My Honest Opinion On NFTs & Investing Your Money In Digital Art Tokens

I have not seen a single trend catch on in the way that nfts are doing right now. Our economy has always worked in a way such that 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 on digital games like fortnite, the more our purchases are shifting away from physical goods and more towards digital goods. But that poses a big 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 market. 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.

This is because you’ll be able to tell from the brush strokes that I have the original artwork. But if I was a digital artist who painted that same piece on my ipad for example, then the second I released that 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 of the mouse and those copies will look 100% identical to my original artwork. So my art will no longer be a scarce resource, and thus its value will drop dramatically.

This is what nfts are trying to change. The word nft stands for non-fungible token and if something is fungible, it means it’s interchangeable like cash. Your ten dollar note can be completely interchanged with my ten dollar note.

And so if something is non-fungible, it means it cannot be interchanged. Nfts are using blockchain technology to be able to indisputably verify who has the original of a digital product.

They are a one-of-a-kind token of ownership that has a value and so when people are buying and selling nfts, what they’re really doing is buying and selling their virtual ownership over something.

And to be honest, there are five distinct advantages to these tokens. Like if you’re 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 and replacing them with smart contracts.

This 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% cut.

Nfts 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 a charizard pokemon card sell for $220,000? It wasn’t because it was good at battling, it’s just hard to find and so through nfts, the fact that you can be the sole owner of the token for a digital piece authenticated via a system that’s completely fraud proof, you can see how it might give collectors a similar thrill.

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 a crypto punk face which was originally bought for less than $30 and has recently sold for $11.75 million.

And I guess even more importantly that the nft market is seen as a fairly accessible place to invest. 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 just to get started.

Nfts give people a sense of belonging. I think a big part of why people buy them is to feel like they’re in a club. For example, there’s one collection of nfts called the board ape yacht club with 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 nfts will use these photos everywhere kind of like a symbol of pride that they’re part of this exclusive group.

And then on top of that, the creators of this board ape yacht club even organize physical get-togethers for people who own board ape nfts. Although this is the exception more than the rule, but it leads me on to the big problem.

I totally believe in the core technologies and the potential benefits of vanities. 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’re 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 prove that it’s your property through one specific way of measuring what counts as your property. This is usually for a little more than bragging rights.

So this is pretty much what you can expect your nft unboxing experience to look like. You’ve got a nice shiny box 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 who just see them as a very quick way of making money. For example, take the lazy lions. This is 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 reappearing 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 are mass-produced computer-generated cash grabs. Someone has realized that nft apes are selling like crazy so they’ve just picked another animal, 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. Another example is one of the most ridiculous concepts I’ve seen people talk about recently. This is the idea of buying digital land.

There’s a real site you can go to called next earth who’ve mapped out the entire planet and for the right price, they 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 since physical land is worth so much now, and if the world is moving digital, then digital land is going to be worth loads right?

But they’re forgetting a very simple fact that physical land has a purpose. You may want to live there, you might want to set up a factory or a server. What exactly am I going to do with my digital land?

Go online camping? It doesn’t make any sense and I mean these 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?

Anyone can set up one of these platforms. As a matter of fact, there are already loads of them. And so if you’re buying let’s say the Taj Mahal on next earth which by the way would cost me close to twenty thousand dollars, that doesn’t mean you own the Taj Mahal.

It doesn’t mean you even virtually own the Taj Mahal. 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.

Twitter is full of thousands of famous people dropping nfts left right and center. They are 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 celebrity nfts are 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 hype of nfts, they’re trying to get fans to pay tens of thousands of dollars for.

This is nothing compared to what I saw the other week. So Stan Lee the now deceased creator of marvel, apparently came back from the dead to promote an nft collection. And at this point, it is just sad.

The 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 always trying to make it seem like because Stan Lee loved embracing new tech, that this is what he would have wanted.

Yeah fun fact Stan 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 Ross. He was known as the guy who inspired the joy of painting with his beautiful sweeping landscape art.

And would you believe it, his legacy is now being honored with 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. Nfts are not helping that. So you might also know that there’s a whole load of different cryptocurrencies that you can own.

There’s bitcoin, litecoin, Ethereum, well almost all nft transactions are made using Ethereum and it is pretty 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 nfts 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’s an even more fundamental question around nfts. As you’ve seen, they’re 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 Ubisoft quartz.

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 tradable 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 that 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’re 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 same weapon from this game to the next game, and still keep ownership of it, that’s a legitimate value addition. But it won’t do that.

As much as companies try to make it seem like it, owning 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’d be able to take my weapon that I earned from playing ten thousand hours of one call of duty game for example, into the next call of duty game.

It’s 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 of the reason it’s an nft is just so that Ubisoft can make more money by taking a percentage cut every time the nft is bought and sold.

And it’s not just unethical tactics. Nfts are also 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 artwork, and tokenized or maybe are 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 three million dollars just for one character.

Except that marvel didn’t make these and they aren’t officially licensed products. So if I actually bought the gif for three million dollars, not only would I be immediately bankrupt, but I would also be breaking copyright infringement law.

With all that said, if you still want to buy nfts but have no idea where to start, this is not financial advice by the way. But it 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 also think people are buying these nfts 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, 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 the 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 going to buy something, buy something that if the whole market crashed tomorrow, you’d 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 Fiverr 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 just one of ten thousand similar pieces.

This nft craze definitely feels like a bubble that is about to pop. I don’t necessarily think that nfts are the right thing to shop for right now.

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