This is Part II of my post about why crypto and fiat are essentially unrelated, and why most crypto is at least partly a scam.
If you talk to most cryptobelievers about why they buy crypto, the reason they give is they they think it will be worth more in the future. The name for this phenomenon is a speculative bubble. The reason why they think this, is that they believe on some future day, lots of people will use Bitcoin in daily transactions and therefore Bitcoin will become popular driving the price upwards. But a primary problem with crypto and Bitcoin specifically is that the designers didn’t understand what money is or how it works. In other words, Bitcoin sucks if you want to use it to buy something. Merchants want Bitcoin, they want dollars. Even when Tesla briefly said they would accept Bitcoin, they probably never actually did and quickly decided it was a dumb idea in the first place.
To make Bitcoin suck less as a medium of exchange, third-parties have created apps to allow you to spend your Bitcoin. Setting aside the problem that Bitcoin is supposed be trustless to not require a third-party, the third party apps don’t actually allow you to spend Bitcoin either.
For example, look at Flexa and the Winkelvei-approved equivalent, Gemini. To the raucous applause of the crypto-community Flexa says it allows you to spend your crypto at a variety of merchants like Starbucks and Chipotle. Except that it doesn’t. Flexa sells your crypto for dollars, and then creates a QR code that the merchant’s point of sale system recognizes as a gift card. Flexa collects a fee from both you and the merchant. But Flexa only allows you to deposit crypto. You can’t withdraw it. I’ll say that again, you can’t withdraw your own crypto. And you can only spend a maximum of $750/week. Gee, that doesn’t smell fishy at all.
Which brings us to NTFs, the cousin of crypto. NTFs come in a bunch of different forms, but basically NTFs allow creator/owner of digital art control over their creations for essentially ever. For example, in the traditional art world, a creator gets paid when she sells an original and then only the owner gets paid for each subsequent sale. But with an NTF the artist might get a cut of each subsequent sale. There are variety of different ways an NTF could work.
But when you lift up the hood, in most cases an NTF is just an URL embedded in the block chain which points to a .jpeg hosted on good old Web 2.0. Your NTF will exist only if the website doesn’t go 404. And even if it doesn’t, anyone with the URL who wants your art can right click, save as. That’s not a lot of security.
And like many things crypto, an NTF actually makes the existing system worse. For example, actor/comedian Seth Green recently bought a Bored Ape Yacht Club NTF for $200,000, which he then developed as a character in an animated series. Problem is, the NTF got stolen and sold to somebody else. Unfortunately, the IP license goes to the owner. And the owner doesn’t seem interested in letting Green use it. Had Green simply gone old school and licensed the IP in the first place none of this would have happened. Instead he went all blockchain and disaster ensued.
Tl;DR: Crypto blows.