Given the number of big name photographers and huge brands jumping on board the NFT bandwagon, you’d be forgiven for thinking that the plethora of problems surrounding the NFT market had evaporated. You’d be wrong. NFTs are a still terrible idea, riddled with problems.

Last year, I published an article entitled NFTs Are a Pyramid Scheme and People Are Already Losing Money. I still stand by every word in that article. A year on, the criticisms continue to be valid, and if anything, they’ve only grown more serious.

1. Environmental Impact

Let’s get this debate out of the way early. Arguments over energy consumption and CO2 are complex at every level, from crypto and bitcoin miners being kicked out of China and buying their own coal-fired power plants, to how little of ETH’s energy use NFTs actually constitute. Some of the arguments are beautifully naive, such as this article that among a number of weak points (checkbooks? Seriously?), conflates the banking system with wealth, somehow assuming that it is banks alone that decide to invest in fossil fuels, and not the people, corporations, and institutions whose wealth they hold.

Other articles are more compelling, such as this well-constructed piece from Nic Carter (notably, another individual who stands to make a lot of money as crypto scales up). Unlike most defenses, there’s no whatboutism (“Yeah, but fridges also use electricity!”); however, what it doesn’t deny is that crypto uses a huge amount of energy. The comparisons made by crypto’s defenders forget that other technologies are deeply culturally embedded and are under pressure to evolve; if they were new, they’d be under far greater scrutiny and the objections would be deafening. Crypto is touted as a revolutionary technology that, if you believe the hype, will liberate us from the corruption and constraints of centralized finance systems, giving us the freedom we’re told we’re supposed to crave. My question: if it’s so earth-shatteringly radical, why does it use so much energy?

Given its game-changing potential, mining bitcoin should require you to plant trees, not burn out thousands of electricity-hungry CPUs, one warehouse at a time. This is not a revolution. It’s like inventing a flying car that costs less than a thousand dollars but runs on newborn polar bears, or creating a new drug that will double your lifespan but requires you to head to what remains of the Sumatran rainforest and massacre 50 orangutans just to get started.

nfts are still a terrible idea embedded

Change in crypto is happening, albeit slowly, and sometimes to the point where you wonder if it’s happening at all; greener alternatives to Ethereum exist and NFT platforms have promised to make changes. Ethereum itself is allegedly just six months away from moving from the power-hungry proof-of-work and over to the far more environmentally friendly proof-of-stake, though it’s worth keeping in mind that Ethereum has been six months away from making this move for more than six years. Elsewhere, the NFT platform Nifty Gateway pledged in March last year to become carbon neutral by the end of 2021, though there’s no mention online of whether this promise has been fulfilled.

In defending their platform’s energy use, the owners of Nifty Gateway make the classic complaint: that existing technologies and systems (e.g., traditional art) are not held to the same level of scrutiny. This never-ending whataboutism returns me to my point: if it’s new, it should be better, not just as bad if not 10 times worse than what already exists, and simply shrugged off with: “Yeah, but what about almond milk?”

2. Royalties Are Only Royalties Until They’re Not

One of the biggest benefits shouted about by NFT art evangelists is the potential for an artist to retain a percentage of all future sales by determining the royalty of an artwork at the moment it’s minted. In principle, this is an excellent idea as there are countless tales of artists selling work for tuppence, only for their fame to arrive prompting their art to be resold between collectors for massive amounts of money. As an artist, being able to ensure a slice of every transaction is an appealing concept.

Unfortunately, it’s not that simple. The technology supporting royalties is not tied to NFTs; it is tied to the platform through which they are sold. For example, last month, Alec Soth minted his project Dog Days, Bogota on OpenSea and likely set a healthy commission each time a work is resold. If I buy #53 for its current price of 3.3 ETH ($9,121.20 at time of writing), Soth — who originally minted the piece and sold it for 1.1 ETH — will probably get around a thousand dollars. However, if I buy it and sell it on a different marketplace, Soth will get nothing. This isn’t the hype that we were promised.

NFTs have the potential to fix this in time, but, as with so many aspects of crypto technology, they are flawed, and the reason they’ve been pushed out without solving their countless issues is because the potential to make money from imperfect technology was a force far more powerful than the need to make sure it worked properly. Despite the noise, NFTs are not some benevolent tech seeking to make the world a better place for artists. They’re designed to make money.

If you don’t believe me, ask one of the two developers who invented NFTs. Anil Dash is very open in his criticisms: “Our dream of empowering artists hasn’t yet come true, but it has yielded a lot of commercially exploitable hype.” Fundamental to its shortcomings is the fact that an NFT doesn’t actually contain a digital artwork. Instead, it’s just a link, which brings me to the next problem.

3. Potentially Pointing at Nothing

There are enough potential rabbit holes in this article that I don’t want to disappear down the one where you realize that NFTs don’t necessarily give you any level of ownership over the digital item that you are buying. An NFT is a self-referential thingamajig that declares that you own the thingamajig that you say that you own. If NFTs could contain the actual artwork, artists would have a workable system of digitally solidifying ownership over their creations. Instead, we have, in the creators’ own words, “yet another method of exploiting creative professionals.”

Again, despite workaround such as Arweave, this is not how NFTs were supposed to function. That they’ve been bodged into working like this is more evidence of the exploitative forces at play.

4. Shoddy Ethics

Unsurprisingly, individuals and institutions that are willfully ignoring the environmental impact of NFTs also have a tendency to make some abhorrent decisions when it comes to ethics.

A few months ago, the British Journal of Photography — one of the oldest photographic institutions in the world — sold its Twitter account of more than a quarter of a million followers to an NFT marketer, trashing its reputation overnight. The scramble for cash is a sad indictment of both the traditional artworld and the clusterf*ck that is now trying to replace it.

Worse is the example of the Associated Press, whose foray into NFTs led it to think it was appropriate to sell a video showing a rubber boat packed full of migrants off the coast of Libya. “Profiting off suffering” read the headline of one of the critical articles, and unsurprisingly, the AP quickly withdrew the sale.

associated press migrant boat

The AP’s NFT venture is touted as a marketplace where fans can “purchase the news agency’s award-winning contemporary and historic photojournalism.” Clearly, selling photographs of subjects such as war, famine, natural disasters, and refugees is questionable, and in the art world, this is anything but new. The image has long been a commodity to be bought and sold, but NFTs herald a new level of highly distilled hypercapitalism that adds a layer of commodification and speculation to people’s suffering that’s not been experienced before. Minting an image as an NFT reduces that image to its financial potential, ripping it further away from its context as a socially engaged, cultural artifact.

Does the fine art world do the same? No doubt, but on this scale? And does it turn everything into a lot in an auction built on a system of hype and FOMO that closely resembles a Ponzi scheme? One of London’s leading print labs claims that 94% of prints are sold because people want something nice on their wall, thereby never entering a speculative marketplace; by contrast, without exception, an NFT is a financial instrument the moment it comes into existence.

5. The NFT Community Behaves Like a Cult

The threat from FUD — fear, uncertainty, doubt — is real. The value of crypto relies on the belief that it has value to the extent that there is no room for anything but positivity. This positivity — of backslaps, congratulations, and enthusiastic greetings — is relentless and, one assumes, addictive. The performative etiquette of GM/GN is a ritualistic demonstration of being “in, ” creating an “them and us” mentality where being “in” means a path towards having your artistic potential being realized thanks to your privileged knowledge and commitment to the cause. Non-believers are treated with patronizing smiles and comments such as “stay curious” and “we’re here to welcome you as soon as you’re ready”. The appeal is obvious; who doesn’t want to hear a daily stream of compliments about their work, however awful that work might be?

These parasocial communities — driven by individualism and speculation and shrouded in the warm, cuddly glow of creativity — are resistant to criticism, reluctant to contemplate the possibility that the market is built on a foundation of sand and an imaginary notion of value that will eventually need to be more than imaginary. This is Web 3.0, and unlike Web 2.0, social connections are not driven by a desire to be social but by a desire to sell.

If enough people pretend that these interactions are authentic, it doesn’t matter that they are not. With NFTs, there is no reticence when it comes to selling your work as your belief and willingness to promote it could be fundamental to its success. Shameless self-promotion is no longer shameless; the floodgates have opened. Every interaction, however small or insignificant, is an opportunity to flog yourself as an artist.

concoda tweet its a scamThe appeal is understandable, and you don’t need to look far to find people who appreciate the opportunities that NFTs present. Advocates explain the potential for artists to have greater self-sufficiency, no longer forever pursuing clients or chasing likes, and evading a pretentious gallery system that, if you’re lucky, shows a handful of prints to a tiny number of highly localized potential buyers. “It’s another product to offer,” explained artist Andy Feltham, “and it pays better than selling zines and prints.” He’s also keen to emphasize the notion of scarcity, of creating a market environment where a jpeg is made valuable as opposed to being infinitely worthless.

nfts are a disaster im gonna hold onto thatTrying to convince the NFT community that crypto is not a utopia is an impossible task, as the culture often doesn’t allow space for crypto’s countless issues to be discussed. Challenged to watch Dan Olson’s epic “Line Goes Up” critique, one proponent explained their deliberate decision to ignore NFT’s myriad problems. “I am the happiest I’ve been for 10 years because of NFT photography,” I was told. “I’m going to hold on to that.”

6. The Medium Is the Message

clown money nfts

Hidden beneath this veneer of unremitting optimism is a system where rug pulls and washing are rampant and the volume of copyright infringement is monumental — as much as 80% of all items being minted on some platforms. All of this is well documented, as are the countless other criminal and ethically bankrupt activities that take place every single day. NFTs’ defenders will argue that these are bad actors taking advantage of the system, forgetting that this is a system that was designed for exploitation.

Ed Zitron wrote an excellent piece last month that perfectly nailed many of my concerns and frustrations about how NFTs have emerged. No doubt, he explains, there are success stories featuring artists that have made serious money from their art for the first time thanks to the NFT market, and there’s a long list of positives. However, he writes, “these are dramatically outweighed by the harm and risk that these technologies cause.”

This is a system that is purpose-built to exploit others, that is funded and controlled by definition by exceedingly rich people, that has no safe guards or protections or ways to help those who have been harmed by it.

Back in the 1960s, a very smart man by the name of Marshall McLuhan coined a phrase that has helped us to understand how modern communication works: “The medium is the message.” The platform through which we communicate carries as much importance — if not more — than the message itself, thereby shaping what it is that’s being communicated. If the medium is one of speculation, a Ponzi scheme (and it really is), cult-like behavior, rampant fraud, market manipulation, and theft of artists’ work on a massive scale, what is your message?

Now part of the NFT marketplace, Alec Soth’s Dog Days now carries this baggage. So does Alejandro Cartegena’s Carpoolers. They’ve let go of their documentary-driven, socially curious, culturally crafted significance. Instead, these pieces are reduced to transactions, instruments of financial speculation on a platform that relies on hype, FOMO, and the carefully ignored fact that NFTs exist solely to convince you to convert your hard-earned dollars into a magical currency that needs every sucker it can find in order to grow.

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