So you might have heard about this recent trend of "NFTs" over the past few weeks. In the event you haven't, it's the latest craze being pushed by crypto enthusiasts that is starting to make actual headlines. In this post, I hope to enlighten people about what NFTs are being promoted as, what they actually are and why honestly, you really shouldn't be involving yourself unless you see no problems with the ethics of profiting from the gullible with more money than the sawdust that makes up their brain matter or ruining nature.
What are NFTs?
Okay, so an NFT stands in it's entirely for a "Non-Fungible Token". That is a complex word for something really simple. To explain it, get a bank note, or look one up. As you can see on the note, there is a serial code on it. That serial code makes that specific note uniquely identifiable. You can purchase something with the note, you can exchange it for another note, the serial won't change and a central bank is able to identify when and where that note was given out. (This is also how bank robbers are usually identified: the note is serialized so if they steal paper money, it will be instantly noticable by law enforcement where the money is being sold).
NFTs are the exact same concept, but on the Ethereum blockchain. Practically, they're implementations of something called "smart contracts", a feature of Ethereum that is mostly used to run automated Ponzi schemes.
Okay but what is this thing about digitzed art sale?
Good question, imaginary person I made up to lead into the next subject. Well, that is how it's being marketed. NFTs are being marketed as the way artists can "sell their art to buyers who have an exclusive copy of it". The phrasing differs often, but this is what the promotion thing usually tries to say. In reality, almost none of this is true. In fact, I want to go as far and say that NFTs are not even close to being that. So, let's take this promotion line and pick it apart.
There are two statements here that we need to unpack.
- Artists can sell their art with NFTs
- Buyers of NFTs have exclusive copies of that art.
While copyright has a bunch of country specific exemptions and tweaks in each country, typically this is assigned to the author of the work. This means that they have full control about how that work is used.
Okay, so, logically following from this, an NFT would mean that the artist would be selling the copyright to their work (this is possible by contract in something called "copyright assignment", which means that you are relinquishing your own copyright to someone else)? Well, no. None of the current marketplaces for NFTs that I could find say that this is what an NFT does. In fact, most of them have explicit lines in their TOS that state that the artist maintains full copyright ownership.
So what is being sold then? Well, to get into this, let's dig in the technical parts, which also explains why the second statement is bullshit.
How do NFTs work technically speaking?
Okay, so technically speaking, an NFT is nothing but a relatively short string (for non-programmers: a string is a bit of text). Since NFTs are build on-top of what might just be the most inefficient and stupidest technology ever designed (I'll spare the blockchain rant for the end), the contents of an NFT have to be simple. In the case of most NFTs, all that the NFT contains is a link to a metadata file on the "InterPlanetary FileSystem" (more on that in a bit). This file is just a simple json file and contains all the fancy text surrounding the NFT, including the author, tags, descrpition and title of the work, as well as a list of more IPFS URLs that list the images/videos/whatever else that is used to display this stuff on NFT marketplaces.
So all that's really being sold to people is a string to a metadata file that anyone can read because the blockchain is completely transparent. This is what shoots the second statement full of holes. Buyers don't have any exclusive rights to their NFTs. Anyone with only a slight amount of knowledge on how to look at these things is fully capable of extracting the "contents" of an NFT and sharing them for the world to see and it's pretty much fully legal since these URLs are unprotected. Which leads us into the final question:
So why are NFTs bad?
Okay, so let's answer this question. The first reason is that these files are all being hosted on the InterPlanetary FileSystem (IPFS). While I'll spare you the boring parts, the IPFS is like torrents except there are no trackers, everyone is using DHT and that it solves a few of the other problems that torrents have. The most useful thing to know here is that web gateways to the IPFS exist, which is how most marketplaces are retrieving the relevant json files and download links. Most just host their own although I've seen a few which use the IPFS gateway that is made by the developers of the IPFS.
What this means is that if nobody is (to borrow from torrents) "seeding" your NFTs metadata and files, it might as well not exist. Sounds like it isn't an issue? Well, a literal shitton of "NFTs" have disappeared because the marketplaces setting these up are disappearing and with them, the "seeds" of the NFT and because the people using them don't know how it works, they dont "seed" their own art.
The second problem is the far simpler problem of art theft that has predated the internet. People creating NFTs that link to work that they don't own. It's not legal, and while a lot of NFT marketplaces claim they process DMCAs and take down "stolen" NFTs, anyone with the technical know-how can keep trading them anyway, which means the DMCA process is liquified poop. It's purely a website block and in the event that the metadata and files aren't being removed from the IPFS, they will keep working.
Finally, of course there is the ecological argument. NFTs are using the Ethereum cryptocurrency blockchain, a technology that if nothing else is incredibly costly on the environments. Recent estimates put the total cost of cryptocurrencies at half the total amount of green energy we produce and at costing more energy a year than the entirety of Ireland. I should point out that currently, people who sell NFTs are trying to downplay this, but it's unfortunately a cold hard truth. Ethereum transactions are extremely wasteful, no matter the type of mining used (Ethereum uses proof of stake, not proof of work, but it's still really bad for the environment. Just because it's not using easy attack angle A doesn't mean that they're not using just-as-terrible tech B) and there's just no way you can downplay it; it's borderline climate change denial.
For a quick estimate, the average NFT costs about 155kg of CO2. I would link you a site that would give estimates of how much this translates to, but the owner of the site that would let me show you this has drunk the crypto kool-aid and has taken it down when people tried to hold artists accountable for trying to sell NFTs to losers. I unfortunately can't find an alternative for you that works.
So yeah that's what NFTs are, and to make it incredibly clear: DO NOT BUY NFTS. THEY AREN'T WHAT THEY THINK YOU ARE AND YOU ARE DESTROYING NATURE BYING USING THEM.
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