NFTs and the digital art gold rush will all likely end in tears

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IF you thought the backlash against the metaverse was wild, you haven’t seen the fork mobs fomenting unrest online over the sudden rise of NFTs.

ow if that phrase means nothing to you, let’s back up a bit first.

Mark Zuckerberg has been trying to convince us since late last year that the virtual worlds known collectively as the Metaverse are where we’ll all socialize in the future. Few people outside of Facebook think his vision is anything more than an exercise in making dirty money.

Yet that pales in comparison to the Wild West gold rush that non-fungible tokens (or NFTs) now represent in the digital realm. NFTs arose because digital items such as images or pieces of software can be copied over and over again. Unlike a real-world object like a painting or a diamond, digital objects have no rarity and therefore no value.

But the techies who now seem to run our lives figured that attaching an NFT to a digital object effectively made it unique and therefore something people would pay for. Using the same blockchain technology that underpins cryptocurrency such as Bitcoin, NFTs and their attached item (image/video/song/whatever) could now be bought and sold.

In theory, NFTs have their legitimate uses, such as allowing digital artists to be paid for their work and proving ownership of items consisting only of bits and bytes.

But, as always in nascent tech leaps, NFTs have left the door open for peddlers and snake-oil sellers, with video games being a prominent frontier.

It’s not a new idea in gaming, with NFT technology Cryptokitties debuted in 2017, allowing players to buy and sell chat characters through the Ethereum cryptocurrency. But the bandwagon really picked up speed in mid-2021 with the sudden popularity of the lockdown. Pokemon-like a game Axie Infinitywhere NFT-based creatures have fetched up to €100,000 in rare cases.

A few months later, many big companies came looking for gold. Ubisoft, known for its hit series such as Assassin’s Creed and Far cry, dipped a toe into troubled waters with the December launch of a range called Quartz. It consists of items for his Ghost Recon Breakpoint game like unique helmets or guns, each with a unique serial number.

The blowback from gamers was immediate and concerted, with the trailer receiving 40,000 dislikes.

“I think gamers don’t understand what a digital secondary market can do for them,” Ubisoft’s Nicolas Pouard said last week. “Players really believe it’s planet destruction first, and just a tool for speculation second.”

Here, Pouard pinpoints two of the critical weaknesses of NFTs. All blockchain technology requires enormous computing power, and therefore electricity, to keep up with the ledger, creating an environmental nightmare. Because NFTs are eminently resalable, we have seen roller coaster valuations as has happened in the land of Bitcoin as speculators come and go.

Unfortunately, you’re going to hear a lot more about NFTs in the months to come. Twitter just added NFT avatars. American talk show host Jimmy Kimmel promoted his purchase of NFT artwork on late night television. Atari is releasing the horribly named GFT – an NFT of a game-themed item that you buy as a gift for someone without knowing what it is.

Don’t say you haven’t been warned.

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