Nonfungible token art lacks the provable scarcity of “real art.”
Non-fungible tokens are currently a major topic of discussion within the crypto space with creators and collectors alike jumping on the bandwagon.
With all that said, I’m willing to be proven wrong. I created a unique NFT with my profile pic. It cost me nothing (well except for the ridiculous ETH gas fee) and no effort at all. Prove me wrong and show me that this has value: https://t.co/ucmu8KB1Us
— Charlie Lee [LTC⚡] (@SatoshiLite) February 15, 2021
According to Lee, artists in the real world are constrained by time and effort, likening this limitation to proof-of-work. For Lee, this restriction creates scarcity and therefore value for art pieces created by famous artists.
“NFTs, on the other hand, create artificial scarcity,” Lee tweeted, adding, “Because of the near zero cost to create another NFT, the market will eventually be flooded with NFTs from artists trying to cash in on this craze. Supply will overwhelm demand and the prices will eventually crash.”
Lee’s comments are a common criticism of NFTs à la right click and save. However, there are arguments to be made for the art scene — both real-world and digital — being flooded by reproductions. However, the value of the piece often depends on the artist with collectors paying attention to the creator of a work of art, thus distinguishing it from other copycat pieces.
Indeed, the ability to cryptographically sign art pieces is another oft-attributed benefit of NFTs, allowing artists to include metadata, file links, and other necessary copyright elements.
With NFTs, scarcity becomes an expression of consensus, which is why an ultra-rare alien CryptoPunk sold for 605 ETH back in January. While it would be possible to recreate this rare item, it would not be part of the collection created by Larva Labs back in 2017.
Hashmasks, another NFT collection, created 16,384 “cards” selling out over $10 million in its first four days as previously reported by Cointelegraph.
Lee’s critique also seems to limit NFTs to art and not the wider collectibles scene with elements like in-game assets and digital land. Earlier in February, nine digital plots of land on the virtual realm Lunacia sold for about $1.5 million.