators. This was before NFTs. The technology never quite took off but I knew he was on to something.
What he saw is that copyright of content is broken. As a writer, anybody can copy and paste my articles and put them on their website. Do a google search and you’ll see plenty of people have done this. It may have happened to you.
When our content — which includes your posts on social media that act like journal entries — is able to be registered on the blockchain, there will be no debate. A network of computers all around the world can verify that your content represented as an NFT is yours.
Once you fix trust on the internet, you fix three problems simultaneously.
- Monetizing content
Right now it’s hard to monetize content. Even when you can, there is little visibility of the underlying calculation that determines your paycheck. Just ask a writer for a traditional news publication.
2. Transportable content
If I wanted to quit LinkedIn tomorrow and take all my content to a new platform it would be hard. There’s no migration tool to take the content and place it on another website. Once you publish content in traditional social media apps, they make it hard to extract it and publish it elsewhere.
NFTs are transportable. You can lift and shift them. There’s no question that you own your content, and moving content is expected — it’s a feature not a deliberate bug.
3. No middleman
NFTs enable direct to audience models. Marketplaces like Amazon that allow us to sell our content take enormous fees and lock us into their rules. When you want to leave you have no contact details for the people who bought your books, or movies, or artwork.
NFTs don’t have to have a middleman unless you want one and see value in their service, like OpenSea.
NFTs stop artists from being screwed.
The underrated use for NFTs
The best use for NFTs is that they can cement relationships with superfans. Now you can sell creative work and attach added benefits. Patreon started this model with donations that had perks.
But NFTs allow perks to be added to artwork (better than donations that have zero value) and then registered on the blockchain. This increases trust. Many people promise the world to an audience, but delivery is optional.
When trust is enabled through the blockchain, creators will have to deliver on their promises and this will create a better experience for fans. As the experience improves, so does the value and the profits that can be made from NFTs.
Fans don’t just want to buy art. They want a relationship with the creator. Took me seven years to learn this as a writer.
Takeaway
NFT hype is everywhere. Crazy amounts of money are being dropped on them. Profile photos on social media have gone from images of users to NFTs overnight. Seeing an NFT as an investment is dangerous.
NFTs have enormous value, though, when you see them as a way to package your content for an audience so it can be monetized, moveable, and full of fan perks. So no, NFTs aren’t bullsh*t when you reject the investment opportunity and focus on the features they enable.
