NFT is a pyramid scheme and people are already losing money on it
Photographers, filmmakers, and digital artists are going out of their way to churn out NFTs in an effort to get rich quick, but in fact only fuel the flow of money from creators to tech billionaires. Why have so many people bought into the idea that something is value simply because everyone says so?
If you haven’t created your first NFT yet and are wondering how it works, then in short the process looks like this: you start a wallet, buy some Ethereum and choose a platform. Then you take one of your digital creations and pay roughly $ 70-100 to “mint” that to piece in a Non-Fungible Token. Choose a starting price and wait for bids to start coming in. You can even prepare for an auction to create buzz.
One of the most convenient places to get started with NFT is at Rariblewhich is bewildering with its crypto aesthetic, crafted from a nightmarish mixture of randomness and memes. The site looks like a terrifying hybrid of children’s cartoons and 4chan.
If you are one of the technology fans or you have friends who like to be at the forefront of progress, then perhaps you will receive an invitation to a platform like Foundation.app… Sites like these create a certain level of exclusivity, they provide filtering to ensure that only a limited number of people can transfer their work to the NFT. If you don’t know anyone with an invite, then you have to go to a special channel on the Foundation Discord server and ask him politely; note that the channel is besieged by people with loss of profit syndrome (FOMO, Fear of missing out), so invite requests appear every 30 seconds.
On Foundation.app, you need an invitation. You will need to upload a video on Nifty Gateway to let the site owners know that you are valuable enough to allow you to sell your work on it.
Whichever platform you choose, you cannot ignore the fact that many people sell tons of dubious digital works for absurdly large sums. This is very motivating to do something like this too.
Motivation is such an integral part of these platforms that many of the pieces for sale reflect this in their aesthetics. Creations with the letters FOMO are ubiquitous in this sea of urge to buy, sell and be sold. This feeling of being late getting on board, of being the start of something new, is the foundation of everything NFT has to offer, and it is a true marketing masterpiece. Almost every tweet announcing an auction you need to participate in reminds you that the artwork will only sell for a short period of time. FOMO is so powerful that you will start to feel like you are already losing money because you still haven’t signed up.
Top sellers on Rarible.com in the last 24 hours. 60.15ETH at the time of writing is worth just over $ 100,000.
NFT tokens provide a new way of ownership and an exciting opportunity to sell all kinds of artwork. As a concept, they have attractive aspects, for example, when creating a token, you can specify the commission that you will receive each time it is sold in the future (usually about 10%). Cryptocurrencies offer an alternative to the economic system run by Wall Street bankers, politicians and insider trading, promising to democratize economic structures to some extent, increasing freedom and flexibility. This new rebellious mindset also influences the artwork that appears to be an endless celebration of how the new system will redistribute power.
For many, this looks like a way to destroy the existing regime; but if you look closely, you can understand that this is just an extreme manifestation of neoliberalism. Instead of being persuaded to buy items you don’t need, you are being persuaded to buy imaginary optimism based on universal admiration. In addition, our generation has the conviction that each of us is special, which means that our creativity should have an innate value; NFT is our chance to sell it.
One of the Foundation.app auctions at the time of writing.
This rhetoric is compelling, but at times looks a little naive. One day I came across a statement accompanying an upcoming drop (ie the start of an auction) written by a fairly well-known digital artist. He, like many other NFT creators, associates the concept of NFT with the piece itself. Here’s how he described his animation of a futuristic character and his flying car: “NFT is a battle call for creators. A call to explore, dream, break into a world where our solitary dreams become a collective reality. ” He adds: “Collecting and creating NFT is not an act of defiance, but a dedication to a historic moment in a movement that is changing our lives.”
I don’t think there can be anything more “meta” than simulated possession of a digital copy of a work of art that describes itself as a dedication to a historical moment in a cultural and economic movement. And the author of the statement “forgets” that the platforms are owned by such millionaires as the Winklevoss twins, who are known to have sued Mark Zuckerberg for stealing their Facebook idea.
Oh, this FOMO
“Buy, sell and discover rare digital goods,” is the slogan of OpenSea.io. If you are wondering how a digital object can be rare, then you are asking the right question. Last century philosopher Walter Benjamin investigated the question of the connection between the authenticity of art and its uniqueness, as well as the problem of imbalance caused by photography and mechanical reproduction of works. I don’t know what Benjamin would say about NFT, but this conflict between our love of authenticity and the virtual world’s inability to provide an alternative is not resolved by the ownership of tokens of dubious origins. Digital scarcity is pretense.
Society is becoming less physical and more virtual, so there is no coincidence that NFTs gained popularity at a time when our social interactions were minimally tangible. In addition, the creative industries now play a significant role in the economies of large countries, and yet, despite the perceived value of the contribution of artists, their employment is largely unstable (which is made attractive in the eyes of society), so they often have to do the usual work to earn money. monotonous work. The carrot that attracts people to NFT is incredibly attractive: let’s all sell something virtually so we can collectively pretend that someone else now owns it.
The art of imaginary value
One of the products on Foundation.app
The challenge for the art market has always been to convince enough people of the value of artwork. In addition, it was a shadow banking system that made it easy to move large sums of money across borders or hide it from the tax authorities. The value of the art sold today as NFT has arisen from marketing, FOMO, and a massive influx of unsuspecting sellers and buyers eagerly following celebrities and big brands. Money is laundered through this system, and like a bubble it is unstable.
What we don’t see among all these brilliant websites and beautiful works is the sheer volume of released works that are not for sale. Selling NFT is not much different from selling a print: it is much easier to do if you have an admiring army of fans willing to donate their money, and in the case of NFT it is even easier if those fans are already techies. If you are a digital artist with a large fan base, then you can be successful and will benefit from actively promoting crypto aesthetics. This is a modest minority of sellers; the vast majority only lose money, because the issuance of tokens is not free, and rest assured, someone makes a good profit on this.
It’s not really an art exchange
I was about to mint my first product, but then I realized that it would cost more than $ 70 to list it on Rarible.com. Many believe that high gas prices mean that Ethereum as a currency is not suitable for this purpose.
By being friendly, supportive people, artists motivate their colleagues to buy each other’s art, saving their egos and instilling a sense that the money spent on gas hasn’t been wasted. However, even if ignore the cost of gasMost platforms add a 3% commission to the buyer’s payout and then take a 15% share of what the seller gets: this generous, supportive act of buying each other’s art becomes simply a means of lining the pockets of the millionaires who created the platforms. Artists would be much better off just sending each other checks, posting photos of the checks on social media, and then just leaving those checks with them without cashing.
Huge harm to the environment
Many artists turn a blind eye to the huge carbon footprint of NFT. One artist, concerned with the preservation of the environment, discovered to her horror that the chasing her six tokens left the same mark as the work of her studio for two years… The exact numbers of the real impact of NFT are being actively discussed (however, the platforms, of course, refuse to participate in this), however, any talk about such a market without mentioning the potential harm to the environment is completely irresponsible.
If there are winners, then there are also losers
If you don’t know what you are buying, then don’t spend $ 6,600 on it.
On the surface, the NFT market has been given the appearance of everyone there making money, but while crypt can indeed rewrite the laws of economics, one thing remains inevitable: if someone makes money, someone else has to lose it. NFTs cannot magically generate wealth from nowhere; they do them for those who buy into the idea of a quick income for the first to come to the market. how explains book author Attack of the 50 Foot Blockchain David Gerard, “NFTs are totally geared towards the benefit of crypto-investors. The only goal that artists serve is to be enthusiastic goofs pumping up the concept of crypto. And, of course, buy cryptocurrency to pay for the “minting” of NFT. “
Over time, this “pumping” will be depleted, because the number of people willing to throw money into Ethereum and NFT will begin to decrease. Given that this system relies on constant growth, it’s safe to say that the value of “rare” items will start to decline, and countless contributors who have spent thousands of dollars on low-res puppy pictures may want to withdraw their money before the system is fully operational. fall apart. What else can you do with this puppy? Print and hang in the closet?
It is likely that selling prices do not even have to remain constant. It is enough for them to stop growing so rapidly and suddenly, then a safer option would be to store dollars in a bank than Ethereum in a wallet, where its price can fluctuate within 20% per day. After investor confidence cracks, the collapse will happen quite quickly.
Ethereum rises in value as people continue to buy Ethereum, and such simulated possession of supposedly rare digital resources is fabricated demand. Cryptocurrencies desperately need to find a reason why people should exchange their dollars for an even slightly more virtual money system, and so far the most relevant solution is NFT. When it reaches saturation point, the market will adjust to the situation and chaos can ensue.
This bubble will burst; the only question is when will it happen.
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