Some artists offer their music in new formats, called NFT (“Non-Fungible Token”). Basically, it’s a copy-protected file that’s supposed to look like an original. But this is a big misunderstanding.
Rapper Cro has auctioned off a digital version, that is, a photo of his mask in NFT for a five-figure sum. Kool Savas the lyrics to his song “King of Rap” and the Kings of Leon some lifetime concert tickets. A seemingly new business model is taking over the music world, after all artists earn next to nothing from streaming platforms these days.
So you might think that’s a good idea, and artists in particular who can’t make a living from their art are hoping for new sources of income.
But what does a buyer actually get out of owning an image, other than reselling it? What happens when, at Kings Of Leon concerts, the bouncer looks at your NFT in disbelief and flips the bird over to you? Or will the band split up? And what can you do with an “exclusive” text from Kool Savas circulating for free on the Internet?
A purported advantage of NFTs is that they are decentralized. Nobody regulates them. Conversely, this means that you cannot pursue your rights just anywhere. And if you can’t claim rights, you don’t have any.
If you don’t come to the Kings Of Leon concert with your lifetime ticket because the bouncers don’t know about it, because you lost it, because it was stolen or deleted, then you have no chance. And lost a lot of money. Nobody cares. Meanwhile, Cro sits in his luxury villa in Bali, figuring out how to keep pranking his fans.
If even Apple iTunes’ business model of selling copy-protected music for $1 per song didn’t work, why would anyone buy art from unknown artists as NFT? NFTs are a way to get rich, especially for wealthy artists, as they profit from every resale. Because there is always a fool who falls into this kind of artificial scarcity.
Computer scientist Jürgen Geuter presented the fundamental problems of fashionable cryptographic technology in a sensational essay. He comes to the conclusion that the so-called Web 3.0, which is based on blockchain technology, is not only a disaster from an environmental point of view, but is also simply a scam.
He likens it to the music industry’s attempts in the early 2000s to put copy protection on CDs to artificially restrict the copying of music.
Here are some of his theses taken from the English article (translated by us, a German version of the text is in progress and will be linked here):
“1. Blockchains don’t work and don’t scale
Ethereum – the blockchain that a lot of these things use – has the processing power of an old Apple II box. It consumes as much electricity as Belgium, but the thing is slow in terms of pure computing power. Bitcoin can currently perform around 4.5 transactions per second. FOR ALL BITCOINS. Ethereum is slightly better and can handle around 30 transactions per second. It’s ridiculously low. The VISA credit card processing network can process up to 24,000 transactions per second (currently around 1,740 per second). Try this number on for size. Currently, existing Web3 services can work because they are mostly used by a few nerds. They are not architecturally fit to do anything on a large scale.
2. Web3 is a security disaster
Credit card details are stolen and when it is yours it is very annoying. You need to get a new card and tell the credit card company that a number of transactions were fraudulent. It’s tedious. But there are systems that protect you. They’re not perfect, but they work pretty well. With a blockchain-based system, all of those protections go away because there is no undo. If you have all your savings in bitcoins and someone has access to your key, those coins are gone and you’re out of luck. When we all know how easy it is to accidentally click the wrong key, get people to click on a phishing email, or just let people infect their computers with a virus, the risk is completely unacceptable. If a virus can wipe out all of your assets without being able to fix this error, that’s not a world we should wish for. We need more protection for people, not less.
3. Web3 is just an attempt to find a use case for blockchain
When an engineer deals with a problem, he first collects the requirements. What should the system to be built do, how and for whom, etc.? Then they look at existing technologies and see which technology and which platform best meets the requirements. With Web3, it’s the reverse. People had a blockchain that was really only useful for unregulated securities trading without paying taxes (“Bitcoin”), but they really wanted to use it somewhere. With no real use cases crystallizing in the 10 years that blockchains have been around, they just fundamentally re-engineered a problem (the web is centralized and controlled by a few companies), crammed the blockchain in, and pretended to have a solution. It’s not, and it’s been another year that blockchain hasn’t found a use case outside of tax evasion.
4. NFTs don’t do what they say they do
Web3 even wants to model real things, or at least things off the blockchain, via tokens, especially NFTs. But just because I created an NFT claiming I own the Mona Lisa (which, of course, someone did), doesn’t mean I own the Mona Lisa. Regardless of what the token says. NFTs also have no legal title to anything. You might own an NFT that has a link pointing to some crappy artwork of a monkey, but you don’t automatically license the artwork or you’re not the true owner of it. . You own one thing says you own the other thing. But you have no authority over it. There are a number of competing blockchains and NFTs, all claiming ownership of the same object. I can simply create an NFT pointing to “your” monkey and claim to own it. Why should your NFT be better than mine? NFTs aren’t even necessary for anything. If it was really about selling digital art, we’ve been doing it for ages. Fortnite and all sorts of free games will sell you cosmetic items for real money. For quite some time, people have also been selling digital art. The Diablo game even had a marketplace to sell the digital items to other players. NFTs are not a revolution, they are a heavy re-implementation of things that we have already done or are already doing better and more efficiently.
5. It is based on pyramid schemes
Cryptocurrencies are a so-called zero-sum game: this means that all the money someone receives must be paid for by someone else. One person’s gains are another person’s losses. This is one of the reasons why NFTs became so important: it brought more people into the system who had to buy Ether (the Ethereum token) to create it or buy their NFTs. And it is money that the people who hold the coins can use to pay. Knowing this, it is morally wrong to bring more people into these spaces. The purpose of a system is what it does, and if what a system does is cheats and pyramid schemes, then that is its purpose. And it is a system that must die.
Geuter cites many other arguments against blockchain technology and comes to the following conclusion:
“The internet’s promise of giving people access to information and potentially the power to publish is about to be replaced by an unregulated casino that is literally burning our planet. I can hardly imagine anything more contemptible.
No one is an island, but the Web3 mob wants to individualize us further, turning everything about our digital and ideally analog selves into objects of speculation, with semi-automated asset trading replacing politics. The complete financialization and depoliticization of life without regard to ecological consequences.
The article can be read here in its entirety and in English.
If you want to know exactly, you can listen again to all the arguments against NFT in two hours.