Nigel's Eyes

20240320 - NFTs - what exactly underpins "value"?

(image copyright Cointelegraph.)

"Human beings naturally find rare objects valuable, and NFTs guarantee authenticity and ownership, making them rare, useful as status symbols, and convertible to cash via cryptocurrency. After NFTs are put on a blockchain, which acts as a digital ledger, they can't be copied."

So says Avast while promoting its digital assets security service.

But is it true? For example, Cointelegraph sells its article graphics as NFTs. But I with a couple of clicks, I can download a copy of the image (I don't even need to make a screenshot) and then I have a perfect digital copy of the original. The proof is above and the article is atā€¦

So, it's the first part of the paragraph that generates the value - not the second. And that value depends, it seems to me, on the certificate of authenticity, not the artwork itself.

It's like cutting van Gogh's signature from the corner of Sunflowers and saying "I've got the original signature and it's only by uniting that with the painting that the art has value".

In the art market that may be true but only because someone else says how much the signed painting is worth.

So, are NFT's driven only by the reputation of the creator and if so is there a following for a creator that would turn a digital image into something worth paying for and which someone else would be interested in.

Otherwise, copyright issues aside (and with the price of NFTs being barely more than that of a Mars Bar these days) enforcing that against someone who puts a print of it on their wall it does seem as if the only reason to buy an NFT is to say "I own that."

But as we know from the case of Jack Dorsey's first tweet, the NFT market isn't actually fickle - it's driven, or not, by whether enough people can be taken in by the hype of a market that seems to have less credibility than a shell company being pumped and dumped or a hedge fund's "proprietary trading system." When the gullible have lost all they are willing to, or can, lose, the sky caves in.

The image above is owned by CoinTelegraph. I didn't ask if I could use it. If fair use or for the purposes of criticism don't arise, let me know and I'll take it down.