I discussed NFTs with some of my friends in a group chat, and @zihuajliu wrote a great piece on his take on NFTs (as well as an assorted discussion on cryptocurrencies, web3.0, etc).

Here are some thoughts that occur to me while reading it.

Is NFT a scam?

I mostly agree with his overall assessment of NFTs. Some specific NFTs look like scams, but that depends on how you define scams. I don't think over-valued arts can be called scams. Is Banky's banana overvalued? It's hard to tell.

I don't think NFTs are designed to scam people. The hype did occur, but it is not due to the NFT protocol itself. Human irrationality is at fault here (or is it a "fault")?

Irrationality and hype exist regardless of NFT. Fans used to buy tons of yogurt and pour them down the drain to help support idols (because the fans need to scan the QR code inside the yogurt cup to vote for their idols).

At the very least, selling NFTs instead of selling yogurts will save all the wasted yogurts. Plus, the idols get all the sales without needing to collaborate with consumer brands, who may take a huge cut of the potential profit. Therefore, NFTs are not the cause of irrationality and scam-like transactions, nor the cure.

NFT's value

Ideally, NFT should be valued exactly as the artwork itself. The fact that digital arts can often be viewed publicly and copied exactly doesn't hurt the value of holding legitimate ownership of it.

What does it mean to own Van Gogh’s original canvas of The Starry Night, where the art can be publicly viewed? What happens if we can copy the canvas on an atomic level? The value of ownership is the ownership itself. NFT offers the digital version of physical ownership.

Potentials of NFT

I can actually see a lot of social welfare improvements that NFTs can provide. NFTs are solving two problems specifically:

1. Providing a way to own digital content.
2. Reducing the entry barrier and enabling indie artists to sell their works.

A lot of art are now completely digital. How do you “own” these kinds of art? NFTs provide a way to own it. Currently, NFTs still have several problems, such as imposters using others’ work to sell NFTs. Eventually, this can be resolved via NFT's protocol updates.

Lowering the cost of entry and subsequent transactions have huge implications for indie artists to monetize their content. Currently, they rely on platforms to do so. Not everyone can afford to have their work put on Sotheby's.

Another important aspect of NFT is its de-platformization or decentralized nature. It is merely a protocol, it doesn't depend on any specific entities to work. Owning NFTs is permanent and is not subject to platform policy and regulation.

Platform closure and regulation change are both very real threats to digital artists. Onlyfans announced that it will shut down all NSFW content on its platform, though later it reversed the decision.

Personal Take

I will purchase NFTs if my favorite artists issue NFTs, such as @ryuichisakamoto or Wong Kar Wai's NFT, as long as they are within my valuation.

It doesn't matter if the NFT is tiered. Price discrimination is supposedly welfare-enhancing.

Personally, I am also tempted to issue my own NFTs with my photos at foto.zenan.ch. I am not expecting it to sell, but experiencing the process of issuing NFT may give me a deeper understanding of it.