The TRUTH about NFTs
I like to think of myself as technology forward, development forward, on the cutting edge of what’s happening, and generally able to keep an open mind.
That said, I also believe in the saying that you should keep an open mind but not so open that your brain falls out.
Now let me tell you about an “investment” that has seemingly caused many people’s brains to fall out…
NFTs (Non-Fungible Tokens)
NFTs, are digital tokens hosted on a blockchain but are different from cryptocurrencies in that each token is unique.
So in the case of Bitcoins, for example, owning 1 Bitcoin is the same as owning any other Bitcoin.
If you own Bitcoin, you don’t care which particular Bitcoin you own.
Therefore, Bitcoins are considered fungible, that is, they are interchangeable with one another.
In the case of NFTs, each one is unique.
If you own an NFT, you do care which particular NFT you own.
Hence the term “Non-Fungible” is in its name.
This is, at least in theory.
The truth is, NFTs are not what they are commonly advertised to be.
Let me explain.
Perhaps you have heard the term:
A blockchain is just a system for keeping track of information over time.
This system is enforced by a network of connected computers so that if one computer gets tampered with or corrupted, the rest of the network will maintain the integrity of the data.
Additionally, changes to the stored data have to be agreed to by the network.
You can sort of think of a Blockchain as a giant excel spreadsheet shared and stored on a network of computers where new changes to the spreadsheet have to be agreed on by all computers in the network.
So how do NFTs fit in this picture?
Well, NFTs are just rows in this giant spreadsheet that point to somewhere on the internet.
Remember when I said NFTs were not what they are commonly advertised to be?
This is because most people think NFTs are digital files.
They think about Bored apes and Crypto Punks and think these are NFTs.
They aren’t. What you are thinking of are digital images.
NFTs are not digital images or any other type of digital file.
They just refer to digital files on the internet.
By themselves, NFTs are simply records in the blockchain.
I can easily save these images to my computer and publish them in my article.
When an NFT is purchased, the buyer pays for the token ID, which was created by a particular user and points to a particular image, to be associated with their name on a blockchain, in this case, the Ethereum blockchain.
What can an NFT buyer do with their purchase?
They can do one of two things:
They can tell people that the token is associated with their name on the blockchain i.e. brag (spoiler: no one cares)
They can sell their token to a greater fool.
To claim that partaking in this insanity is somehow a form of investing is so non-sensical it truly begs belief.
Imagine someone visiting a public park.
They really like this public park and enjoy it.
They find someone who works at this public park and offer to buy the park.
The park worker says: sorry it’s a public park and can’t be owned.
The person insists.
So the park worker, seeing this person is eager to part with their money, makes them the following offer:
I’m going to give you a deed to the park, but this deed gives you zero rights over the park. Everyone else can still use the park exactly as they always have and just as much as you can. You have no authority over the park. All this deed allows you to do is to say that you own the deed to the park. You can also sell this deed to someone else.
This useless park deed has the same utility as an NFT.
How supremely dumb is this?
There have been some attempts at connecting NFTs to real-world objects and use cases, basically bundling them with something else of actual value, but these attempts just serve to obscure the worthlessness of the NFT.
For example, some have proposed using NFTs in place of event tickets. So instead of getting a QR code for example you would get an NFT.
This exercise in no way makes the NFTs themselves valuable.
If you start selling tickets to events as NFTs, any value associated with these NFTs is just a reflection of the value of the event, not the NFT.
Going back to the public park example, if the public park worker starts using their worthless park deeds to wrap shawarma sandwiches with, and people start buying them more as a result, this doesn’t mean the deeds are now more valuable, it just confirms that shawarma is delicious.
So far, the use cases that are being bundled with NFTs seem forced and complete overkill.
You don’t need an immutable record stored and maintained forever in a blockchain to record the ticket you use to attend an event.
Get over yourself.
This is a complete waste of time and energy.
NFT Impact on Environment
This brings me to another important topic which is that in addition to NFTs being a pure greater fool trade if there ever was one, it’s also an incredible waste of energy.
To say the NFT craze is analogous to the Tulip bubble in Europe hundreds of years ago is a gross mischaracterization and offensive to Tulips.
Tulips are good for the environment and beautiful to look at.
NFTs are horrible for the environment and typically look like they were created in state hospitals for the criminally insane.
I’m not saying that the technology behind NFTs cannot potentially fill a role where it is actually needed.
What I am saying is that as of today, all the use cases for NFTs seem forced and completely asinine, especially those which relate to digital files.
It makes absolutely no sense to try to own digital files which can be perfectly copied with zero effort.
So far, if I’m being candid, NFTs seem like a solution desperately in search of a problem.
So the next time you want to buy a digital art NFT, do us all a favor and just save the image to your desktop and burn your money instead.
You’ll end up with the same image and less harm to the environment.
I’m not changing my thoughts on the general permissibility of NFTs from a halal perspective. I would just encourage people to remember that on the day of judgment, you will be asked about your time and health and wealth and how you spent them. If you’re spending time and effort and money on NFTs, just make sure you’re comfortable answering the questions you will surely be asked.
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