Bitcoin, ethereum and other major cryptocurrencies have been hit by a huge crash over the last week, partly triggered by the shock collapse of a major coin.
The bitcoin price has lost 25% over the last month with its biggest rival ethereum down over 30%.
Other smaller cryptocurrencies have been even harder hit—sparking fears others could collapse entirely.
Now, as serious economic "shock therapy" warning signs flash, analysts at Wall Street giant Morgan Stanley have predicted prices of digital collectible non-fungible tokens (NFTs) could come under pressure. (Forbes)
As a complete outsider, one thing occurred to me, once I'd picked myself off the floor from laughing myself stupid at the plight of people whose idea of fun was tweeting "Have fun staying poor" at people who didn't fall for the latest iteration of the old get-rich-quick scam. That was how the whole idea of NFTs seems to be a great example of how clever people (or at least ones with specific smarts in areas like IT & cryptography) can also be really dumb. I'm reminded of the classic Larson cartoon of a geeky kid outside the Midvale School for the Gifted, stubbornly pushing at a door marked "pull".
My first thought about attempts to monetise a digital artworks by chaining it to a token of authenticity was how counter it runs to the principle that information wants to be free.* The legacy of some very smart digital pioneers is that reproducing digital information is trivially easy and almost costless. Attempting to make this process hard again is a difficult task which the smart people behind NFTs set themselves - and failed to achieve, as owning an NFT is not the same thing as owning the artwork or image, or text message, or tweet, or whatever else you decide to associated with it:
There is no possible way to see an NFT with your naked eyes. They are immaterial goods that you cannot see but own. NFTs are inherently treacherous and right-clickers, collectors, and artists worldwide are falling for their deception.
My second thought is how obviously mostly socially useless and scammy the NFT pioneers' project is. I say "mostly" because the quote above hints at how you could justify an attempt to make digital art, or any other digital creation, non-fungible. If you're an artist, or the creator of anything in the digital space, it would be easier to profit from your own hard work and talent if it wasn't possible for every rando on the internet to swipe your creation with a right click. If this was just a tool for creators to protect their creations from theft, I'd understand.
But it's not that. This is mostly middle men, trying to turn either someone else's work or some, usually ugly, mediocre, low-effort image they've created themselves into a something with the attributes of a gambling chip crossed with a share in a pyramid scheme which has value only if you can pursuade a horde of greedy and credulous people that it has value.
Other than that, I'll leave the commentary on this story to people who actually have a proper knowledge of IT, cryptography and finance, which I don't. But I think it's still legitimate even for me, as layperson, to take a firm view on this, based on the fact that there are plenty of explanations out there from crypto evangelists and from crypto sceptics who do have some background in this stuff. And I've found the arguments of the sceptics to be lucid where the evangelists are obscure, explanatory where the evangelists are defensive and disinterested, where the evangelists would have an obvious interest in pushing this stuff.
For an actually informed tear-down of NFT/crypto hype, explaining why this stuff mostly doesn't work as advertised (and would be a dystopian nightmare if implemented, even if it did work as advertised), see video below:
*Here's the full orignal quote from Stewart Brand "On the one hand you have — the point you’re making Woz [Steve Wozniak] — is that information sort of wants to be expensive because it is so valuable — the right information in the right place just changes your life. On the other hand, information almost wants to be free because the costs of getting it out is getting lower and lower all of the time. So you have these two things fighting against each other."
