Everyone knows somebody that collects trading cards. Whether it be Pokémon, baseball or K-pop photo cards, trading cards have been popular for what feels like forever. Now take the trading card formula, and translate it into an all-digital environment. What is the end result?? Non fungible tokens, more commonly known as NFTs.
The first NFT can be traced all the way back to May 3, 2014 where Kevin McCoy created an NFT that he dubbed “Quantum”. It was on this day that he unwittingly unearthed the craze that is NFTs. Even though the whole idea of NFTs originated in 2014, it really did not pick up steam until 2021.
But what are NFTs? Well, to quote Ethereum.org (the creators of the currency used to buy NFTs),
“NFTs are tokens that we can use to represent ownership of unique items. They let us token-ize things like art, collectibles, even real estate. They can only have one official owner at a time and they’re secured by the Ethereum blockchain – no one can modify the record of ownership or copy/paste a new NFT into existence”
In other words, NFTs are individual collectables that are one of a kind. To continue the Pokémon analogy, it is like if Pokémon were to create one card for each Pokémon and then they did not produce any more. This then leads to coherent value to own a “one of a kind” NFT, as some people are spending upwards of a million dollars. These people then attempt to sell it for a higher price point to make a profit (which I will get into later). But for now, here is my first gripe with NFTs:
NFTs function akin to a very expensive game of hot potato. You buy an NFT for $100,000 , and then somebody buys it from you for $200,000 . That person then sells it off for $300,000 , and this cycle repeats itself on and on and on until people realize “oh wait, why are we buying monkey drawings for $1.8 million?”. Then, the unfortunate person who had the NFT last can not find anybody to sell it to, leaving them $1.8 million in the hole with nothing but a drawing of a monkey.
With the big spike in popularity for NFTs, big companies began to create their own NFT lines. Lets take, for example, the NBA. During the middle of 2019, NBA announced and released “NBA top shot” which is comprised of a bunch of clips and photos of NBA games to sell to fans for upwards of $200,000. What bugs me about this is how NBA is essentially scamming their fans of thousands of dollars (which they do not even need for such a big company) in trade for a 5 second clip of some d-tier basketball player doing a dunk.
There is a very high likelihood that NFTs will remain a constant in the future, but it would be better without (well, maybe a couple of bored ape’s can be spared).