NFTs Are Neither Miracles nor Scams

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On Thursday, my colleague Kevin Roose sold a crypto token of a newspaper column for more than half a million dollars. (For charity!) Someone paid $69 million for a digital file of a collage that anyone can view online.

This is part of the mania of the moment in NFTs, or nonfungible tokens, and they are an example of people rushing to judgment about basically anything new and novel.

I have some straight talk: The proliferation of NFTs will probably not be the world-changing revolution that its proponents claim. And it’s probably not an entirely absurd bubble, either. As with other emerging technologies, there is a good idea in there somewhere if we slow down and resist the hype.

Allow me to explain to normal humans what’s happening: NFTs are essentially a way to transform a digital good that can be endlessly copied into something one of a kind. When someone buys an NFT, what they’re effectively getting is the knowledge of owning an official version of a cat with a Pop-Tart body, a song, a video clip of a basketball dunk or another virtual thing. The records of ownership are maintained on a blockchain. (For more, check out this delightful explanation from the Verge.)

Perhaps you find this confusing or silly. Push that aside for a minute.

Mostly, my beef about NFTs is how people, particularly those who live and breathe technology, talk about them and other emerging companies or concepts including the blockchain, the audio chatroom Clubhouse and ultra fast trains.

Almost immediately, people sort themselves into camps to declare that THIS WILL CHANGE THE WORLD or it’s TOTAL CODSWALLOP THAT WILL RUIN EVERYTHING. We would all benefit from more breath and less breathlessness.

In life, most things are neither glorious revolutions nor doom. And behind most novel ideas is often the possibility of something useful. The trouble is that hyperbole and greed often make it hard to sort the glimmers of promise from the horse manure. So let’s take a step back.

The purported big idea behind NFTs, as Kevin and Charlie Warzel, my colleague in Opinion, each explained this week, is to tackle a problem that the internet created. With sites like YouTube and TikTok, anyone now has the power to make music, a piece of writing, entertainment or another creative work and be noticed. But the internet has not really fulfilled the promise of enabling the masses to make a good living from what they love.

NFTs and the related concept of the blockchain hold the promise to, in part, give people ways to make their work more valuable by creating scarcity. There is promise in letting creators rely less on middlemen including social media companies, art dealers and streaming music companies.

Will any of this work? I don’t know. Run screaming from anyone who has a definitive answer either way. Basically, everyone should listen to the wise and measured Anil Dash, a veteran of the tech industry who accidentally helped invent the concept behind NFTs and is both furious about the hucksters swarming them and believes that there’s a there there.

That said, NFTs will probably not fix the broken economics of streaming music or tear down the power structures of the journalism and art worlds. Sorry to be a broken record, but technology is not magic. Likewise, cryptocurrencies are probably not an effective fix for unaffordable housing. A complicated and expensive train may not be the best solution for global warming and our car addiction.

So, are NFTs a bubble inflated by unusual financial conditions and our brains turning to goo in the pandemic? Definitely. Are they pointless Beanie Babies for rich tech bros who are ruining the planet with all the energy required to create the digital tokens? Not entirely, no.

Maybe they are somewhere in between. And that’s fine.

It often feels as if policy debates about technology are a hamster wheel going nowhere. But there is progress if you squint a little.

Tech journalists’ reaction to the 4,000th congressional hearing into the power of Big Tech on Thursday was mostly: [muffled screams]. Yes, elected officials and technology chief executives went around in verbal circles. And it felt as if America’s policymakers were moving at a snail’s pace to resolve whether and how laws should change to make tech companies more accountable, effective and fair.

All true. But let me give two examples of tech companies actually becoming more transparent and effective. We should grumble about what hasn’t changed, but we shouldn’t ignore what has.

In the last few years, Facebook, Google and Twitter created searchable databases of ads running on their websites and offered some ability to analyze them. The companies’ disclosures are wildly flawed and insufficient, but I’d still say that it’s better than what we had before: zero visibility into what ads were circulating to billions of people.

That was a problem when Russia-backed trolls spread social media propaganda around the 2016 U.S. presidential election. After that debacle, Congress debated new laws requiring tech companies to maintain online libraries of political advertising. That hasn’t happened, but the companies did a version of it themselves.

There are two ways of looking at this. Either America’s big corporations are more accountable than our elected leaders. Or the fear of more muscular laws forced tech companies to do something different. Either way, I’d call it measured progress for which elected leaders and tech companies deserve some credit.

Tech companies and U.S. government officials also capably handled attempts by foreign governments to mess with the 2020 election, as I’ve written about before. Even absent some Big Bang Big Tech law, both our powerful tech institutions and elected leaders were scared enough to address a threat to Americans.

None of this is a substitute for effective law making. But it’s also not true that nothing has happened in tech policy besides yelling and screaming.

  • Weaponizing shame in money lending: A new breed of online loan apps in India require people to hand over information from their phones. And they bombard borrowers and their contacts with phone calls and social media posts to squeeze them for repayments, my colleagues Mujib Mashal and Hari Kumar reported.

  • How TikTok changed music and us: You definitely want to listen to this podcast with my colleagues Jenna Wortham and Wesley Morris discussing the creative expression of musical challenges on TikTok, and why the app has helped kill the bridge between a pop song verse and chorus.

  • What does it cost to fully replace cable TV with online alternatives? It comes to $92 a month, Bloomberg News calculates.

Check out this 5-day-old owl being fed VERY carefully with tweezers. My favorite moment is the tiny owl flapping its wings when it swallows.

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