A journal of my thoughts, longer than is appropriate for the Midnight Pub.
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It's started to become almost routine to hear about someone that lost/made money off of NFTs. Life-changing sums of money either vanished or gained, and at the core of that transaction is a technology that only recently gained traction, and still very few people seem to know about, other than a very basic, rudimentary overview of it. Cryptocurrency investors scream "Web3!" as the ordinary person has yet to understand what "Web2" even means. Besides, what is crypto anyways?
Let's start with NFTs. NFT is short for non-fungible token. NFTs are pieces of (meta)data or information that is stored on a decentralized blockchain. The blockchain is append-only and public by default. All transactions are public for everyone to see, and transactions can only be added, not removed nor changed.
The original premise of NFTs seems logical: have the ability to store information in a decentralized fashion, and prove that you own that information. No central authority can remove your ownership from you because your record of ownership is stored on the blockchain, which as I mentioned is append-only. However, when you actually take a deeper look into NFTs, you soon come to realize that this premise falls apart quite quickly.
Let me explain: while it is true that NFTs could have lots of use cases, the most common use of NFTs today is as an investment, similar to stocks, real estate, or any other item you might "invest" money into in hopes of making a profit in the form of either capital gains or dividends. Since the NFTs rely heavily on the blockchain (you could consider them a product of the blockchain), you need to buy them using cryptocurrency. It's for this reason that almost always, people who buy or own NFTs are simultaneously cryptocurrency investors. My problem isn't with this. As I'll explain further below, I don't have a problem with cryptocurrency itself, nor do I have a problem with the blockchain itself. If you want to invest in crypto, who am I to stop you?
My problem lies with those who believe that NFTs solve some "problem" that the world was having prior to NFTs. For example, people who believe that owning an NFT grants them some form of "copyright" to the art associated with the NFT. This is nonsensical. In the United States, copyright lawsuits are handled in federal district courts. As of the time of me writing this, federal district courts will not allow you to submit any type of cryptocurrency, NFT, or other blockchain-based contract into evidence. Given that you cannot submit your NFT into evidence, it becomes much more difficult, if not impossible, to prove that you are entitled to any form of "copyright" over the artwork. Since you cannot prove your "copyright" in court, there is nothing you can do if your alleged "copyright" was to be violated, other than sit back and watch aimlessly. Part of this is due to the legal system, and part of it is due to the nature of how blockchain and cryptocurrency is.
At least here in the United States (I can't speak for other countries since I don't have experience living in them or interacting with their legal systems), cryptocurrency is largely unregulated. The only regulation as far as I am aware of is that the IRS (Internal Revenue Service) requires you to declare capital gains/losses on cryptocurrency. That's it. Cryptocurrency in itself is unregulated, which is both a good and bad thing:
This unregulated nature also extends to NFTs, since they are a direct byproduct of blockchain and crypto. NFT scams have already started happening, where users are promised a certain real-life/tangible good in exchange for buying the NFT, only to not receive that tangible good upon buying the NFT. In other cases, the value of the NFT drops astronomically thus causing the buyer to lose all of the money they invested.
If NFT regulation was to be implemented, that would defeat one of the main points of owning an NFT, which is not having to rely on a central authority for ownership. If NFT holders have to go through the court/legal system to prove they own an NFT, then isn't that the definition of "relying upon a centralized system to prove ownership"?
As I mentioned, NFTs are a solution looking for a problem. Nothing that is currently possible with NFTs was impossible without them. Copyright existed for centuries before NFTs were even a concept. Users were able to own digital goods for a while now, at least for the past 2 decades or so. If you want to invest, why not just invest in crypto or (if you prefer investing in something that is regulated) stocks? Everything that diehard NFT fans claim that NFTs solve has already been solved by solutions that have a well-established track record of working as intended. Why fix something that needs no fixing?
Now, as I also mentioned, I'm not entirely against crypto and blockchain. These two ideas seem reasonable. In fact, for very privacy-sensitive transactions, I would strongly recommend that you use some type of cryptocurrency (ideally one that is well-known and widely supported). International transactions can be made much easier as well since you don't have to worry about exchange rates and you don't have to pay fees to exchange money in between countries. I have very few problems with crypto in and of itself (other than the fact that Ethereum, one of the most widely used cryptocurrencies in the modern day, is still based on Proof of Work which has long been known to negatively impact the environment), and virtually zero problems with the blockchain as a concept.
The problem arises when these technologies are so blatantly being abused just as a "get rich quick" scheme or to scam gullible investors. You could argue "investors should research a coin before investing in it to avoid being scammed", however placing the burden of solving a major problem with a certain product on the users of that product doesn't usually end up with a desirable outcome.
On the one hand, I feel like NFTs could have actually been useful. Imagine having an NFT of your favorite movie that you can watch as many times as you want. Or an NFT of your favorite song. But on the other hand, I feel like the entire purpose of NFTs is contradictory and non-important. It's become this clique of people who seem to act like they're better than everyone else for buying an NFT of a jpeg of a monkey, and who call anyone who raises any valid criticism "poor".
So yeah, there it is. My opinion on NFTs, cryptocurrencies and blockchain. To summarize, I don't see any major problems with crypto & blockchain in and of itself (other than the environmental problems that arise with proof-of-work blockchains). I absolutely despise NFTs in their current state, though. The legal framework that makes NFTs feasible for ownership doesn't exist yet (and if it did, it would defeat the point of owning an NFT), the current NFT userbase is extremely toxic, and NFTs as a concept are a solution looking for a problem.
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