NFTs (non-fungible tokens) have been around for about five years, but they only started gaining popularity last year. In 2022, the market for NFTs has been demand an oversaturated mess with both crypto and NFT scams being unveiled on a weekly basis. How did something that was supposed to help artists monetize their work become a term that now fills a lot of people, i.e. both artists and buyers, with rage?
But before we begin…
For a more-in depth understanding of NFTs, the NFT Handbook is a great place to start, which is currently free (As of 25 April, 2022) with an audible subscription. You can get a free one-month Audible Plus trial by following this link.
What went so wrong?
NFTs (non-fungible tokens) are a unique record in the blockchain that can be created for almost any digital object. Since this record is unique and indivisible, it is principally used to sell digital assets, for example, works of art. However, anything can be the object of a NFT transaction, for example, the first tweet of Twitter founder, Jack Dorsey.
The last six months have clearly demonstrated that non-fungible tokens have many disadvantages. The plan was that NFTs would help artists by letting them earn money without intermediaries with payment going directly to the artist. This is still partially the case, but the space is cluttered with issues, which is why people continue to hate on NFTs in 2022.
An NFT token is just a certificate confirming the rights and identity with a link to your image, which is sold for money.
How does that instill a sense of rage?
I. From the perspective of artists themselves
To understand NFT rage, we have to look at the crux of NFTs themselves and why they may not be ideal for the artists themselves.
Because of the fact that the tokens provide originality and are non-interchangeable, it is possible to attach them to any file and as many times as you wish. Scammers can do the same and it is not technically forbidden to use pictures and videos already linked to other tokens. But according to copyright law, they are treated the same way as any other artwork, thus there is a degree of liability involved.
This may seem like the matter is resolved, but it gets more complicated than that.
Let’s say you delete your work or it is deleted due to a copyright violation. The token itself will remain with its owner and can be reused in such a case.
In the case that the buyer and the artist have not signed an agreement (for example, a third-party agreement) about the transfer of copyright, then all the rights remain with the author of the work. Solely with the author.
What’s concerning in this scenario is that anyone can link an NFT token to any picture without proof of authenticity. The main problem with NFTs today is that the platforms (such as OpenSea) where artists post content for sale do not verify the authenticity of the works or establish the copyright (although OpenSea does check for user verification, it must be noted).
In this way, anyone can collect pictures of different artists from the web and place them for sale as a collection. It’s often the case that the artists don’t even know that their work is up for grabs while the scammers get away with it.
It’s safe to say that the NFT market is still the Wild West from the perspective of artists and whether there are solutions applicable without resorting to centralization, which would ruin the entire concept of NFTs, is questionable.
Therefore, a principal point of why people hate NFTs is because they are unregulated.
II. From the perspective of the outside world
But most of the NFT hate does not come from the artists themselves that are, at the very least, making some money from the whole ordeal. No, it comes from the outside world and the general population.
Once upon a time there was a new hype called “cryptocurrency” and “blockchain”. While these concepts may be easier to digest now, but when they first started to reach the masses, they were met with equal skepticism and disdain. In fact, it’s a very similar case to NFTs.
When the first stories started to appear about the amount of money people were making from crypto, it’s not difficult to comprehend that it may have instilled a sense of FOMO and jealousy.
“Damn, why didn’t I jump on board when I had the chance?”
But as the saying goes: Fool me once, shame on you. Fool me twice, shame on me. But with cognitive dissonance in mind and not understanding this new, funky NFT acronym, it’s easier to resort to disbelief and hate instead of saying:
“Hey, I didn’t make money on this other new, shiny digital thing. Let me come to terms with how it works and how other people can make even more money with it!”
But FOMO and jealousy are easy to resort to when people began to realize the ridiculous amount of money that people were and are still making with NFTs. For example, this 36-year-old that makes six figures from selling them (!)
But it’s not so much the average Joe making bank that grinds people’s gears. As always, it’s the power imbalance in society that comes into play. When the “elites” got on board and started perpetuating these insane gains, people started asking:
Hold on, is this a front for money laundering?
According to a number of artists, NFTs are still increasingly being used by tycoons and art dealers to launder money. Of course, this is due to the points that we have already touched upon in this post: the lack of regulation and legal norms.
But why NFTs, in particular, as a lucrative form of money laundering?
This is because all NFT transactions, even for very large amounts, are tax-free, which is why criminals are able to use the system as a means to transfer money from wallet to wallet without any tax deductions.
The fact of the matter is that anyone can create a simple image and link a token with a price tag of 50 thousand dollars to it, and then sell it off to themselves or their partner-in-crime. This has made it a magnet for black market activity and money launderers.
There are numerous examples of this happening.
With all of these points in mind, it’s not difficult to see why NFTs have received such a reputation and why, even in the year 2022, people find reasons to hate the NFT concept.
We’d love to hear what you think about NFTs. Let us know in the comments below.
In the near future, we are planning to pick out some interest NFT projects that are worth looking out for this year. Stay tuned.
If you are looking to navigate the world of NFTs and want to separate the scams from the golden nuggets, The NFT Equation by Jared Ross is an excellent way to start. It’s available as an affiliate-link here.