NFTs are Useless

Change my mind

NFTs have been selling for a lot lately and the hype around them is thick and juicy. But I would contend that their real technical value is not really any different than what the internet offers already.

I will continue to consider NFTs valuable in correlation to their functional value. NFTs that are plugged into some kind of real context are cool in correlation to that context. What do I mean by context?

A key by itself is useless. If you say that the key is the key to Mona Lisa’s heart, but you can’t take her home (or in the case of digital art, everyone can take her home) then it isn’t worth much of anything. There is no real context to the key other than the lie the locksmith sold you.

In the art world, owning the real Mona Lisa is cool because you’ve genuinely homesteaded on a real piece of cultural real estate – you own a physical piece of art that means something to almost everyone. People can print the Mona Lisa, but it really isn’t the same, even a good replication.

You’d have to replicate the brushstrokes, and the frame, and the nuanced effects of aging. You can hang this very specific object in your room, or lend it out to a museum that folks must traverse to physically to view. They cannot copy and paste it. There is a physical context that is undeniable.

In online economies such as MMORPGs, or classic web games such as Neopets or Kingdom of Loathing, the items are purely digital but they exist within the context of a game that the other players care about. A functional piece of equipment or a rare crafting ingredient both have _contextual_ value within that digital world, at least.

The ones that do have a bit of context, like Cryptokitties, are better than most NFTs for this reason, although most of the existing ones lack much of the actual “game” elements that surrounded the older web-based games I mentioned before. And it is still unclear why or how the decentralized/crypto aspect of NFTs is useful to their mission. What value are NFTs adding to these experiences? I guess I can allow a HyperDragon to eat my cryptokitty, but I remain unconvinced of how interesting this actually is vs. just writing that game in a more centralized way.

Most crypto is cool and valuable because it exists in a useful context – a monetary one. It offers an alternate way to transfer value to others that is mostly outside of typical financial systems. The fungibility is exactly what makes it worthwhile.

NFTs, on the other hand, offer almost no value that is not offered by the internet or crypto already. What they do offer is hype that drives interest in the actual underlying useful technology. They act as social pointers towards art, and artists, and the world of cryptocurrency, which is cool and useful.*

If NFTs become integrated with systems that enable genuinely unique ownership of items – whether acting as physical or digital keys towards enjoying those assets, possibly with attached legal frameworks – then I may revise my opinion. Until then, they are simply a trendy way to put more money in artists’ pockets. And I’m pretty okay with that.

*I am entirely disregarding environmental costs, because I am under the impression that, for Ethereum at least, proof of stake will mitigate many of the costs. I am bearish on bitcoin and believe it is relying almost solely on a first-mover advantage to drive its growth.