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NFTs Are Dumb: Here’s Why

As many readers know, I did a deep dive into cryptocurrency a few years back and in fact, had purchased an initial Bitcoin long before that, in 2011, so 11 years now. And I'm still as confident in at least Bitcoin and Etherium as ever and hold some of each.

I think there's good reasons for doing so and I treat it the same as I would holding gold in a vault.

When I first heard about NFTs (non fungible tokens) perhaps about a year ago, I began a dive into them. I was seeing some smart people go all in on promoting them. More on why I think that is, later.

So let's get meaning in place. First, what is fungibility?

Fungibility is the ability of a good or asset to be interchanged with other individual goods or assets of the same type. Fungible assets simplify the exchange and trade processes, as fungibility implies equal value between the assets.

https://www.investopedia.com/terms/f/fungibility.asp

So, fungible: money per denomination, gold by weight, bitcoin by ledger entry. Each denomination of those is equally interchangeable. A dollar is a dollar, whether hot off the presses, or old and wrinkled.

Non fungible: houses, cars, boats, airplanes, tulip bulbs. None of those are equally interchangeable, because they are not identical. Even the same make and model of car, same year, is different and each minute of use makes their similarity diverge.

And so now you see the reason for the header image. NFT should really denote Non-Fungible Tulip, not Token.

"Token" is merely a slight of hand whereby a unique cryptographic unit (token) tied to some digital creation is written onto a blockchain, making it permanent. Unlike a ledger entry, like bitcoin—fungible—the typical reason for a token is to have something unique—like a tulip bulb or a snowflake.

That's where things end and NFTs become even more ridiculous than Tulip Mania. So let's move on...


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Richard Nikoley

I'm Richard Nikoley. Free The Animal began in 2003 and as of 2022, contains over 5,000 posts. I blog what I wish...from health, diet, and food to travel and lifestyle; to politics, social antagonism, expat-living location and time independent—while you sleep—income. I celebrate the audacity and hubris to live by your own exclusive authority and take your own chances. Read More
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