NFTs, Or: How You Were Duped

Let’s have a realistic conversation about NFTs. There’s a come to Jesus moment in crypto’s future, and it’s worth being able to see it coming.

There was an article on CD not too long ago titled: *15 NFT Use Cases That Could Go Mainstream: Art and collectibles were just the start.*

I want to break down a few of these and why it’s all complete pipe dreams.

# Gaming

From the article: *Every day, there are 2 million people who play with the little blobs of Axie Infinity, which now has a valuation of* *$3 billion**. ‘Gaming is really exciting, as you already have billions of people who are buying digital goods inside of games said Devin Finzer, CEO of OpenSea, the largest NFT platform.*

This is… some heavy hyperbole. Especially because it’s in regard to NFTs. It sounds good on the surface, but when you look at the actual stats: it sings a very different song.

40% of Axie Infinity players are in the Philippines. While I’m not trying to shit on developing countries using crypto – I’m going to go out on a limb and say it’s certainly not going to aid in NFT adoption nor NFTs building value.

Further, DappRadar shows a total of 180k users interacting with Axie Smart Contracts over the last 30 days with a total of 1.85million transactions. Pretty easy to see it’s an average of 10 transactions per user. But… Axie says they have 2.8million daily players.

Let’s pretend *none* of those day-to-day players are unique. So there are *only* 2.8million Axie players total. (This is the conservative estimate) This would means that over 30 days, the 84,000,000 instances of players being online and engaging… led to only **2% of the interactions being NFTs.**

# Fashion and wearables

From the article: *”You can create financial products, like an index of the top-selling sneakers today,” said Shen, which could let you invest in a pool of the 100 hottest sneakers, for example, instead of tossing the dice on a single pair.*

This is legit one of those… I can’t even… kind of things. This is taking selling sneakers into the world of bundled securities. While, obviously, there is *zero* need for an NFT in this use-case, it’s purely a financial grab, not an actual market.

# DeFi NFTs

So, before we even established any sort of actual value to the jpg you just bought… let’s go ahead an make it so you can use it as a lending tool! Because that makes sense… /s

From the article: *But perhaps an NFT of the sword’s “twin” – that lives outside of Fortnite – could be bought and sold on a derivatives market, and then some kind of mechanism would allow for the transfer of funds once the transaction (the sword handover) is complete in Fortnite.*

This is some incredibly gymnastics. So, now, they’re using NFTs to create a mirror of an in-game item that you can sell to someone, then transfer the item in-game, and then get paid via the NFT transfer out-of-game after the exchange is complete. Nothing could possibly go wrong there…

Other than the game developer changing anything that would break that interoperability. The game developer not caring that you’re trying to make money off of *their* work. The NFT not actually representing the in-game item accurately. And so on.

I could keep going down the list of their NFT ‘concepts’ but every single one of them fails at a basic level of critique because of one thing: *the general public cannot be held accountable.*

If something happens to my home’s title with my county, I can go to court. I have the records. I can hold the at-fault party responsible for their mistake and have it rectified with the proper authority: the county. That’s the *only* authority I care about with regards to my home’s title, because… they are the only authority to validate it.

It’s a centralized concept on purpose. Because when something goes wrong – we know exactly where to go to fix it. I can sue my county. I can file appeals on assessments. Etc. I *cannot* sue a fucking blockchain.

But, here’s where it gets even worse. Your crypto wallet is *not your identity*. It’s a set of keys. And those keys can be held ***by anyone*****.** Put your house on an NFT? If I have the keys, it’s now my house. But but but… it is then verified by the county, right? THEY ALREADY DO THAT. Having an NFT of my house does nothing for record keeping, nothing to make transfers easier, and introduces numerous problems that don’t currently exist.

The *concept* of NFTs is absolutely brilliant. But all of these ‘dream use scenarios’ are an absolute joke that are doing far more harm than good. It’s brining in a bunch of ignorant moon bois thinking NFTs are somehow revolutionizing things that already exist.

Repeat after me: NFTs are nothing but a digital contract between two anonymous parties.

Putting that same idea on paper instead of the internet shows *exactly* how useless a contract like that really is.

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4 thoughts on “NFTs, Or: How You Were Duped”

  1. Can’t say I am an expert but I expect only one use case needs to be strong for adoption to soar. All of the other weaker plays will be weeded out.

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