NFTs: scam or art?

KIRAN BACCHUS (UPPER SIXTH)

Two million, nine hundred and fifteen thousand, eight hundred and thirty-five dollars and forty-seven cents ($2,915,835.47). That's the amount of money the first tweet ever in the history of Twitter was sold for by Jack Dorsey, former CEO of Twitter.

Transactions like these spark up the debate over NFTs, and whether they are the equivalent of a rising hot air balloon filled with pure speculation and excitement carrying the upper class, primed to eventually burst, or whether there is some aura of legitimate art behind the crypto-craze.

But first, what actually is an NFT?

NFT stands for Non-Fungible Token. Non-Fungible means non-replaceable, which is a key feature of most esteemed artworks, such as the Mona Lisa. Before explaining Token, it might be useful to explain the ‘blockchain,’ which, simply put, is a public record, powered by thousands of computers, tracking every transaction made between two users (getting rid of the so-called ‘middleman’ function of banks which already do this). So, if Person A wanted to purchase Person B’s tweet for close to three million dollars, the blockchain would only care to see if Person A actually had close to three million dollars in cryptocurrency to buy that tweet, or to buy that ‘token,’ resulting in the transfer of an NFT.

Of course, the biggest elephant in the room about NFTs is: what's the point?

After all, NFTs and digital art are not

truly non-fungible in the modern age,

where a simple click of the ‘save image as’ button renders any potential rarity null. However, if NFTs were truly null and void, how is it possible that they sell for so much?

One potential, and arguably cynical, answer is that it is just pure speculation. Finance and business content creator Coffeezilla claims that the "endless speculation on what’s gonna be the next NFT [is] where the scam is." One way in which this speculation manifests itself is by two or more people buying each other’s NFTs to increase their perceived values.

For instance, if Person A owns an NFT, they could sell it to Person B for $1000. Person B could then sell back the NFT for $1100, and then Person A buys it back for $1200. This cycle continues with both parties ultimately losing little or no money and making a larger profit when selling the NFT at a high perceived value.

The media and influencers have also played a part in increasing the general ‘FOMO’ (fear of missing out) of the public, with paid advertisers often promoting NFTs without publicly disclosing that they were paid to advertise it, alongside media outlets covering highly successful NFT stories making the average uninformed person believe that they have the same chance of having the same success.

Even some social media influencers, such as Logan Paul, are creating their own projects such as ‘CryptoZoo,’ which was later exposed to be poorly edited stock photos of two animals together (hence the name of a ‘zoo’ but on the blockchain), eventually netting $1,300,000 worth of Ethereum at the time. In fact, Coffeezilla himself recreated the NFT images in Adobe Premiere showing how unoriginal the

artwork for the NFTs were.

Nate Chastain, an executive at OpenSea (the largest NFT marketplace) is alleged to have partaken in insider trading, which is using non-public information to buy low, and sell high, an illegal practice which could have aided in the eventual accumulation of $539,000 worth of cryptocurrency. Thankfully, due to the public nature of the blockchain, wallet addresses can be tracked and traced to find out these scams. However, with Crypto and NFT scammers using dozens of wallets to hide their activity on the blockchain, the

majority of the public still remain blind and naïve on which NFTs, and which artists, are scammers or not.

However, some have argued that NFTs can serve some legitimate purpose as they provide an option for modern, digital artists who don’t use anything physical. CGI animators can create immersive, detailed 3D environments which aren’t as valued highly as there is no scarcity. NFTs may provide the solution for artists, as they allow them to make limited, certified copies of their art to sell on for higher prices reflective of the works’ worth. Art Station, a prominent website for people to showcase their portfolio of digital art, can often be limiting for newer artists due to the volume of already pre-established work and artists there, hence NFTs can be another viable option.

However, Art Station themselves had planned to release NFTs on their platform but quickly cancelled their plans due to public backlash, which labelled the practice environmentally unethical.

In fact, a digital artist, Akten, has analysed 18,000 NFTs, finding out that

the average NFT has a carbon footprint equivalent to a month’s worth of electricity for a person

living in Europe. The environmental effects of NFTs can certainly limit the availability. Therefore, a more reliable and

sustainable income can be attained by

aspiring NFT artists, ultimately serving some potential use that traditional art lacks, whilst also arguably being more detailed due to the increased use of technology allowing for more immersive and advanced effects.

However, NFTs and cryptocurrency in general are looking to become more eco-friendly in the future (Such as ‘Solana’ – claiming that one NFT transaction on Solana is less impactful than two Google searches) in order to reduce public backlash on NFTs, with renewable energy dampening the environmental impact.

More advantages of NFTs can be their low barrier of entry, which can allow thousands of unique digital collectives to be founded, with NFT projects such as CryptoPunks, Bored Ape Yacht Club, MoonCats and Flurks (having thousands of NFT variations) all available to browse on OpenSea. The obvious concern is that there are too many projects fighting for people’s wallets, but perhaps NFTs should be viewed under the same broadly positive light as eBooks and selfpublishing, which allow more people to become authors. Moreover, compared to traditional art, NFTs can be programmed to carry a royalty, allowing them to make money even after they’ve been traded past the first sale. For instance, a piece of work sold for $1,000, then $100,000 and after that $1,000,000. The creator who initially received $1,000 would accrue $111,000 with a 10% royalty after their work was traded multiple times in the digital market. At best, NFTs appear to be a temporary plaster to cover the deep wounds of unfairly compensated artists and, at worst, NFTs appear to be the cause of some people’s injuries. Whilst NFTs can provide a form of legitimate, accessible income, the overwhelming majority of value surrounding NFTs is solely derived from speculation drummed up by media headlines, the top 1% and influencers pushing out and advertising NFTs to the public and their audiences. The degradation of the environment and the physical world via thousands of computers chewing through acres of code to uphold the blockchain is yet another issue that’s only been skimmed through. There are countless issues not just with the functionality of NFTs, but also the negative impacts that follow even when they work properly that make them appear to be a scam for most.