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Alex Has Opinions: NFTs are a Scam

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I don’t usually write opinion pieces for the paper. Perhaps it’s not a journalistic quality, but I feel that one doesn’t need to have an opinion on everything.

That said, when our own Bob Grylls sent me an article on cryptocurrencies and non-fungible tokens, or NFTs, I found something I actually do have an opinion on.

Likely you’ve heard some of these terms before on social media – my twitter feed and Youtube is often awash with ads by big name actors, like Matt Damon of Saving Private Ryan fame, or the British crown commissioning the royal mint to produce an NFT.

I can’t claim to be an expert on technology, but NFTs are, as Bod discussed above, a kind of certificate of authenticity tied to a piece of property that apparently can’t be reproduced. The NFT, and many cryptocurrencies, use what’s called a ‘blockchain’ – a series of directories linked together that reference and verify data. The argument for NFTs is that their value will increase over time and they can be sold for a much higher price.

Frankly, the idea that so many high profile individuals support this technology is baffling when you start researching it. Samey, repeated monkey heads with random features like different shirts, mouths, and eyewear but the same base. Which you can get for free with a kind of online image generator called a ‘picrew’, but I guess without a magic data line saying you own the original.

Cryptocurrencies, which are digital only currencies created and traded online using the digital architecture of the internet to produce unique code, fluctuate rapidly in value. This of course means that they can become highly valuable, but can also plummet to nearly worthless, with even more rapid frequency than the stock market. Elon Musk tweets have caused his car company, Tesla, to lose value on the market – imagine that with even less basis in reality.

NFTs issues come from how they are produced. The computer process used to make them takes a tremendous amount of electricity and computing power. Entire warehouses of computers just ‘mining’ bitcoin are used, and these draw enough from the power grids that police will investigate thinking they are drawing power to run drug growing operations. This electricity usage, in an era when the climate is changing drastically and threatening our lives, is exceedingly troubling.

Secondly, NFTs value is based on artificial digital scarcity. One such token is theoretically unique; that doesn’t stop someone from saving the digital art its connected to, or making copies of it. The NFT isn’t actually the object; it’s like owning an address that tells you where the real object is. Like a certificate of authenticity, really.

It says something that NFTs are mostly used for digital art. There’s an interview with Keanu Reeves and Carrie Ann-Moss, actors from the Matrix Series of movies which recently had a new movie, where Reeves points out that digital artwork is “easily reproduced” before laughing uncontrollably at the explanation. The idea that he NFT itself is scarce, even if the artwork can be copied infinitely, is what drives its supposed value.

Anyone saying that something is valuable because you can sell it for more later is a step above you in a rapidly-expanding pyramid where they’re trying to make their money back, and given some of the threatening messages I’ve been seeing online to critics, it seems that the scammed-become-scammers desperation is hitting hard.

How does one avoid being scammed, and verify that one is trading for a ‘legitimate’ NFT? I have no idea. Evidently, as one user known as s27 lost two monkey pics valued at $550,000 for three that just had the watermark photoshopped onto copies, and the lack of centralization and authority on a blockchain meaning no support for the scammed. Think being tricked into a phone scam.

One of the reasons you’ve likely never come across cryptocurrency at the store or that it’s only the purview of the Internet-embedded is that it’s not accepted. Crypto is entirely theoretical – there’s no national body or physical good bound to its existence. This is why it fluctuates so rapidly – it’s the stock market principle but applied with far less restriction or basis. As such, it’s easy enough to lose value as much as it is to gain – and the massive millionaire gains only come from those who have large amounts of digital currency to begin with. You don’t make millions in the stock market without millions going into it, and crypto is no exception. There’s a common argument that cryptocurrencies would help people under restrictive regimes, being able to trade it largely ‘off-grid’ – though in practice this seems to mostly mean illegal firearms, drugs, and digital items.

Most of what NFTs are used for, it seems, are digital goods that are easily reproduced. Nothing’s stopping an artist’s work from being turned into an NFT without their consent by someone looking to try and wring some money out of it. That it’s only being used for artistic items, where authenticity is key to value, shows the inherent absurdity of producing bundles of digital fingerprints and claiming that them being unique is inherently valuable. I cannot wrap my head around it – it’s like when people thought Beanie Babies would be valuable because some were rare/ Small toys believed to be worth thousands because only a few people had them.

If you want to use it to buy art of cartoon monkeys, or drugs, by all means use it for that. But I’m not going to buy a digital baseball card with the promise that it will be valuable someday. Jokes about boxes of worthless cards waiting ‘to be worth something someday’ were a joke even when I was a kid. This is just that again, but with more power grid drain.

I don’t have the money to waste on bad art on the promise I can sell it for more later.