The Craze for NFTS and the Downsides

Now, if you've been around this space for as long as I have, then you'll probably be the last person to Google something as obvious as "what's an NFT". OK, I'll admit it. I did all that Googling in 2017. I mean, sure, I'd heard about Crypto Punks a year earlier but that damned CryptoKitties Dapp led me to look into ERC-721s and NFTs and all of that.

And I've been asked quite a lot this year about NFTs and since I never give out financial advice, I tend to beat around the bush a lot (I can be self-aware too) before giving a version of an answer that seems to fit the person asking the question the most. If the person's a crypto user, I go right to the token design. If the person's a collector, I talk about NFT collectibles. Or, if like most people out there, the person's really just wondering about whether NFTs can make them rich, then I just give them a sound "no".

So don't worry. This isn't going to be another "what are NFT" article. There's more than enough of those to go around to last us till next Christmas, so no need to fill your reading stocking with this!

Instead, I thought I'd share a collection of my favourite tid-bits from around the industry on what other people think NFTs are. They could be general blockchain experts. They could be artists. They could be game developers. They could be blockchain strategists.

And despite the straightforwardness of the ERC-721 token standard, you'll find, like I did, that people actually have quite a diverse range of ideas about what they think NFTs really are. Proving, after all, that variety really is the spice of crypto life.

So here goes.

All NFTs are trying to do is create an agreed-upon story on digital “objects” that we can all collectively decide to value. If some people collectively decide to value something, it has value.
-- Taylor Foreman, entrepeneur, writing for The Startup.

Foreman's idea of NFTs is probably one of the most practical and simplistic explanations of what they are. He doesn't really nail down future use-case of NFTs (simple transferable ownership) but it is spot on what is driving the hype surrounding them today. Cause if someone decides an ugly 3D model of a luxury yacht is worth $650 million, it's worth $650 million, right?

The way I describe it to my family members and friends is like, people buy Supreme clothes, or they buy a Rolex. … There are all these ways to tell everyone that you’re wealthy. But a lot of those things can actually be faked. And with an NFT, you can’t fake it.”
-- Clayton Patterson, founder, Pudgy Penguins

If an NFT project founder's staunch insistence that an NFT can't be faked puts you off, you'll forgive that Patterson's only 23 years old and he probably was trying to dramatise the whole thing during his interview with the New York Times. You can, by the way, fake an NFT...

NFTs are a major economic innovation because they allow creatives anywhere in the world to share and receive payment for their work.
-- Tiana Laurence, partner, Laurence Innovation, writing for Forbes

Now I thought it was worthwhile to share this opinion from one of those many pre-seed investment funds now looking to back up all kinds of NFT startups with millions of dollars. Clearly, we can't ignore that NFTs have opened a new way for creatives (musicians, artists, writers, etc.) to get eyes on their work and to receive compensation for it.

Personally, I think it's great that artists don't have to suck up to big art houses to try and showcase their work, or to fight for clicks and views on social media (although now the NFT scene is getting crowded, stragglers may find they have to go through the same struggle). So say what you will about NFTs, they've done a fair share of good for many artists around the globe.

Pengu... cute, but actually you only semi-own a number that points to a non permanent link on a centralized server which may return some info and a jpeg. Maybe a pengu today and a goat tomorrow and a 404 the day after
-- @Boring_Crypto, founder, BentoBox

Sorry, I really didn't mean to bash Pudgy Penguins club or whatever they call themselves these days but it's when you talk to actual coders who can study smart contracts that you realize how flimsy NFTs really are. As shown in the NFT API above, what most NFT buyers don't realize is that all they're buying is a number that points them to a server somewhere that tells them what resides there. Because most NFT servers are actually centralized, it's entirely likely that the information your NFT is pointing to isn't even permanent.

One of my favourite descriptions of an NFT so far I heard on a podcast I can't even remember but it went something like this: "An NFT is a finger pointing to something in the sky, like the moon. But the moon moves, and sometimes out of sight. You're not buying the moon, just the finger pointing to the moon."

I thought that was apt!

So one day, if you do decide to buy NFTs that don't have any obvious use to you (in-game NFTs are another story altogether), just make sure you're not surprised to wake up one day to see this screen below when trying to look up your million-dollar NFT: