Whichever side you’re on, the hype and resentment of NFTs are resulting in them reaching a critical mass of mainstream appeal.
NFTs are officially taking over and entering the mainstream. Everywhere you turn, that three-letter acronym seems to be inescapable. How did this happen, and what even is an NFT?
“NFT” stands for non-fungible token. These “tokens,” or digital items, are held independently on internet marketplaces. The blockchain, which is where these marketplaces are stored, generates and authenticates decentralized assets like NFTs and cryptocurrencies.
“Okay,” I hear you asking.“I get what an NFT is now, but why are they worth so damn much?”
Good question.
The worth of NFTs comes from the fact that they are, as previously mentioned, decentralized assets. This means that distribution is peer-to-peer rather than one centralized entity, the government, controlling the distribution. NFTs demand such high prices because they are considered unique, non-fungible assets.
An example of a real-world non-fungible asset would be the Mona Lisa, since there’s only one authentic Mona Lisa. The authenticity, exclusivity and a mix of society’s cultural-monetary evaluation of art give the Mona Lisa its $850 million price tag. The same rules apply in the virtual world of NFTs. So no, screenshotting someone’s NFT does not mean you own it.
While NFTs may sound like a new internet happening, the core idea of digital items having substantial monetary value isn’t anything new.
The “Counter-Strike: Global Offensive” (CSGO) community has already shown what an NFT marketplace would look like since its conception in 2012. Digital items within the game can be sold or traded through the Steam community marketplace, which is dictated by supply and demand.
Even with how niche the CSGO community is, its marketplace is so lucrative that most items have significant financial value. The Case Hardened AK-47 weapon, with four Titan holographic stickers attached, was valued at $150,000. The most expensive unsold weapon is the Case Hardened Karambit Blue Gem, which is valued at $600,000.
It’s important to note that these weapons are cosmetic skins. These digital items give the player no advantages ingame, yet they net such substantial value.
On the surface level, NFTs seem to be an intriguing emergence in cyberspace. However, the technology has drawbacks.
Minting, the process of generating and authenticating NFTs and cryptocurrency, is bad for the environment. Authenticating, auctioning and selling NFTs each take massive amounts of energy because they happen on the blockchain.
Visual artist and climate change activist Joanie Lemercier reported that selling just two NFTs hosted on the NFT marketplace Nifty Gateway used 175,773 kWh and emitted 103,129 Kg of CO2. To put this into perspective, this is equivalent to a single EU resident’s electricity usage for 49 years, a computer being left on for 401 years or flying an airplane for 992 hours.
Theft is common within virtual spaces where, unbeknownst to digital artists, their artwork is sold without their permission. The Twitter account NFT thefts, created in Sep. 2021, has documented thousands of plagiarized NFTs, while also sharing resources for digital artists if the problem arises.
Some NFTs are advertised in the name of dead celebrities, which audiences have criticized as tasteless. On Dec. 14, 2021, Stan Lee’s Twitter page promoted an NFT of Chakra The Invincible, Lee’s first Indian hero. The Twitter post stated that Stan Lee was ahead of his time for championing diversity and embracing new technology.
Most egregiously, an NFT collection titled “EtikaPunks,” named after the deceased content creator Etika, was created to “commemorate the life of Etika who sadly ended his own life with these one-of-a-kind NFTs made by fellow fans of his!”
Despite the negatives, NFTs aren’t entirely doom and gloom.
Instead of relying on commissioned work, merchandise or the occasional brand deal, NFTs support digital artists. Jacqueline Choe, known online as JisuArtist, normally sells prints and merchandise of her artwork for around $20-$60 on her website. Now, she can also auction her art as an NFT and have Ethereum bids worth two thousand dollars.
Since blockchain technology is still relatively new, the infrastructure is gradually improving. Some blockchains are moving away from a proof-of-work (PoW) mining process, adopted from Bitcoin’s early development, to a more recent, energy-efficient minting method called proof-of-stake (PoS).
Whichever side you’re on, the hype and resentment of NFTs are resulting in them reaching a critical mass of mainstream appeal.
Game publishers Square Enix and Ubisoft plan to incorporate NFTs into their games. The President of Square Enix, Yosuke Matsuda, spoke about his investment into NFTs and blockchain games in a New Year’s letter.
“The driver that most enables such self-sustaining game growth [from blockchain games] is diversity, both in how people engage with interactive content like games and in their motivations for doing so,” Matsuda said. “Advances in token economies will likely add further momentum to this trend of diversification. I see the ‘play to earn’ concept that has people so excited as a prime example of this.”
Ubisoft is getting into the NFT space with Ubisoft Quartz, described as “a new experience designed for Ubisoft players,” Digits, Ubisoft’s form of playable NFTs, will be introduced into their upcoming projects. Similar to the Steam marketplace with CSGO, players can buy and sell items from one another.
Twitter recently integrated NFTs into their website as well. Users can now showcase their NFTs as profile pictures, which are separated from normal profile pictures with a hexagon shape instead of a circle.
NFTs are also expanding outside of just digital items into tools and services.
VoiceverseNFT is an NFT service that uses AI to simulate specific voices. Troy Baker, an industry-leading voice actor, received backlash when he announced his partnership with VoiceverseNFT.
Baker’s announcement was perceived as inflammatory towards critics due to his quote, “you can hate. Or you can create. What’ll it be?”
VoiceverseNFT previously admitted to selling voice content stolen from fifteenAI, a non-NFT voice synthesis service. Additionally, other voice actors like YongYea have criticized the concept of voice NFTs for their potential industry impact. Voice NFTs could be successful for popular voice actors like Troy Baker, but they could reduce work for up-and-coming voice actors.
On Jan. 31, Baker announced that he ended his partnership with VoiceverseNFT, stating: “Intentions aside, I heard you and apologize for accusing anyone for ‘hating’ just by simply disagreeing with me.”
Are NFTs the inevitable future of the internet? Lines have been drawn and sides have been chosen, but currently, it seems like NFTs are here to stay.
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