Non-fungible tokens
Non-fungible tokens (NFTs) first came to my attention just a couple years ago. Apparently, anything could be an NFT. Per Investopedia:
“Non-fungible tokens (NFTs) are assets that have been tokenized via a blockchain. They are assigned unique identification codes and metadata that distinguish them from other tokens.
“NFTs can be traded and exchanged for money, cryptocurrencies, or other NFTs—it all depends on the value the market and owners have placed on them. For instance, you could use an exchange to create a token for an image of a banana. Some people might pay millions for the NFT, while others might think it worthless.
“Cryptocurrencies are tokens as well; however, the key difference is that two cryptocurrencies from the same blockchain are interchangeable—they are fungible. Two NFTs from the same blockchain can look identical, but they are not interchangeable.”
Most of the NFTs I’ve seen have been digital images. Their utility depends on The Greater Fool Theory of investing. Again, per Investopedia:
“The greater fool theory argues that prices go up because people are able to sell overpriced securities to a “greater fool,” whether or not they are overvalued. That is, of course, until there are no greater fools left.”
Apparently, the universe of fools is large and expanding, and there’s no shortage of people willing to exploit them. Now, there’s a secondary market in lawsuits filed by those left holding the bag when the NFT bubble bursts:
“NFTs are used to transform works of art and other digital collectibles into one-of-a-kind, verifiable assets that can be traded via blockchains.
“Prices soared in 2021, with an NFT of Twitter founder Jack Dorsey’s first ever tweet selling for $2.9 million, a video clip of LeBron James making a slam dunk fetching over $200,000 and a “Nyan Cat” GIF going for $600,000. The first virtual NFT artwork to sell at a major auction house, “Everydays: The First 5000 Days” by a digital artist who goes by “Beeple,” fetched a record $69 million at Sotheby’s rival, Christie’s.
“The Bored Ape Yacht Club, a collection of 10,000 NFTs hosted on the Ethereum blockchain, launched in April 2021. The images feature cartoon apes with computer-generated features and accessories, such as gold fur, laser eyes, “hip hop clothes,” a “sushi chef” headband or a sailor hat.
“The lawsuit against their creator also names several other companies involved in promoting the NFTs, such as sportswear giant Adidas, claiming they conspired in a “vast scheme” to artificially inflate prices.
“Crypto payments company MoonPay is meanwhile also accused of market manipulation. The lawsuit says that Yuga Labs used MoonPay to “discreetly pay their celebrity cohorts” and make interest in the NFTs “appear to be organic” rather than the result of a paid promotion.”
Nothing new about this. See, e.g., Tulip Mania in the 17th century Netherlands. It’s remarkable to me that in the third decade of the 21st century, the supply of fools is as robust as ever.
NFT lawsuits
The First NFTs Pre-existed the United States
The first NFT was a long, beaded belt of white wampum with two parallel lines of purple beads.
The difference is that wampum belts were actual rivalrous physical objects. An NFT doesn’t confer the right to prevent people from duplicating the image. The only thing that they represent is the fact that you have given someone some money, with nothing to show for it. The world is full of morons.
Hmmm. Since no one knows what ‘fungible’ means, there is no difference between ‘things that are fungible’ and ‘things that are non-fungible’. It ought to the case that tokens that are non-fungible are only worth the paper they are printed on, if that.
That’s certainly not true of money, right?
@Fred,
From Investopedia:
“Fungible goods are items that are interchangeable because they are identical to each other for practical purposes. Commodities, common shares, options, and dollar bills are examples of fungible goods.”
And, somehow, the use of acronymns like ‘NFT’ disguises the fact that ‘NF’ is the opposite of ‘F’.
Like how everyone finally got so confused by the use of ‘virtually’ and ‘figuratively’ that they were fianlly declared to mean the same thing.
“literally” now means “figuratively”
Hmmm. Maybe ‘virtually’ means the same as ‘literally’, pretty much.
An awful lot of time and effort went into making a wampum belt.
That’s why they were considered valuable, and could be used for trading.
Similar to gold-mining, back in the day, and digging for diamonds.
Not exactly true for bit-coint mining, which mainly involves a lot of energy consumption. But all this is expensive, the more so the better apparently.
Goethe said ‘Alles vergängliche ist nur ein gleichnisse.’
(All that is transitory is only illusion.)
One observes that money is considered (by some) to be an abstract concept.
Whatever that means.
@Fred,
From the Encyclopedia Britannica online: “Money is a commodity accepted by general consent as a medium of economic exchange. It is the medium in which prices and values are expressed. It circulates from person to person and country to country, facilitating trade, and it is the principal measure of wealth.”
From Simplicable: “An abstract concept is an idea that people can understand that has no physical form. The ability to identify, understand and communicate abstract concepts is a foundational element of human intelligence. It is a mistake to think that all abstract concepts aren’t real as they can be documented with evidence.”
Note the use of the word “all” in that second definition. Some currency takes physical form, even though the US Treasury creates and destroys dollars every day with keystrokes. Yap Island coins have physical form. But the *utility* of money rests on belief, even when it takes physical form as paper, metal, stone, shells or beads.
‘Currency’ (coins, bills) is certainly not abstract.
@Fred,
Some currency takes physical form, even though the US Treasury creates and destroys dollars every day with keystrokes. Yap Island coins have physical form. But the *utility* of money rests on belief, even when it takes physical form as paper, metal, stone, shells or beads.
The ‘value’ of money seems (to me) to be an abstraction, somehow tied to the ‘full faith & credit’ notion. Hence the expression, ‘not worth the paper it’s printed on.’