Having emerged from the relative obscurity of crypto enthusiasts’ niches, thanks to some major corporate push and celebrity endorsement, NFTs (Non-Fungible Tokens) now regularly feature at the forefront of mainstream publications, and they are already moving millions of dollars in cryptocurrency transactions each month. NFTs generated over 23 billion dollars in trading volume over the course of 2021 alone, their price skyrocketing over the course of the year: at the moment the cheapest CryptoPunk goes for 70 ETH (which amounts to about $187,000) the most affordable Bored Ape goes for 100 ETH ($270,000), while the least desirable lot of land in the Sandbox metaverse can be purchased for the bargain price of about 3.5 ETH ($9500). Looking at the growing number of NFTs minted and sold each month on large marketplaces like OpenSea, this a trend that seems destined to grow in the course of the coming year, with other major parties eagerly getting involved in the NFT market.
Due to the objective difficulty, for the layman, of fully grasping their technological underpinnings (occasionally deliberately obfuscated by means of useless jargon) the public debate around NFTs and their future is highly polarized, and frankly neither edifying nor particularly informative. The curious bystander is caught in the crossfire between a relentless marketing push promoting NFTs as the panacea of all our digital ills on the one hand, and critical voices struggling to illustrate in an easily digestible way their complex sinister baggage (from their being exceptionally prone to frauds to their environmental impact). As a consequence, some valid concerns, hijacked by the NFT craze, are ignored or, worse, indirectly acquiring a negative connotation. While I have no interest in defending or endorsing NFTs or any particular metaverse, I think it would be useful to make some provisional observations on what is happening and why, before it happens in a way we are not equipped to understand and control.
To begin with, a couple of firm points need to be established: first, the current practical/technological implementation of NFTs — as digital items with proof of ownership stored on the Ethereum blockchain — is far less transparent and iron-clad than many enthusiasts claim it is, and there are very concrete technological and ethical criticisms of the current paradigm that are still to be convincingly addressed, precisely on those very grounds of security, decentralization, and ownership that NFTs should be epitomizing. In short, NFTs don’t quite do what they are advertised as doing (to give unique and identifiable ownership of a digital item), they sit in a legal grey area (the ‘ownership’ they promise is not regulated by any legislation, and they are ripe for exploitation by scammers, money launderers, and tax evaders), they are not actually fully decentralized and P2P based (as their movement and display still relies on centralized APIs), and, like any blockchain-based technology, they are (at least as long as a “proof-of-work” algorithm remains the principal consensus-maker for the authentication of new blocks) environmentally problematic to say the least.
Second: the artworld-related NFT scene — for the time being, the primary stage for NFTs to shine — is nothing more than a huge speculative bubble, mostly exploited by waning celebrities looking to make themselves relevant and richer, financial whales smelling huge profits in a highly volatile market, self-appointed hyper-capitalist gurus and influencers, and libertarian crypto bros making money flipping worthless pixels. Surely, there are also many honest artists who would like to ride the NFT wave to make a living out of their work, as well as small, gullible investors with disposable income who hope for sizeable returns by being early adopters of the next big thing in tech. However, there is simply no justification based on the intrinsic artistic value that can explain the inflated prices of NFT images, as the overwhelming majority of them are nothing more than cultish, elitist, and vapid status symbol statements. Bluntly put, even if there was no technological and environmental objection to NFTs, their art-world/fashion industry turbo-capitalist exploitation would still be thoroughly repulsive, for the real economic gains are made by already wealthy VCs with large capitals to invest, not by average users nor by struggling digital artists, who invariably end up being enthusiastic victims of scams, or at the dump end of “pump and dump” schemes (and the occasional fluke, the headline-worthy feel-good success story is then amplified to convince new investors that they too could make it).
More recently, however, NFTs have spread out of the artworld sphere, becoming a hot topic within the gaming industry. Major software houses (like Ubisoft, Electronic Arts, or SEGA), are tentatively beginning to promote the creation and exchange of NFTs in their games — meeting the almost unanimous backlash of the gaming community. What is noteworthy here is how the gaming world is significantly different from that of digital art. Gamers have already lived through a decade of reckless monetization of free-to-play games, gateway drugs that move millions of dollars each year in microtransactions for purchasing skins or cosmetics. They are also all-too used to spend money to ‘own’ digital games which will remain at their disposal only for as long as the servers are kept alive, or as long as the platform where the purchase was made will allow access to the game itself. Gamers have also long been familiar with (and users of) online marketplaces for the exchange of digital assets and accounts of popular MMOs, paid for with in-game virtual currencies — from EvE’s ISKs Minecraft’s Minecoins. In short: the idea of spending money to acquire intangible items isn’t really anything new in the gaming world. So, what explains this backlash against NFTs?
The blockchain Product Director at Ubisoft used bombastic terms to explain how “blockchain’s decentralized technology enables gaming companies to move beyond current limitations set by more traditional technologies and lay the foundation of an ambitious and exciting new ecosystem that is, by design, truly community-driven”. The goal is no less than changing “the videogame industry by introducing concepts like uniqueness and control, and thus value distribution in our game worlds”, ultimately of opening up “new opportunities such as interoperability between games or a never-before-seen level of autonomy for communities within game worlds thanks to the decentralized nature of the technology.” Taken in isolation, and considering the recent history of controversies within the gaming world — rampant use of microtransactions, lootbox gambling, digital-only consoles… — these sound like very worthwhile (albeit somewhat vague) objectives which surely gamers, tired of videogames designed as mini-casinos, can endorse. But there are two main problems undermining the whole project.
Firstly, as already mentioned, and as it is the case for any kind of NFT, there are inherent problems with the blockchain technology that underlies the whole endeavour, both concerns regarding security and protection from fraud, and wider issues regarding the disproportionate environmental price to pay for the authentication of NFT transactions (although many keep promising the adoption of a “proof of stake” system that would dramatically reduce energy usage for Ethereum transactions, this promise still needs to be turned into a reliable reality).
Secondly, and more pertinent to the gaming world in particular, even if we imagine an implausible perfectly safe and green blockchain implementation (or some other underlying system), NFTs remain unrealizable promises: the dream of fully portable digital assets (a character, an item, a skin…) purchased within the confines of a game ecosystem but in principle employable in any other current or future game is, quite simply, still a dream. Between incompatible game engines and programming languages on the one hand, and the fierce competition between software houses and videogame hardware manufacturers on the other, to believe that a free circulation of cross-game, unique digital items is around the corner is like being confident that Star Trek-like replicators are a technology just a few years away. It would obviously be an amazing and revolutionary scenario, but its realization would require such a massive technological leap, and a reframing of present-day programming paradigms, that it is not even worth hoping for just yet. As much as I would enjoy driving my Death Stranding reverse trike across Elden Ring’s Lands Between, I know that to be a technical mirage and a game-balancing nightmare. We haven’t even reached wide-spread adoption of cross-platform online interactions for the very same game running on different platforms, and we are now being promised ownership of cross-game items? What NFTs can offer now, at best, is an allegedly more “secure” way to purchase and store characters or cosmetic items within a single game. Not exactly revolutionary.
It follows that gamers see the threat of a gradual introduction of NFTs into videogames as yet another method for developers to make a profit, by creating an artificial scarcity of unique digital assets, grounded on an environmentally unsustainable technology. No wonder the reactions are vehemently against it, even from a notoriously reactionary demographic group as the “gamers”. We cannot exclude the possibility that, in some more or less near future, some of these issues with NFTs will be resolved — for example, there are already Layer-2 blockchain solutions who promise a drastic reduction of energy per transaction, and indeed presenting them as completely “carbon free” — but the marketing claims made by enthusiasts and CEOs seem to be, for the time being, well ahead of reality.
However, there is something of value to extract out of this NFT frenzy and this debate over digital assets. It seems to me inevitable that the next step in the hybrid/virtual world we inhabit — and will be increasingly entangled with — will be that of gradually making “compatibility issues”, in the broadest sense of the term, disappear. Although it sounds like science fiction now, the goal of complete compatibility and interoperability is a worthwhile one, which should not be immediately and unreflectively associated with anarcho-libertarian Ponzi schemes to extract profit out of thin air. Indeed, to overcome the overabundance of separate platforms across which our data are scattered — and out of our control — is in our best interest: as the saying goes, “if the service is free, you (i.e., your personal data) are the product”. NFTs — and various “metaverses” in which they would proliferate — are a wrong, exploitative answer to this widespread demand for a more streamlined and safe experience in the digital environment. The idea is that, at some far point in the future, statements like “I need to link my PayPal account with eBay”, or “can I sync Dropbox with my Adobe Acrobat?”, or “I have to login into LinkedIn using my Google Account”, or “how do I move my Spotify playlists over to Apple Music?”, or again “which password manager should I use?” will seem quaint as it is today to pick up the phone and ask “operator, please connect me with X”.
But for this transition from a specialized platforms (walled-gardens) paradigm to a more seamless, decentralized movement of assets across digital space to be possible we need to be in full control of our data, not to have them crystallized in a blockchain, nor relinquish control in the hands of a uber-powerful meta platform (Meta-verse?) doing the work for us. And in addition to a ground-level compatibility across platforms, portability requires some kind of unique identifier for the asset/database to be ported, a protocol to univocally determine its ownership, together with a way to securely authenticate our identities. Todays’ NFTs can then be seen as a twisted, flawed, and exploitation-prone form of private and movable digital assets: while there are many reasons why these are not the digital asset format we’re looking for since everything is in the open on the blockchain (in this context, they promise private ownership at the expense of privacy) and ripe for manipulation, they do dimly gesture towards something we should be asking ourselves. Yet the question shouldn’t be “how do we create private digital items out of thin air in order to profit from them?” nor “how can we monetize our digital items, further promoting the marketization of any human interaction?”, but rather “how do we claim ownership our private digital items in order to control who can access them and guarantee their longevity in a virtual space?”, To “decentralize” doesn’t necessarily mean “to store on the blockchain” — rather it should be understood as re-centralize our digital footprint in our hands first, in order to then be free to choose what (and how) we want to share.
To demand full control over our data (something we have willingly forsaken for far too long) and our digital belongings — the existence of which, as the gaming world already foreshadows, seems an inevitable evolution of our virtual lives, within or without a metaverse — should not be seen as a further push towards the privatization our digital commons and the creation of even more hedges compartmentalizing a free and shared internet. Take Tim Barnard’ Lee’s “Solid”, a genuinely decentralized platform, built on top of the existing internet infrastructure, and aimed at reclaiming ownership of our data into private (even self-hosted) “pods” wherein all our digital belongings (from bank details to pictures, and from medical records to, why not, game items) would reside, as opposed to having it hosted on, and owned by, dozens of different platforms. The goal is to allow users to regain control of the web’s core currency: our data and our content. Full ownership of our digital footprint and a unique personal identifier are therefore conditions of possibility for a free exchange of digital assets and information, mindful of privacy concerns and respectful of intellectual property. The choice is that between a worldwide web where individual users own their data — where ownership does not equal to attribution of monetary value, but to freedom of choice of how to share them — and one where big platforms and tech giants compete with each other to earn their trust, and to act as allegedly trustworthy custodians of their data.
So, while it’s natural to laugh about Bored Apes jpegs, or lots of “land” in The Sandbox metaverse being sold for ludicrous sums, to shake our heads in disbelief about yet another NFT-related scam being unveiled, or to be outraged about the environmental impact of cryptocurrencies, it seems to me that the best outcome of a critical evaluation of the NFT phenomenon should be that of triggering a new debate over personal data, pushing us to adopt a more stringent and informed attitude towards the broader issue of digital ownership on the internet, ultimately striving to break out of the current paradigm of digital feudalism. The aim should be that of a fairer, transparent, privacy-minded, and environmentally conscious digital society — allowing direct exchange of digital items protecting both the intellectual property of creators and the rights of consumers — rather than a more profit-hungry and economically unequal one.
Today’s NFTs cannot maintain their promises. They are not revolutionary solutions for today’s problems, for all they do is replicate already-existent exploitative structures while relying on a different, even more problematic, technological infrastructure. They ultimately amount to a grift, yet another avenue for the environmentally-damaging accumulation of capital in the hands of the few, and should both be condemned and abandoned. We should rather be open to the possibility that tomorrow, there will be a better method of securing ownership of, and agency over, our digital assets — most notably, our personal information, extracted from the capitalist process of financialization of everything — maintaining some of the promises made by NFTs, but free from their toxic baggage.