While NFTs are critiqued heavily, it often gets a bad reputation due to its misrepresentation. As one of the newer concepts in the land of crypto, it is understandable that many are skeptical. After all, why would someone spend thousands for a silly-looking piece of digital “art”? While this is how it is perceived by many, the truth is that there is much more to it than just that. While it is talked about often on the interwebs, there are a lot of half-truths or preconceived notions that surround NFTs; however, due to the complexity of it all, it can be understandably so.
U.S. History and Sociology teacher Mr. Patrick has collected NFTs and been bullish on cryptocurrencies for a while now. Patrick described NFTs as a thing that “holds a spot on the internet or on the blockchain.”
In layman’s terms, the blockchain is essentially a system that records information through data that cannot be changed, or at least would be very difficult to, and can conduct transactions.
Mr. Patrick said, “Today what we know NFTs as are more like art style pieces… tomorrow NFTs will be completely different.”
Some ways they could be different is by having an effect on how we deal with selling homes and cars, for example. He also explained how it is possible to sell a house or car through an NFT.
“The deed to your house, you would enter that into a smart contract, and then once someone agrees to buy that house they enter into that smart contract. Say it’s two Bitcoin, they could use two Bitcoin to buy that particular home, and then the deed to that house would be released via the smart contract,” Patrick said.
Another criticism of NFTs is also their harm to the environment. Many critics and skeptics hold this against NFTs. Mr. Patrick admitted to some of its faults, however also said that he felt those people are missing the bigger picture.
“NFTs on Ethereum (a cryptocurrency) is what we refer to as ‘gas.’ Gas is basically how much you’re paying for a transaction to go through… mining that takes place because ‘proof of work’ uses energy. So the argument that NFTs are bad for the environment is talking about the type of energy, and the amount of energy that is used through a transaction on the ethereum network. Ethereum is not the only NFT chain, there are other NFT chains that are completely green like Algorand. (That) would be one that is totally green, it’s actually a carbon negative blockchain so they’re actually doing things to better the environment. The idea that all NFTs are bad for the environment is just hyperbole.”
Patrick also mentioned some other cryptocurrencies that can back NFTs that leave little or no carbon footprint, such as Solana and Tazos. He said there are “many alternatives.” He also mentioned another crypto, Avax, saying that there are, “plenty of other alternatives. The main one that people discuss is Ethereum, and that’s because the most people use it.”
Mr. Patrick also described one way energy is being obtained through a more clean route. “Bitcoin miners are working towards using green energy in order to mine Bitcoin. The truth that isn’t being told is that we have an energy that we don’t use every single day that just kind of sits on the grid. You have other sources such as hydroelectric power.”
He also described a particular way some miners are getting their energy, describing how energy is being obtained through the El Savador volcano, saying whenever oil is being drilled, “flaring off of natural gas and burning that off is just a process that has to be done. What bitcoin miners did was they went and hooked up mining rigs to basically harvest that natural gas and turn that into clean energy in order to mine bitcoin. If you think about a situation like Texas had, where they had their power grid shut down, and then we see this an incredible ramp up in energy costs for the average consumer. The thought process here is that if you’re mining bitcoin on the grid, and then you have an issue such as that Texas power outage, you shut the bitcoin miners off, you take the bitcoin that you’ve mined from them, and then you’re able to purchase outside energy and not have the extreme rate hikes that the Texas folks have.”
Mr. Patrick also discussed the future of crypto and how things could improve. “Crypto people are inherently trying to do what’s better for the world.” He argued, “We’re only 10 years in, and so the thought that it ‘must be green now,’ well it takes time. It takes time to get to that point and it doesn’t just happen overnight because you want it to, and that’s the important part that people have to understand. There’s a greater thing that’s happening here rather than just like ‘well you’re not doing this now,’ well we’re going to, we just have to get there.”
The U.S. History and Sociology teacher also described the process of crypto mining, saying to think of it as like “a really, really hard sudoku problem. Your computer is solving this problem, and then once that problem is solved, it’s awarded with a block of bitcoin.”
Another critique of NFTs are those that say, “well, why would I pay so much for an NFT when I can just screenshot it?” Many people view this as the equivalent to buying the NFT, without having to pay. This is not the reality of the situation though. Mr. Patrick also countered that argument, saying, “Yeah, you can go ahead and you can right click and save that thing, but do you have the rights to it? And the answer is no, I have the rights to that image.” Mr. Patrick gave an example of if he bought a particular NFT, then he would have the rights to, for example, make a clothing focused on that image or item, because he would own the rights to that. “If I wanted to create a comic strip, if I want to create a movie, a television show, I have the rights to do that.”
Mr. Patrick further explained that the reason that argument doesn’t work very well is because he can prove that he owns the NFT. “It’s more than just a jpeg, there’s data behind that. We’re going to get to a point where you will be able to have code written into NFTs that could possibly change once it changes hands from person to person. That’s the thing that most people don’t understand, they just think it’s a picture. It’s not. There’s code behind that as well that causes it to do whatever it’s going to do.” Another example of this would be when buying a book. When you buy a book, you’re not actually owning the copyright to the book. Sure you can read it, however you do not own the copyright of the NFT.
Another question circulating is why would people be so willing to pay so much for digital art pieces? What many people don’t consider though is that this is art as much as physical pieces of art are. People pay thousands for art pieces all the time. The highest selling painting was Salvator Mundi by Leonardo da Vinci, which went for $450 million. Mr. Patrick also similarly stated that same idea, “This is just a new iteration of that, it’s a bet that in the next 10 years we will be more digital than less digital.” He also made the case for the other side a bit, saying, “could you consider that highly speculative? Yes, you could. But I think that with what we know about how we are progressing as a species that eventually we are going to be more digital. You are buying, right now, the early iterations of the Mona Lisa, you’re buying the Van Goghs, the Da Vinci’s, like that.”
He also compared it to how much people spend on physical art now, saying, “if you look at like how much money is in the art market, it is a striking amount. This just makes a much better medium of exchange for it instead of having to go to a physical place (like) an auction house in order to buy this art, or having to go to New York to see my favorite painter or photographer’s thing. I can go online in a virtual gallery, and see everything that they’ve produced and choose and buy exactly what I want.” He also made the case to both sides, saying “I always ask people: in the next five years are we gonna be more digital or less digital? If you think less digital, NFTs aren’t for you. If you think more digital, this is a speculative investment that might be right for you. If you like the art, buy it. If you don’t, you don’t have to.” He also emphasized that this is an investment, however one that he and many others believe in, which is true. This is as much of an investment as anything else, whether it be stocks, mutual funds, or even collecting items that you believe will be more valuable in the future. Most of us
Another critique some that may be opposed to NFTs are that some of them are stolen. Many people don’t realize, though, that you can actually see if it is stolen or not. Mr. Patrick also stated the same. ”That is a thing that happens, but I can go and see who created it right away. I can click on that NFT and then if you’re a real deal creator, you have listed your creator wallet, the transaction IDs, everything.” He also made another point saying, “it’s also ridiculous to think that it’s only happening on the internet. People buy stolen pieces of art all the time. It’s not just an internet thing. The same thing goes for wine, people steal and falsify wine and make fake bottles and sell it like that. Does that mean we shouldn’t drink wine, does that mean we shouldn’t collect wine, does that mean we shouldn’t collect art? You have fraudsters in everyday life all the time, always trying to scam you out of things. NFTs are no different than any other thing out there.” This point is true. As similarly stated previously, we make investments like this and purchases like this very often, the only difference in terms of the purchase aspect being that this is an investment that is highly speculative, similar to some investments you may make in the stock market.
Mr. Patrick also believes that NFTs support artists rather than hurt them. “Ten years ago if you wanted to be an artist, you had to pay money to be in a gallery, you had to go out and promote your artwork, it was expensive. It wasn’t cheap, it was difficult.” He continued by saying that on platforms such as OpenSea, a place to buy and sell NFTs, “there is no gatekeeper. You post your art that you want to post and that allows people if they want to buy it they can go do that. It allows artists, musicians, whomever to connect with people in a way that they have never had the chance anymore. The term starving artist is starving artist for a reason. Today, artists don’t have to starve.”
This is all very true, because as I’m sure most would agree, it is easier to reach people through the internet as opposed to the confines of one building or area of the world. Mr. Patrick also gave an experience he has witnessed for example of how this helps artists, describing how the creator he has bought the most NFTs from was just able to pay off his student loans. “His classmates think NFTs are ridiculous. Yeah, they have a hundred thousand dollars in student loan debt and he doesn’t.” For those reasons, Mr. Patrick said it is hard for him to understand how it could hurt artists more than it does help them.
While it is true that NFTs are a complex thing to understand and wrap one’s head around, there are indeed some false notions that surround it. Between NFTs being smart contracts, to helping artists have more of a chance to get their art out there, it seems that it can have a very good impact in the future if NFTs continue to get support by its community, which currently seems to not be slowing down. While the future is in fact uncertain, all that can be done now is to speculate, just as one would with any other investment.