3 Reasons Why NFTs Are BS
Firstly, I need to clearly state that I fully support independent artists. I have only one misgiving about NFTs — they are not “non-fungible.”
NFTs are completely fungible.
If you take an image, repeatedly run it through a cryptographic hashing algorithm, say, SHA256, you will get a consistent result every time. However, if you alter the color of a single pixel even an indistinguishable amount, rotate, resize, et cetera; the resulting hash value will be completely different.
The reason reCATPCHA exists is because it relies on the difficulty of establishing “sameness” between two images. Sameness is the determining factor for fungibility.
The problem is that you can’t digitally verify the fungibility of an image. Some significant advancements in AI would need to be implemented and all participants would need to agree to use this apparatus. Even still though, it wouldn’t work, as I’ll explain in a second.
2. Blockchain Exclusivity
The entire notion of non-fungibility is also predicated on the assumption that management of the digital asset occurs on a single blockchain. The artwork can be easily copied and resold on another blockchain even if the hash value is reserved on the original blockchain.
3. Transactions are Non-Fungible, Artwork is Not
Transactions on a blockchain can be non-fungible, the artwork referenced by them, is not.
A transaction can be non-fungible — provided the transaction history is publicly available — because the transaction itself is also directly tied to the coin’s value. The coin is the asset. It’s not referencing an asset. I’ll get more into this in a second.
That’s the Problem and the Solution Doesn’t Scale
The only way to fix all of the above mentioned problems is to create an entirely new chain and coin specifically tied to that piece of artwork.
You may say, “oh, that’s all? Sounds simple enough.” Not so fast…
I’m talking about launching an entirely new coin based on the artwork. This means building a new mining community if it’s PoW, hosting pools, getting listed on various exchanges, building a social presence, etc.
This will take many hours for just one piece of art. It doesn’t scale.
Why are we wasting our brilliant minds on this? That’s a discussion for another day.