The Problem With NFTs

By January 21, 2022NFT
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Non-fungible tokens (NFTs) have helped fuel the rise of cryptocurrency’s prevalence over the past year. Celebrities such as Steph Curry, Jimmy Fallon, Eminem and many others have bought NFTs and displayed public support for them. The Twitter account of the late Stan Lee even posted an advertisement for an NFT collection, a decision that has faced outcry for being incredibly disrespectful to Lee’s legacy. This widespread celebrity marketing proves that the increased exposure of NFTs is the result of an expansive, unethical promotional campaign that overlooks the harmful effects of NFTs on the environment.

An NFT can be any form of digital media, but the primary medium NFTs have been utilized in is the digital art market. The sales of NFTs come at a great cost, but there is some appeal to NFT ownership. The phrase “non-fungible” denotes that each NFT is wholly unique. Despite others’ capability to screenshot or download one’s purchased NFT, the exclusivity of being the true owner of a one-of-a-kind product remains a major selling point; there are even events for NFT holders, and high-profile NFTs typically sell at anywhere from five to seven figures. Even a low-grade NFT can sell for hundreds of dollars. Despite the presence of scammers, digital artists can make a profit through the sale and resale of their products. Besides that, the benefit of NFTs to society is minimal and far outweighed by the negatives.

Beyond the space of digital art, some music artists have released projects as NFTs, although the practice has yet to enter into the mainstream world of music. There is a simple reason as to why: there is absolutely nothing stopping a consumer from recording the music themselves and leaking it to the public. Just as one could attempt to resell the artist’s music at a lower price, scammers can gain money by impersonating digital artists, duplicating their artwork and even impersonating companies, as the founder of the cryptocurrency service Metakey tweeted.

In regards to environmental impact, NFTs use high levels of electricity consumption and carbon production that are extremely detrimental to the environment. They are purchased with the cryptocurrency Ethereum, which has exploded in popularity since the rise of NFTs. A single Ethereum transaction consumes the electrical energy that the average U.S. household does in about 8.2 days. Some NFT creators have donated money to causes that support the environment. Still, any contributions from the cryptocurrency community cannot come close to making up for the negative effect of their transactions. No price can be put on the health of Earth’s ecosystem.

Countless big-name celebrities and influencers beyond the ones mentioned above have bought and promoted NFTs. Their presentation of the NFT market as a lucrative opportunity is dangerous to their followers, as it is not accessible to the average person by any means. Many are able to make a profit by reselling highly sought-after sneakers on sites like StockX, but the price of NFTs is ridiculously inflated in comparison, which makes the resale field carry a great risk. The average person cannot responsibly spend thousands of dollars on an NFT in the hopes of a positive return on their investment. The vast majority of people have nothing to gain from this market, so its existence is frankly unnecessary. Nothing is going to stop affluent individuals from gathering these collectibles at the cost of Earth’s ozone layer, but it would be best for everybody if the usage of NFTs moved away from digital art and any other medium involving monetary transactions with Ethereum.

In a testament to the artificial popularity of NFTs, Atlanta rapper Gunna bought a $300,000 NFT from the popular Bored Ape Yacht Club collection and tattooed it on his leg, yet the release of his latest album “DS4EVER” had no involvement with the NFT space. Gunna proved that NFTs in their current form are nothing more than a fad that rich individuals spend absurd amounts of money on simply for the thrill of it, but this fad will have permanent consequences. For Gunna, the consequence is having a silly ape visible on his leg, but for the world, it is the acceleration of global warming.

Daniel Waters is an Opinion Intern for the 2021 winter quarter. He can be reached at dlwaters@uci.edu.

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