The curse of NFTs

Non Fungible Token' are goods that are said to be non-equivalent because they can be unique pieces.

It is said, for example, that a crumpled and used $10 bill is worth exactly the same as a new one and, therefore, they can be exchanged without any change in value. In fact, this is true... but not completely true.

The material value of a $10 bill is practically none (the value of the paper and ink). The accepted or official value is the value we assign to it, which is ten dollars. From this point of view, a bill is fungible. It is exchangeable for any other.

But there is another value, the market value, which is the value that someone is willing to pay for his $10 bill. Imagine that the bill is a limited series that was printed with a mistake that was later corrected. Or that it was printed in a particular year with the serial number 00000 (the first of that year). Perhaps, a collector could pay more than $10 for it. At this point is where speculation begins.

The Value

NFT technology makes it possible to create one-of-a-kind pieces. But that does not mean that all NFTs are unique or have any value or an interchangeable value.

Imagine, for example, a unique painting by Goya and a unique painting by Velazquez. Both are paintings, both are highly valued, but they are not the same painting, nor do they have the same value, nor will they evolve over time in the same way.

The same thing applies to NFTs when they are unique, but NFTs can be generated in series (an authentic Goya or a Velazquez cannot).

Although we could replicate the same NFT over and over again, it would not be exactly the same. They would have a slightly different encoding and we would be able to tell which one was created first (as with $10 bills).

So NFT can be of limited series. For example, we can make 1000 copies and no more.

For collecting purposes, the NFT with the serial number 000 (the first created) is likely to be more valuable to collectors than the 234. Or the 999 (last of the series created) may be even more valuable. Who knows on what basis a collector will pay a different price for an NFT that looks the same as another? Just as it happens with the $10 bill, which in reality, belongs to a limited series.

We can also make unlimited copies of a NFT, but if something is too common, it becomes worthless.

I would say that the collectible value of an NFT rests on three things: its uniqueness, its authenticity and its immutability.

Immutability, uniqueness and authenticity.

Once an NFT is created, it cannot be altered (for good and for bad). An NFT can be unique or very scarce. And an NFT can be original/authentic… or not.

For example, in NTF-based games there is the possibility of acquiring a very common NFT, a rare NFT or a unique NFT. Apart from its in-game utility, its rarity gives it additional value. A collectible value that is worth a little if it is of an unlimited series (common), a little more if it is of a limited series (rare) and quite a bit more if it is unique.

However, anyone can capture an image of that NTF. But cannot own it, cannot copy its code, and cannot use it in the game. It is not the image, it is the ownership and authenticity that makes a token valuable.

For example, anyone can buy a replica of a Da Vinci's painting or take a photo of it, print it and hang it in the living room. But it is not the authentic work, nor is it rare or valuable. Pretending that it is an authentic work (by an NTF) is useless because it is obvious that it is a falsification without any value. It is the same as making a photocopy of a $10 bill.

Although the NFT technology can be applied to multiple things (property documents, identity documents, quality seals…) it is in the world of Art where it has found a fantastic flourishing.

Speculation in art is something very old and very previous to NFT and that is precisely the curse inherited by NFT based on artistic creations.

Loads of untalented people pretend to be creators of digital artworks with some value. They pretend to become the contemporary Goya, Velazquez or Da Vinci, but without the talent and the effort that these geniuses applied to their unique works.

The worst thing is that 99.99% of them are not unique, authentic or original works. Mostly, they are illegal appropriations that could (and should) be reported for attempting to obtain economic profit from someone else's property.

In sum: they are falsifications done by thieves of stolen pieces that only pretend some kind of talent that they do not have. And earn money selling a fake artwork, by the way.