# NFTs are not a net good for artists
The economic structure of [NFTs](../concepts/nft.md) is almost identical to that of [multilevel marketing schemes](../concepts/mlm.md).  Both MLMs and NFTs share the same set of psychological tricks to create fear of missing out and false promises of financial windfalls to entice more victims into the scheme. Just like with MLM schemes, NFTs require an upfront buy-in cost in order to mint the NFT projects. These minting fees must be paid in a specific [cryptoasset](../concepts/cryptoasset.md) which creates [artificial demand](../concepts/artificial-demand.md) for the token since artists are forced to buy the token at any price to buy into the scheme.

Since the NFT market depends highly on [sign-value](../concepts/sign-value.md), hype, and promotion generation the returns on any one NFT projects are only a factor of their visibility and [market manipulation](../concepts/market-manipulation.md). Thus artist who will see higher returns are ones who outside of their NFT projects already have high visibility and are thus able to leverage their influence to create exit liquidity in their NFT scheme.

Because digital tokens have no inherent value and are not backed by any other asset, hype is crypto's product and those with the most to lose are in the worst positions. NFTs are a form of [predatory inclusion](../concepts/predatory-inclusion.md) that on average does not liberate artists. Instead most artiists will engage in the token sales at a loss, making almost nothing in return. The return and payout structure is similar to that of MLMs which depend on [asymmetric information](../concepts/asymmetric-information.md) to incentiveize a small pool of individuals at the expensive a vast number of others who are victims of the scheme.

On the whole, NFTs create more harm to than good like most [is-negative-sum](is-negative-sum.md) investment schemes.

## References
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1. Whitaker, Amy. 2021. Economics of Visual Art: Market Practice and Market Resistance. Cambridge University Press. https://doi.org/10.1017/9781108649919.

## External References

* [Web3 is Going Great](https://web3isgoinggreat.com)
* [Line Goes Up - The Problem with NFTs](https://www.youtube.com/watch?v=YQ_xWvX1n9g)
* [The NFTBay](https://thenftbay.org)