I wrote a little while ago about the new thing called NFTs and my bafflement that anyone would buy one. But we are seeing them being hyped by celebrities and to my mind, it has all the hallmarks of a bubble, where something of little or no intrinsic value is talked up by famous people as a great new investment. Luke Savage points to a segment in which Paris Hilton and talk show host Jimmy Fallon give what seems like an informercial for NFTs, both having bought two slightly different versions of the same NFT featuring (I kid you not) a cartoon ape wearing dark glasses and a yachting cap.
Celebrities and social media influencers can’t shut up about them. From Serena Williams and Logan Paul to Matt Damon and William Shatner, the NFT craze quickly transcended generations and swept up an eclectic cavalcade of the rich and famous in its wake. (Jimmy Fallon, incidentally, spent more than $200,000 on the Bored Ape NFT that now graces his Twitter profile.) Beeple, name-dropped by Paris Hilton in her Fallon segment, fetched more than $3.5 million in an NFT auction.
Savage says that they are the latest in a long line of highly speculative investments that people are being suckered into.
On its face, buying one can be a bit like buying an original artwork, though with digital usage rights and stored on a blockchain. You can’t, in other words, actually hold it in your hands like a poster or painting. The NFT market being a kind of property rights Wild West, some have been converted into tokens without their author’s knowledge or consent. Still more incredibly, the original media object almost always remains totally accessible to anyone online — essentially rendering the whole premise of exclusivity moot (except in the abstract sense of “bragging rights”).
In a word, NFTs are bullshit. And, like most forms of bullshit in America — think WeWork, the Fyre Festival, or any number of other venture capital-hatched disruption rackets — they’ve come packaged in a phony populist language of community and an even phonier rhetoric of innovation.
Like cryptocurrency, it’s hard to make a case for their actual use value and, like the very dumbest Silicon Valley startups and multilevel marketing scams, they’re best understood as speculative investments in which a privileged few can wring money from something of no redeeming social benefit. The majority, in fact, are about as useful as trash. As Vulture’s Rebecca Alter put it, most NFTs “are about as valuable as a QR code on a Coke bottle cap that sends you to a dead link to an mp3 download.”
Remember, the item itself has no intrinsic value. Its only value is what people are willing to pay for it. In that sense it is similar to other collectibles except that there is no tangible object that one has exclusive access to.
This whole thing seems to be a way for the wealthy to find new things to own and profit from. Savage quotes Jacob Silverman:
NFTs reflect a view of the world in which anything can be monetized, even if its value is entirely specious. Having exhausted traditional investments like property and stocks — as well as boutique services like concierge doctors or privileged access to the COVID-19 vaccine — the country’s idle elites are now seeking to expand their financial footprint to cover, well, anything to which they wish to lay claim. . . . It’s the financialization of everything, with practically anything eligible to be tokenized, chopped up into tranches, converted into securities that intrepid day traders could buy and sell.
I really don’t give a damn if wealthy people want to spend their money to buy useless things. What worries me is that people who are not wealthy but get sucked in by the excitement generated by the hype and are driven by FOMO to decide that they want to get in on the action in the hope of getting quick returns and invest in what they don’t understand and cannot really afford. It is those people who will get hurt when the bubble bursts. Such people are like the ones humorously portrayed by Julie Nolke except that the crash is not going to be funny.
People should stick to less speculative investments into things of real, historical value, such as tulip bulbs.
Not only are NFTs a bubble, but every individual NFT release is also its own bubble. The ones that buy early win by reselling, the ones that buy late are left holding an overvalued database entry. But everyone that buys, does so under the impression that they are the lucky early wave.
Mano, you could release your posts as NFTs and make a fortune.
And these would be NFTs with some actual intrinsic value.
“Bubble” is an interesting way to spell “pyramid scheme.”
@1 Bruce: you beat me to it. Fortunately, if the analogy is correct, MS doesn’t need to be that pessimistic.
https://corporatefinanceinstitute.com/resources/knowledge/economics/dutch-tulip-bulb-market-bubble/
@4 invivoM: A pyramid scheme is not the same as a bubble. In a pyramid scheme no investments are made (except small ones at the very beginning) and no products are sold. In a bubble products (like tulips indeed) are sold, until the market has run out of naive buyers.
I’m gonna find a way to make NFTs of Beanie Babies. Once I do, I’ll be RICH! RICH, I tell you! BWAH HAA HAA!!!
When you put your money into the stock market, at least you know that the companies you are investing in will be creating jobs and products that may help to improve society. There is something to be said for investing in the useful.
The thing is, crypo and NFTs really are useful for certain people. The problem is that those people are mostly criminals, money launderers, and people who want to avoid taxes.
As said, this is an examples of a classic speculation bubble, many more have existed. But, it’s got to be the reductio ad adsurbum of them, don’t you think? At least a tulip bulb exists materially and you could plant it and grow a tulip. NFT’s seem like what the article said, the end of reification of every experience or concept into a monetary product.
So, has there been an NFT of an NFT?
I can think of no reason why there couldn’t be. In which case, we have reached an infinite loop. It’s turtles all the way down.
Non-Fungible Tulips?
It’s the modern equivalent of the pet rock but a lot more expensive and with no intrinsic value and you can’t even hold it in your hand or throw it at somebody when you realized you were scammed.
I wonder if someone will start selling NFTs of tulip pictures. Hopefully they’ll include that famous painting of soldiers trampling a tulip-garden to keep prices stable…
Luke Savage points to a segment in which Paris Hilton and talk show host Jimmy Fallon give what seems like an informercial for NFTs…
If famous-for-being-famous Paris Hilton is calling an idea bogus…
Raging Bee @#13,
Hilton is not calling them bogus in the least. She is a promoter of NFTs and bought one version of the ape.
NFTs have become useful for one company -- Twitter finally found a way to make suckers pay them just to get hexagonal profile pictures.