# Non Fungible Tokens
A type of [smart contracts](smart-contracts.md) that associates a tradable [crypto asset](cryptoasset.md) with a unique piece of data, often a url to hosted image representing some abstract or perceived notion of ownership in [art](art.md) or [sign value](sign-value.md). Since the tokens have "unique" data associated with the token it is non-fungible unlike other crypto assets which aspire to be a fungible [private money](private-money.md).

NFTs at their most basic conceptual core are a hyperlink or URL to a *datum* that is itself sold as a tradeable asset where the connection between the concepts of the URL and the *datum* portrayed as a [ficticious commodity](ficticious-commodity.md) is generated by the [Tinkerbell effect](tinkerbell-effect.md).

Since the image or data associated with an NFT is stored on a public server, any member of the public can "right-click" on the data to access the information independent of their perceived ownership.

Some NFTs are purely conceptual and do not link to any data at all. In these situations abstract notions and contextual [narratives](narrative-economics.md) about the NFT are the product being sold to investors. This may be part of a piece of [performance art](art.md).

## Redefinition of Ownership
NFTs have been critized as using an overloaded definition of the word *ownership* to supplant traditional philosophical and legal definitions of the term with an entirely new definition of "ownership" which is intrinscly linked to a specific [blockchain](blockchain.md) concept and not to the perception of the term in wider society. The new definition fractures the canonical notion of ownership from its components of "access" and "assignment" to portend that digital assets—which are infinitely reproducible—admit an entirely new (and incommensurate) definition under the in the presence of "universal access".

In computer science terms, the NFT definition of "ownership" refers to the process by which an individual field in a [smart contract ](smart-contracts.md) references a [wallet](wallet.md) address on a specific [blockchain](blockchain.md) network.

## Duplication
NFTs have been critizied as having no way of guaranteeing uniqueness of the datum or hyperlink. Since multiple NFTs can be created that reference the same artwork there is n canonical guarantee of uniqueness that an NFT purchased is "authentic" and it remains unclear what "authentic" would mean regarding hyperlinks which are infinitely reproducible.

Two NFT smart contracts which reference the same piece of data or art are effectively identical to each other.

## Plagiarism
Given the duplication problem above, many artists have critized NFT sales that involve plagarized versions of art whereby a [pseudonymous](pseudonymous.md) party will "steal" or reference the work of another when deploying the [smart contract](smart-contracts.md) allowing the third party to potentially profit off the work of another with no attribution or royalties paid to the original artist.

Plagaraism in NFT markets is rampant, largely uncontrolled, and with little to no recourse for those who are the victims of this form of intellectual property theft.

## Multiple-chains
The NFT definition of "ownership" has been critized as having no single source of truth since multiple [blockchain](blockchain.md) networks can be created and operated in parallel, and all of which can give rise to independent and potentially conflicting suppositions of ownership for the same piece of data. Given a conflict of this nature, there is no canonical way to say a priori which blockchain network represents the base reality. This presents an intractable logical contradiction at the heart of the definition of NFT redefinition of "ownership".

## Link Rot
NFTs have been critized for the fact that the hyperlinks to the data in the [smart contract](smart-contracts.md) do not point to blockchain-hosted data but instead to content served on the open internet on private servers. These servers are themselves are operated by third parties which may cease to exist or serve the content that the NFT points at. When the content goes down the hyperlink is said to *link rot* and the underlying data is no longer accesible by the alleged "owner" of the NFT and now the NFT effectively refers to nothing.

## Tinkerbell Effect
NFTs have been critizied as only having value derived from the [tinkerbell effect](tinkerbell-effect.md) attached to the supposition that much of the NFT culture resembles either a [pyramid scheme](pyramid-scheme.md) or [high-control group](high-control-group.md) which is coercive in maintaining a shared delusion amongst members of an ingroup who have a financial incentive to create a market [bubble](bubble.md).

## Market Manipulation
NFTs have been critized as having excessive amounts of [market manipulation](market-manipulation.md), and in particular large demonstrated cases of [wash trading](wash-trading.md) which are now expected and normalized in the market. The presence of these phenomenon makes it difficult to ascertain what (if any) of the [price formation](price-formation.md) is organic versus the work of a coordinated [cartel](cartel.md) attempting to create [asymmetric information](asymmetric-information.md) .

## Bubble Claims
NFTs have been critizied as being a [bubble](bubble.md).

NFTs have been critizied as having a payout structure similar to a [pyramid scheme](pyramid-scheme.md) or [multilevel marketing scheme](mlm.md).

## Comparables
NFTs have been compared to metaphors and other schemes in which narrative-driven [ficticious commodites](ficticious-commodity.md) are also sold based on the [Tinkerbell effect](tinkerbell-effect.md).

* A purchasable recipe with no physical good or rights attached.
* Name-A-Star Registries
* [Indulgences](https://en.wikipedia.org/wiki/Indulgence)

## Investment Properties
NFTs have no [use value](use-value.md).

NFTs have no [fundamental value](fundamental-value.md).

NFTs are a [speculative asset](speculation.md).

NFTs have no [income cashflows](income-cashflows.md).

Trading NFTs is a [zero-sum game](zero-sum-game.md).

## References
* Olson, Dan. 2022a. Line Goes Up – The Problem With NFTs. https://www.youtube.com/watch?v=YQ_xWvX1n9g.
* *‘NFTs, Cryptocurrencies and Web3 Are Multilevel Marketing Schemes for a New Generation - WSJ’. n.d. Accessed 14 March 2022. https://www.wsj.com/articles/nfts-cryptocurrencies-and-web3-are-multilevel-marketing-schemes-for-a-new-generation-11645246824.
* Low, Kelvin F K. 2021. ‘The Emperor’s New Art: Cryptomania, Art & Property’. Art & Property. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3978241.
* Aharon, David Y., and Ender Demir. 2021. ‘NFTs and Asset Class Spillovers: Lessons from the Period around the COVID-19 Pandemic’. Finance Research Letters, 102515. https://doi.org/10.1016/j.frl.2021.102515.
* Ante, Lennart. 2021. ‘Non-Fungible Token (NFT) Markets on the Ethereum Blockchain: Temporal Development, Cointegration and Interrelations’. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3904683.
* Bodó, Balázs, Alexandra Giannopoulou, João Quintais, and Péter Mezei. 2022. ‘The Rise of NFTs: These Aren’t the Droids You’re Looking For’. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4000423.
* Çağlayan Aksoy, Pınar, and Zehra Özkan Üner. 2021. ‘NFTs and Copyright: Challenges and Opportunities’. Journal of Intellectual Property Law & Practice 16 (10): 1115–26. https://doi.org/10.1093/jiplp/jpab104.
* Casale-Brunet, S., P. Ribeca, P. Doyle, and M. Mattavelli. 2021. ‘Networks of Ethereum Non-Fungible Tokens: A Graph-Based Analysis of the ERC-721 Ecosystem’. ArXiv Preprint ArXiv:2110.12545. http://arxiv.org/abs/2110.12545.
* Diehl, Stephen. 2021. ‘The Tinkerbell Griftopia’. 19 November 2021. https://www.stephendiehl.com/blog/tinkerbell.html.
* Dowling, Michael. 2021. ‘Fertile LAND: Pricing Non-Fungible Tokens’. Finance Research Letters, 102096. https://doi.org/10.1016/j.frl.2021.102096.
* Fairfield, Joshua. 2021. ‘Tokenized: The Law of Non-Fungible Tokens and Unique Digital Property’. Indiana Law Journal, 1–99. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3821102.
* Frye, Brian L. 2021. ‘After Copyright: Pwning NFTs in a Clout Economy’. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3971240.
* *———. n.d. ‘How to Sell NFTs Without Really Trying’. Harvard Journal of Sports and Entertainment Law, Forthcoming. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3930430.
* Gibson, Johanna. 2021. ‘The Thousand-and-Second Tale of NFTS, as Foretold by Edgar Allan Poe’. Queen Mary Journal of Intellectual Property 11 (3): 249–69. https://doi.org/10.4337/qmjip.2021.03.00.
* Guadamuz, Andres. 2021. ‘The Treachery of Images: Non-Fungible Tokens and Copyright’. SSRN Electronic Journal 16 (12): 1367–85. https://doi.org/10.2139/ssrn.3905452.
* Kim, Soyeon. 2020. ‘Fractional Ownership, Democratization, and Bubble Formation - The Impact of Blockchain Enabled Asset Tokenization’. 26th Americas Conference on Information Systems, AMCIS 2020, 0–5. https://aisel.aisnet.org/amcis2020/adv_info_systems_research/adv_info_systems_research/19/.
* Kong, De-Rong, and Tse-Chun Lin. 2021. ‘Alternative Investments in the Fintech Era: The Risk and Return of Non-Fungible Token (NFT)’. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3914085.
* Mackenzie, Simon, and Diāna Bērziņa. 2021. ‘NFTs: Digital Things and Their Criminal Lives’. Crime, Media, Culture, 17416590211039796. https://doi.org/10.1177/17416590211039797.
* Mazur, Mieszko. 2021. Non-Fungible Tokens (NFT). The Analysis of Risk and Return. SSRN Electronic Journal. October. https://doi.org/10.2139/ssrn.3953535.
* Nadini, Matthieu, Laura Alessandretti, Flavio Di Giacinto, Mauro Martino, Luca Maria Aiello, and Andrea Baronchelli. 2021. ‘Mapping the NFT Revolution: Market Trends, Trade Networks, and Visual Features’. Scientific Reports 11 (1). https://doi.org/10.1038/s41598-021-00053-8.
* Solimano, Andrés. 2021. ‘The Evolution of Contemporary Arts Markets’. https://doi.org/10.4324/9781003215127.
* Tonelli, Emily. 2022. ‘Internet Guru Tim O’Reilly: Crypto and NFTs Are “Pretty Serious Speculative Bubble”’. Decrypt. 10 February 2022. https://decrypt.co/92676/internet-guru-tim-oreilly-crypto-nfts-serious-speculative-bubble.
* 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)