June 19, 2021

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The Troublesome Reality Of An Exploding NFT Market

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I just bought a Disney movie for $30 the other day. 

Actually, I didn’t really “buy” anything. Using the Disney+ app, I merely rented the digital code for a period of time. And even when I do “buy” a digital movie, it’s not mine to keep forever. I don’t own it, I’m licensing access for a while.

In the digital realm, ownership has a whole new meaning.

In recent weeks, I’ve heard about how the NFT market has exploded. People can “purchase” the ownership rights to a house, a tweet or a video clip.

In some cases, they have bought the rights to a single image. An NFT stands for “non-fungible token” and the best way to think of it is like having a digital ledger in the blockchain that authenticates you as the original owner. 

Like that Disney movie or an NFT, this idea of digital ownership is complex and nuanced. I don’t technically own any of my tweets, for example, so if I sell an NFT for one of them, it’s more like I own the official autographed copy. You know who really owns the tweet? That would be Twitter itself.

Even if someone pays millions for the tweet, it’s mostly just “parked” in the blockchain, a digital authentication. Is this a good trend?

I talked to two book authors recently who told me the idea of owning autographed copies of digital bits and bytes is rather troublesome, actually.

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Michael Heller and James Salzman both teach classes about property ownership and they wrote the wonderful book Mine!: How the Hidden Rules of Ownership Control Our Lives that came out just this month. I included the book in a recent round-up.

Heller says an NFT authenticates the original digital artifact, and what makes it so trendy is not the technology itself but the fervor over buying these digital signets.

“It’s tulip bulb mania and it can last for a while but eventually it will probably come to an end. I am skeptical it will last,” says Heller. Meanwhile, Salzman called it “ownership engineering” and wondered if there is a sustainable market for virtual artifacts. For now, he argues there is. 

Both authors seem to view the NFT explosion as a flash in the pan and a worrisome sign.

“In my mind, an NFT combines the absolute worst of two worlds. It combines the worst of blockchain and the worst of the art world,” says Heller. “It takes online art, which has been one of our most democratic media, and turns it into a ruthless speculative game for the tech bros who are looking for places to park their extra money.”

Heller argues that the entire exercise seems to be a waste of resources and doesn’t serve either community (e.g., those in the blockchain or those who collect art). Salzman agreed there is a cultural aspect where people are trying to show their wealth in new ways.

“We are in the midst of an ethical transition,” says Salzman. “We have always thought of ownership as our tangible stuff. In the last two decades that has changed very quickly to owning or relying on a string of ones and zeros. On my iPhone, what do I own? I own a brick. I don’t own the operating system. I don’t own the apps. It’s not like owning a horse back in earlier times. We are in a digital economy now where we are licensing access.”

“What does it mean to move to a world where we stream everything and own nothing?” asks Heller. He doesn’t think it is the end of ownership but the hyper-concentration of ownership. Uber and Lyft are just two examples of what that looks like, he says. Ownership still exists, but we might not be the ones who own the car or the GIF of LeBron making a spectacular dunk.

There is a danger, though.

“I worry that in the move to an online world we lose the tangible and spiritual connection to physical ownership that has been so important throughout human history,” says Heller. “I don’t know if I want to live in a world where people rent their engagement rings or lease their dog.”

I’m not sure, either. I told the authors I might decide to sell a few tweets as an NFT, but since then, I’ve wondered if I really care that much about them at all. A social media influencer I know named Shay Rowbottom recently commented, tweets are a bunch of digital codes on a screen. It’s not worth getting too enamored with them.

I’m curious what you think. Post in my Twitter feed if you think NFTs are legit.

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