Hey Jesscollectors
Every so often, the crypto market spits up a new idea or rather rehashes an idea, and people rave about it like it's a breakthrough in technology when it's really not all that great. I dig crypto, and I'm a big believer in Bitcoin, but honestly, I have to call out bullshit when I see it.
As it so happens, people have extremely short memories, or they don't bother to do their own research and fall into the same trappings with a fresh lick of paint and a new swanky sales man punting it on Twitter.
Same trappings, different kind of cheese
During the 2017 bull run, we saw NFT's make a big splash in the form of crypto kitties that nearly brought down the entire Ethereum chain as people FOMO'd into the frenzy. Then bull turned to bears, and where are crypto kitties now? Ain't worth shit, and most people have moved on.
This time around, what do we have? Oh, another bull run and another chance to get on the NFT bandwagon. This time, however, it's not digital cats; it's graphic and art NFT's.
Reaching peak insanity
The madness has escalated into mainstream media with the 3LAU sale of $11 million in NFT and Justin Sun offering to buy Jack Dorseys first Tweet for $2 Million. Humans tend to have a bias towards number go up if the number goes up, it means its legit. We've seen this play out time and time again with bubbles and Ponzi schemes.
If their fiat value is X and now is X2, that means it's legit; forget about all the underlying issues at play.
The new pump and dump
Ironically, I mention the Ponzi scheme, and the number goes up when that's such a strong narrative about Bitcoin. The hypocrisy is not lost on me, but to be fair, I've done a fair bit of research on these topics and coins.
Now I have no problem with what people spend their money on, and you can buy E-girl bath water for all I care. I'm just giving my take on NFT's because I've been asked about it a few times over the past few weeks.
What I see are a lot of early investors in crypto with coins to spare looking to secure "perceived" scarcity not to retain but to flip it for a profit. Pretty much what we saw in the ICO boom, you buy for X, hold for a bit and sell for Y before it all blows up.
These aren't markets of buyers and sellers; these are narratives being sold to a greater fool. We all know a fool and his money are soon parted, and once the fools run out, so dies the hype.
So what are these new graphic NFT's all about?
Bitcoin has done an amazing job of driving home the idea that value can be stored on a distributed chain. Bitcoin is a native asset to its chain, and its network is backed up with millions of dollars worth of labour, machinery, energy, transactions and software.
Bitcoins floor price value represents all that combined; Bitcoin's market price, however, represents how much people are willing to pay to get a piece of this asset.
So you're thinking, I know about Bitcoin, why are you telling me about Bitcoin. I want to know about NFT's. Well, hold your horse's buckeroo; I'm getting there.
NFT's or Non-Fungible tokens are now used to represent art, photos, moments in sporting history, cards and more. At first read, that sounds cool; you're taking the concept of Bitcoin and expanding it to real-world physical items.
Same same but different
Yes and no! NFT's capturing of value is in idea only there is no value to an NFT in my opinion, all it is, is a fancy hash marked onto a blockchain with a unique identifier.
Do I own the art?
If I buy a piece of art, I get a certificate for the art; I have the rights to it and any royalties from its redistribution.
I also bare the storage cost, but with an NFT,
- Who owns the original piece of art?
- Can I force the artist to ship it to me since its mine?
- Can I force the artist to destroy the physical copy?
- Can I issue takedowns for the use of the image elsewhere
- Can I stop the artist from reminting on another chain or in another run?
At least with a piece of art, there would be an effort to recreate it, and it would not be the same; they'll make mistakes or change their mind; the replica won't be identical, with an NFT it is, copies are the same.
Item not in the NFT
When an NFT is minted, only a bit of text data and unique ID are minted onto the chain. The actual graphic could be stored anywhere. If anyone has the URL to that image, they could use it regardless of not owning the NFT.
If I bought a piece of art and hang it up in my gallery, people would have to visit me to see it; NFT"s anyone can host the image.
There is no digital representation of the graphic on the actual blockchain because that would be stupidly inefficient to try and store an image of a few megs or gigs on a chain.
Collectables value is in decay
The reason collectable cards, for example, are valuable is that there firstly were never collectable to begin with, no one knew how rare they would become with them. There are less of the collectable available in a mint condition from the original print run.
For example, when they minted first edition Pokemon cards, kids eat them, ripped them up, played with them, lost them, burned them. Now those kids are in their 30s and have a bit of cash and feel nostalgic, and are willing to pay stupid prices for a piece of cardboard that was well looked after for decades.
Time and fragility give collectables value as there is a cost to maintain them.
What cost is there to maintain an NFT? How does it decay?
Authenticity comes into question
Art and collectables are highly subjective intellectual property; when it comes to collectables like sports cards or Pokemon. There is a massive central entity that validates the authenticity and protects the IP to retain its value.
Who is maintaining the value of these NFTs? Are there multiple oracles that need to pass through to review a minted NFT? No, any person can mint an NFT, so how do I know its that persons work?
How do I know how long they took to produce it, or did they photoshop something quickly and call it a day?
When I buy the NFT, do I also have the licencing to reproduce it or do whatever I want with it, like if I had the physical artwork or collectable? I doubt it, and who is going to enforce any of it?
Supply and demand
The thing with Bitcoin is, when you want more of it, you have to convince a holder to give it to you by paying more. The supply is not going to change.
An NFT, well, the artist can keep minitng as long as people want to keep buying the supply is endless. The only thing the blockchain facilitates is a hash identifier and a payment rail; it has nothing to do with securing an asset of value.
If you just want to support a creator and purchase a little momento I get it but as an investment I would avoid it.
NFT's to me are an idiot tax, mining NFT's and buying NFT's! The only ones winning at the moment are the platforms collecting fees on these faux collector items.
If you want to create NFT's or buy NFT's by all means, go ahead, this is just one guy's opinion on the internet.
Good concept, poor execution
I am not totally against NFT's I think the concept has value, and we'll see better uses for it in the future, like ticketing systems and reserving purchases. As for minting art, I will happily give this one a miss.
Have your say
What do you good people of HIVE think?
So have at it, my Jessies! If you don't have something to comment, "I am a Jessie."
Let's connect
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