NFTs & Why They Aren’t Evangelized by Everybody

Do NFTs have any inherent value? It’s one of the most heated topics of the past few months. The whole phenomenon of buying NFTs is pretty counter-intuitive when you first encounter it. Why are people spending millions to own things that do nothing and don’t exist?

It shouldn’t come as a surprise that people collect digital assets, but mainstream society is baffled as to why some would want to own and pay large sums of money for an NFT (especially if it is just a collectible or a work of art). For collectors the idea of connecting with their favorite artists or public individuals through collectibles is exciting and collecting as a hobby has been documented as far back as 3000 BCE. Still, NFTs and their collectors have attracted a lot of provocative opinions

People have complex reasons for buying things, and even though a large part of the world’s population now spends more than 80% of its time using technology, we still find it somewhat hard to understand and accept that intangible assets can have value.

Why are people paying millions for projects like NBA TopShot and CryptoPunks when they’re essentially, useless? Other than bragging and proving that you own one of these NFTs, you can’t do much else with them. However, whether you find value in them or not, they are valuable.

An article was recently published by a BBC journalist with the sensational title “Buying a pink NFT cat was a crypto nightmare.” The NFT community was pretty outraged at the audacity of this journalist to speak so cruelly about NFTs. While the community’s objections are valid, the points raised in the article are something we can learn from; why have NFTs and blockchain in general not yet been adopted by mainstream culture?

We create value

Before attempting to explain why people are baffled by the fact others spend hundreds, thousands, or millions of dollars on something that you can’t physically hold and admire, it’s important to consider how technology and humanism philosophy relate to “value.” 

As Jonathan Zittrain explains: “The internet itself similarly functions as a collective hallucination, owned by no one. It has no CEO. No entity controls its evolution. There are only manufacturers of internet devices, operators of networks that interconnect with the larger network, and authors of software that “speak” internet. When new internet standards are proposed by the unincorporated volunteer organization that stewards those protocols, they are not adopted through regulatory mandate, but through emergent consensus that they are better than what came before—or at least that they are likely to be adopted by others, who in turn are looking to see what everyone else is doing.”

We as humans collectively create value through supply and demand, and NFTs are an incredible example of how we co-create and dictate reality. NFT art wouldn’t have value if we didn’t, all together, agree to give it value. People buy art for many different reasons, such as supporting an artist, as a financial investment, or as a hobby. 

Ownership is valuable

The idea of ownership and owning “the real thing” is nothing new and has been around for centuries. As we all know, brand names and originals cost more than knock-offs, and first editions cost more than later printings. The endowment effect perfectly describes the difference between owning an NFT and right-clicking to save a copy – and while it may not be rational it is very real.

In an article by KF on understanding art and NFTs, the author explains how Rai stones, which were enormous stone disks used as money hundreds of years ago on the islands of Yap, were not moved when spending them. Instead, they just kept track of who owned which ones with the physical stone being irrelevant. Only the ownership mattered.

In that sense NFTs are just another tool for proving ownership, authenticity and provenance.

NFTs offer many new possibilities

NFTs have a wide-range of use cases beyond crypto, art, and gaming, and they certainly have the potential to be a long-term player since they can be used in different niches and aren’t location-dependent. They also present opportunities for newcomers to learn how to navigate the crypto space. 

On the other hand, NFTs don’t have to be passive collectibles; they can be used to share in the profits generated by the community and the movement they create, meaning they have the potential to transfer wealth to young and budding creators without middlemen. NFTs can also be leveraged as assets in a variety of financial infrastructures, such as index pools. 

Why Mass Adoption and Accepting the Value of NFTs is Difficult

For the average person, learning how to sell, trade and pick the best NFT projects is a learning curve on its own and not as easily adoptable as it is to the seasoned tech-savvy user. To many, crypto and NFTs sound like weird, obscure trends that people are being scammed into accepting. After all, NFT traders should understand the latest technology, market conditions, and applicable copyright law when engaging in NFT transactions.

Authenticity remains a major concern, the market is not established, and the price of an NFT often depends on speculation and other factors such as utility, ownership background, liquidity premium and future value speculation. So it is no wonder that many fail to understand their value and what it’s all about.

Another major challenge is the underlying blockchain technology. Even more than a decade after blockchains first made it into the radar of geeky tech guys, there are still no “normal” uses for the typical consumer. Cryptocurrencies are the only use case so far, and even crypto is still a niche topic. The web had half a billion users around the world by the time it was as old as bitcoin is today. 

Then there is the clunky tech and the fact that NFTs still depend on third-party websites which are run by start-ups who may not be around in a few years, meaning your NFT may not be around either. How will the linked artwork be verified to the original in a few decades? 

Right now NFTs are built on an absolute house of cards constructed by the people selling them,” the software engineer Jonty Wareing wrote on Twitter.

Most NFT transactions don’t hand over copyright or other intellectual property benefits, so owning one doesn’t put you in a different position to someone who hadn’t bought it. You have only a token that is hosted publicly online, “registered” as assigned to your digital wallet rather than someone else’s. (quote)

The abstract nature of NFTs is also somewhat of a paradox that can be hard to comprehend. For crypto evangelists the fact that NFTs don’t come with more conventional fragments of ownership – such as physical items and perks – is what enhances the value of the NFT. Their purely digital nature may not resemble traditional ownership, but that’s what makes them desirable. 

Those who are not familiar with crypto, NFTs, or blockchain, typically presume that NFT buyers are either money laundering tycoons (yes, some are) or that they are being ripped off. However, this misses an important aspect of digital goods: “The less of a link they have to tangible, non-internet stores of value, the higher the price they might command.

For experienced NFT buyers, NFTs are an easy-to-understand use case for blockchain technology and a big step toward mainstream adoption. But to the traditional buyer, “crypto, NFTs, and blockchain” sound like bizarre concepts. A large number of platforms also require users to complete crypto-native tasks, such as using a digital wallet, before they can purchase NFTs. This is another barrier in pushing the potential audience beyond its current niche collectors. 

It’s clear that our lives have moved increasingly online, and many have come to value our online spaces as methods of education, work, socialization and relaxation. In this new era of virtual connection, NFTs will find their way to being appreciated and accepted. 

With that said, it’s also important to question whether we (the NFT community) need to evangelize NFTs and make sure that normal people “get it” and have uses to it? Perhaps it is for the best that we just do our thing and let the early adopters and tech enthusiasts embrace it, with the thought that mainstream will come eventually, whether we want it or not.

As Satoshi said: 

satoshiquote

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*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to fully research any product prior to making any kind of investment

Resources:

https://www.theatlantic.com/ideas/archive/2021/04/nfts-werent-supposed-end-like/618488/

https://www.theatlantic.com/ideas/archive/2021/04/nfts-show-value-owning-unownable/618525/

https://www.somethinginteresting.news/p/its-not-nfts-you-dont-understand

https://bisontrails.co/why-nfts/

https://medium.com/@changhugo/understanding-the-value-of-non-fungible-tokens-nft-49d2713bdfc4

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