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Non Fungible Tokens

A type of smart contracts that associates a tradable crypto asset with a unique piece of data, often a url to hosted image representing some abstract or perceived notion of ownership in art or sign value. 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.

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 is generated by the Tinkerbell effect.

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 ownership.

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

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 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 references a wallet address on a specific blockchain 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 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 party will "steal" or reference the work of another when deploying the smart contract 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 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 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 attached to the supposition that much of the NFT culture resembles either a pyramid scheme or high-control group which is coercive in maintaining a shared delusion amongst members of an in group who have a financial incentive to create a market bubble.

Market Manipulation

NFTs have been critized as having excessive amounts of market manipulation, and in particular large demonstrated cases of wash trading 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 is organic versus the work of a coordinated cartel attempting to create asymmetric information .

Bubble Claims

NFTs have been critizied as being a bubble.

NFTs have been critizied as having a payout structure similar to a pyramid scheme or multilevel marketing scheme.

Comparables

NFTs have been compared to metaphors and other schemes in which narrative-driven ficticious commodites are also sold based on the Tinkerbell effect.

  • A purchasable recipe with no physical good or rights attached.
  • Name-A-Star Registries
  • Indulgences

Investment Properties

NFTs have no use value.

NFTs have no fundamental value.

NFTs are a speculative asset.

NFTs have no income cashflows.

Trading NFTs is a zero-sum game.

References

External References