Every time I read about NFTs and the tremendous amount of hype surrounding them, I think, “Surely I’ve got it wrong. Surely there’s more to these than there appears to be, because there’s no way this many apparently intelligent people could be taken in by something so obviously phony.” And the more I read, the more I realize – there’s not.
NFTs, or non-fungible tokens, use the same blockchain technology as most cryptocurrencies. That is, they’re a decentralized ledger that tracks the ownership of some asset, and provides a complete history of how that asset has been transferred from owner to owner. The difference is that, whereas the assets involved in cryptocurrency are created out of thin air (or fossil fuel) by some sort of mining process, the assets tracked by NFTs are external to the blockchain. It could be a tangible, physical object, or real estate, or any number of things. But the types of NFTs that seem to have garnered the most attention are those associated with digital assets like image files. NFTs are supposed to be the long-awaited answer to how we can enforce the ownership of something that can be copied and shared at will.
Except they’re not. As @gossipbabies put it on Twitter, “I feel like NFT’s are basically those certificates that say you have a star named after you . Like ok sure babe”
For those unfamiliar, there are a number of companies with names like “Official USA Star Registry” that, for a not-really-all-that-small fee, will send you an official-looking piece of paper saying that a certain star is named after you. Except it isn’t. If someone registered Mu Cephei in the name of Steve Buscemi, astronomers are still going to call it “Mu Cephei.” These star registries aren’t government bodies or scientific organizations, and virtually nobody actually uses the names they register for stars. And you certainly don’t “own” the star named after you in any real, legally binding sense. It’s a gimmick, nothing more.
But surely NFTs are different. Surely they enforce ownership through some kind of fancy technological means, right? Or at least provide evidence of ownership that would stand up in a court of law? No and no.
On the first point: I could see how something like an NFT coupled with digital rights management (DRM) could be useful. One of the criticisms of digital media like ebooks or downloadable MP3s is that once you buy them, you can’t resell them. A related criticism is that the company you bought them from still controls them and could decide to stop making them available for download; if you don’t have a backup, you’ll never see them again. Thus there’s a very real sense in which you only rent, rather than buy, digital media. (This point holds even more for streaming media, which, at least for audio and video, has all but supplanted downloadable media in recent years.) Removing DRM would just mean that anyone could share the media with anyone for free (whether it’s actually legal or not), and I know that many have argued that’s how digital content should be. A decetralized ledger that’s not controlled by Amazon or Apple, coupled with DRM that ensures that only the owner can decode the media, would allow customers to sell their copies of digital media to someone else, at which point the new owner would be able to decode it, and the old owner would not; this would continue to be possible even if the original seller stopped offering new copies for sale or even went completely out of business. NFTs do nothing of the sort, and in fact I’m not sure there is any technological solution that would make something like this possible and not be easily circumvented.
Nor does there seem to be much legal standing for NFTs. As this article points out, NFTs aren’t the same as copyright, and indeed there’s nothing to prevent someone from selling an NFT of a work for which the copyright is owned by someone else. The closest thing to a legally binding contract involved in an NFT is the so-called “SMART contract,” the blockchain code that determines how ownership changes hands, but these contracts don’t seem to be accepted by courts of law as of yet. And even if they were, what rights, exactly, would be enforced? If I “own” a copy of a Tweet (as distinct from the copyright to the Tweet), what do I even own, and how could I sue someone for violating my claim to it?
How are NFTs enforced, then? The honor system. A recent New Yorker article painted a glowing picture of an NFT community known as the Bored Ape Yacht Club, yet devoted only a brief mention to the fact that NFTs aren’t really enforceable: “N.F.T.s aren’t wholly secure – ownership is denoted only by a line of code on the blockchain, and anyone can theoretically copy an ape image and use it as an avatar. But the clubs police such appropriation. ‘Crypto Twitter has this understanding: you just don’t steal someone’s avatar,’ Artamonovskaja told me.”
In other words, the only thing keeping people from ignoring the “ownership” recorded in NFT ledgers and just doing whatever the hell they want with the images is trust. Communities like the Bored Ape Yacht Club that form around NFTs have to trust each other not to set their Twitter avatars to images they don’t “own”, and the penalty for violating that trust is merely the disapproval of that community. That’s where the real value (insofar as there is any) of NFTs comes from: you’re paying for approval. Buy this NFT of an ape shooting lasers from his eyes, and you, too, can be One Of The Cool Kids! You can set it as your Twitter avatar, and other Cool Kids who spent an astonishing amout of money for the approval of strangers will recognize you as one of their own.
This raises an interesting question: if NFTs are enforced only through trust, why do they need the blockchain? The whole point of the blockchain is that it’s a “trustless” system: if a block of transactions passes all the requisite cryptographic tests, one can be certain that it is valid even if one doesn’t trust the other actors using the blockchain. Contrast this to a database that’s stored on a server owned by a bank, government, or corporation: if you don’t trust the entity owning it, you have no reason to think they wouldn’t manipulate its contents to their own ends. The thing is, blockchains aren’t automatically superior to centralized databases for all applications because – and I know this is a radical concept – sometimes people actually do trust each other. And these NFT communities have to trust each other, since there’s no way to enforce their claims on NFTs except through the honor system. There’s no guarantee that the community won’t suddenly fall apart after you buy your monkey picture and there will be no Cool Kids left to congratulate you; there’s no guarantee that Twitter won’t be flooded with people setting their profile pics to your same monkey picture and the Cool Kids will be unable or unwilling to do anything about it. You pay your money and you trust that the community will hold up their end of the bargain. So why not just trust the community with a community-run database? It’ll be just as good as existing NFTs and won’t accelerate climate change nearly as much. But of course, this will never happen, because the only reason people even bother with NFTs is that they use blockchain, and blockchain is the Next Big Thing.
The whole thing is silly, which is to say, it’s ripe for parody. And so I am announcing the creation of the Flotilla of Leftist Gorillas!
What’s that, you say? Well, it’s an anarchosocialist commune of people who really like crudely drawn pictures of apes dressed as famous leftist revolutionaries. These images will be protected by a Copyfarleft license prohibiting any and all commercial use or resale, and every image will be owned collectively by the entire group. When you sign up, you will be issued a unique ID, and your (part-)ownership of the image will be verified by the following super high-tech “Eastern BlocChain” algorithm:
def verify_ownership(uuid):
if uuid:
print("Congratulations! You are part owner of this many-of-a-kind Leftist Gorilla! Hasta la victoria siempre, comrade!")
else:
print("Go away, you capitalist running dog! You will be the first against the wall when the Gorrivolution comes!")
Yes, you too can be part-owner (along with the rest of humanity) of a genuine Chiquita Khrushchev, Chim-Chim Guevara, Comrade Kong, or Koko-chi minh! Just as soon as I build the website and write the software. Collectors of dodgy contracts with no legal standing of the world, unite! You have nothing to lose but your brains!
Last modified on 2021-09-29