WTF is an NFT? The Philosophy and Politics of the Internet’s New and Most Confusing Investment Vehicle
Were you on the internet during the 90s?
Apart from Web Rings, Yahoo Groups, and Under Construction signs, you might also remember “adoptable pets.” These were simple GIFs that you could copy and paste from another website onto your own “homepage” and say that you “owned” them. There were cats, dogs, hamsters — all lovingly rendered with about 8 pixels each.
I had dragons.
These pages are mostly dead now, so much so that you can find very little information about them outside of the WayBack Machine.
But their spirit lives on in NFTs.
What is an NFT? Or: I’ve Got a Great Picture of a Bridge to Sell You
Imagine, if you will, that you have a lamp. You take a photo of this lamp. You then write a receipt saying that you are giving this photo of a lamp to a person you know. You sell them the receipt. You sell it for $20,000,000.
An NFT is a non-fungible token. NFTs form a list of validated, signed, and credentialed transactions; they operate as a “certificate of authenticity” for a digital item. At its simplest, it’s like a ledger:
MARY SOLD [Green Dragon GIF] TO TODD
JIM SOLD [Red Dragon GIF] TO MARY
Why are NFTs worth anything? Well, really, because people agree that they are. But on a technical level, NFTs operate on the blockchain. The entire chain is visible to and validated by everyone.
Everyone knows that Mary was the first to sell a Green Dragon GIF to Todd and Todd was the first to buy it. This opens the door for “collectible” sales; someone can sell limited edition GIFs, for instance, and charge only for the first 10.
But I Can Just Have a GIF
Yes, you can. You can have the GIF. You can do whatever you want with it. The NFT part only comes in to validate transactions. Anyone can have the GIF at any time; what you’re purchasing with an NFT is the transaction on the blockchain. Essentially, you are purchasing a receipt — validation that the transaction just occurred.
But. I. Can. Just. Have. a. GIF.
At first, NFTs seem impossibly complex. Then, once you understand them, they seem impossibly shallow.
But both things are true.
If you’re jumping ahead, you already realize there are some core problems with NFTs:
- Just like a dead web link, an NFT can just disappear if it isn’t saved by the user who bought it.
- Anyone can view the NFT anyway, it’s literally just a digital item, not encrypted in any way.
- Despite this, NFTs are going for ridiculous amounts of money — $500,000 for “disaster girl.”
- Importantly, NFTs convey no exclusivity, merely certification.
Of course, everyone’s always looking for a new investment vehicle. And we are rapidly reaching a horizon in which we must, universally, admit money means nothing and value is in the eye of the beholder.
So, What Are NFTs Actually Being Used For?
I already told you: Dragon GIFs.
But the technology is in its infancy and that’s not to say they aren’t being used for other things. NFTs are being used to sell digital land, for collectibles in video games, and pretty much anything else that absolutely should not have an investment valuation attached to it.
Yet some of these GIFs, PNGs, and JPEGs — which, it must be stressed again, have no exclusivity or even permanency — are going for hundreds of thousands of dollars.
What is happening?
What are they really being used for?
Let’s Take a Step Back: What is “Value”, Anyway?
Say you are a millionaire and you want to make a transaction of $500,000 for highly illegal goods. Even though you’re a millionaire, you can hardly write a check and put “crack” in the memo line. Your accountant frowns on it.
In the old days, you’d have to buy a painting for $500,000 and then gift that painting to someone. Then you’d have all the crack paintings could buy. The painting itself would serve as a type of check for this transaction.
But you can’t just buy a $50 painting. You need to have some justifiable reason as to why that painting is worth $500,000. Otherwise, there’s no plausible deniability.
This is where NFTs come in.
Fine art has been used as a financial instrument by the rich for pretty much as long as there has been an art market. It all works based on an agreed-upon value. You can give someone something — anything — “worth” $500,000 as long as they have a pretty solid assurance that they can prove it’s “worth” $500,000.
And NFTs are way more convenient than purchasing a Banksy and hoping it doesn’t self-shred.
Some People Are Idiots; Some People Are Rebels
Alright, but it’s certainly not just old money jumping in to buy cat GIFs on OpenSea. They still don’t know what Bitcoin is.
The internet has given rise to a counter-culture of financially-backed trolls; people who have made literally millions on Robinhood YOLOs, GME, and DogeCoin. While they are a very small percentage of total investment stock, they are a very large presence when it comes to anything meme-related on the internet.
Which NFTs absolutely are.
And why shouldn’t a 17-year-old with $50,000,000 in the bank thanks to DogeCoin spend $50,000 on a GIF of a dragon?
This counter-culture isn’t as aimless as it might appear. Beneath the obstinance lies a real desperation. As the fabric of our economy continues to fray, there is a reckless and perhaps even poetic desire to strike out at the financial masters that are pulling at the seams.
NFTs are more than just a dumb investment being fed into by internet billionaires and they’re more than just a loophole the rich can use to fuel their crack addictions or purchase indentured servants from other countries. NFTs are symptomatic of a greater issue; the fact that late-stage capitalism is reaching end-stage capitalism.
With so much wealth accumulated at the top, the ways we now gain wealth have become whimsical and arbitrary. Wealth is littered upon the lower classes by cavalier, capricious billionaires; people who can turn a company’s stock or bolster an alternative currency exchange based on a single tweet.
So, what are NFTs? Probably the coming of our own financial demise. But if you want to see 90s era Geocities GIFs, there’s currently no better marketplace.