It was the clip heard around the world.
Paris Hilton, sometimes socialite, fading reality TV star and occasional pop chanteuse sharing her “Bored Ape” NFT with Jimmy Fallon on his late-night talk show. Fallon reciprocated with his own Ape image, and the two shared stultifying small talk about cool things like hats and sunglasses. And… scene.
What to make of this? And what the heck is an NFT?
I’m glad you asked, because up until a week ago I wouldn’t have been able to give you an answer. But now I can confidently say it’s a non-fungible token, don’t you know!
In the simplest terms possible, NFTs are digital receipts of neat digital stuff you can own. Except that you don’t own the actual item, such as the picture Hilton bought from Bored Ape. All you own is the right to say you own it, and sell it to someone with even more money. Or something like that.
Bored Ape Yacht Club, as the current celebrity pet startup is officially named, says it offers “a collection of 10,000 Bored Ape NFTs — unique digital collectibles living on the Ethereum blockchain. Your Bored Ape doubles as your Yacht Club membership card, and grants access to members-only benefits.” Justin Bieber dropped $1.7 million on a cartoon of a sad-looking ape last week.
Honestly, I’ve read a lot of articles and watched innumerable videos about NFTs, and there’s still a point at which my brain says, “Huh?” A good explainer is here.
Anyhoo, celebrities have taken to NFTs like the proverbial new hotcakes.
The entrance of famous people into the cryptosphere isn’t new, but it’s become more obnoxious of late, whether it’s Matt Damon shilling cryptocurrency or Reese Witherspoon issuing cryptic pronouncements like: “In the (near) future every person will have a parallel digital identity.... Avatars, crypto wallets, digital goods will be the norm. Are you planning for this?”
Well, I wasn’t, but now that you mention it, Reese, I guess I’ll start thinking about it now!
Usually when stars make such announcements, it’s followed by a marketing campaign hawking a product. In this case, a crypto something or other.
What to make of the increased star presence and endorsements around this stuff? Someone must be paying them, but who, I wonder?
If Hilton and Fallon’s strange exchange wasn’t enough to convince you that something weird is up, then YouTuber Dan Olson’s impassioned, eloquent and well-researched arguments might just do the trick.
On Jan. 22, Olson posted a video to his YouTube channel titled Line Goes Up: The Problem with NFTs. It’s a two-hour takedown of the tokens that has over four million views to date.
As the video’s comment thread shows, Olson has articulated what many folks have suspected about NFTs but haven’t yet pinned down. Namely, that the whole thing is more than slightly nutty.
There’s a lot of information packed into Olson’s explainer, which uses jargon phrases from the crypto world like “to the moon!” and terms like “DAOs” and “whales.” In short, he presents a case about why NFTs, Web3 and blockchain technology aren’t all they’re cracked up to be. The video has since been much debated in crypto circles.
Olson starts his assessment of the hyped-up promises of cryptocurrency with a look back at the 2008 financial crisis. Much of his analysis is drawn from Michael Lewis’s book The Big Short, adapted by director Adam McKay into a film of the same title.
(Charles Ferguson’s documentary Inside Job covered some of the same territory. Matt Damon, who narrated Inside Job, apparently wasn’t paying very close attention to the stuff he was reading, or he might’ve noticed similar patterns of hot air and hype.)
If you recall, the thing that kicked off the global financial crisis was banks deciding to roll the dice on subprime mortgages, with help from the regulators who were supposed to be calling out bad behaviour, all before getting bailed out by the government because they were too big to fail.
Olson draws parallels between the financial bubble of 2008 and the current NFT craze, pointing to what he sees as an inflated market with little oversight, and a whole lot of bad actors.
Line Goes Up is worth watching in its entirety, but the final coda is where things catch on fire. Almost incandescent with rage, Olson explains how the crypto world simply reflects the same tired old system, suckering the sad and the disenfranchised, all in the name of filthy old money.
In this aspect, he’s tapped into a deep and throbbing vein of anger and bewilderment as people try to make sense of a system that would sacrifice them, and everything they hold precious, for this thing we call the economy. Or what he calls the “financialization of everything.” The anger goes deep, like thrombosis deep, meaning it if explodes it will probably kill you.
Olson makes a compelling case that despite all the revolutionary talk surrounding NFTs, the people in charge of old money, the non-crypto stuff, are still the ones in charge: corporations, hyper-industrialists and venture capitalists. Or as he describes it, the crypto world is “a turf war between the wealthy and the ultra-wealthy…. It’s a cat fight between the five per cent and the one per cent.” I’d hazard a guess that the crypto side is the five percenters, with ambitions toward being in the one.
NFTs might be an odd embodiment of this turf war, but they’re also nothing new when it comes to human behaviour. The same old human truths, even if they have a new digital sheen to them, hold true: a fool and his money are soon parted; there’s a sucker born every minute; and if it sounds too good to be true, in all likelihood it’s not! (In more recent terminology, the idea is that there’s always a bigger idiot: someone who will come along and buy your Bored Ape NFT for oodles more money than you paid for it.)
Which brings me back to celebrities. The idea that wealthy and famous folk are flaunting their excess riches not even on designer bling or super-yachts, but rather imaginary stuff, is deeply galling when much of the world lacks real things like housing, food or clean drinking water.
Although there’s a temptation to draw comparisons to past bubbles, be it tulips or beanie babies, the recent mania for NFTs is slightly different. Although the age-old human propensity to fall for get-rich-quick schemes remains, the difference is that you already have to have considerable actual money to get in on the current windfall.
For example, in the olden days, “miners” were ordinary people who packed up picks, pans and shovels and headed to the gold fields to strike it rich. Some froze to death, fell in a river or got rheumatic fever. Today’s bitcoin miners won’t die in a blizzard, but their endless whining might make you wish that they would. In order to make money as a bitcoin miner, you need massive computing power. An old dirty pan and shovel won’t cut it anymore.
The question of value is where things get weird. Gold is valuable because it’s rare and pretty. Art is valuable because it is also rare and sometimes pretty. And both are also valuable because people are willing to pay high prices for them.
But at least they’re real. How do you create value for something that doesn’t even really exist?
To call Bored Ape stuff art strains the limits of credulity. But even if it was, the art world isn’t exactly clear on where things are going. An essay by Tina Rivers Ryan in ArtReview laid out the forking path.
“Artists have always helped innovate new technologies, but this is the first time a larger artworld has joined them, suggesting a question that has far larger stakes than whether cryptoart will be canonized and/or collapse under a bear market: are the proponents of NFTs visionary pioneers of our blockchain-based future, finally realizing the avant-garde’s dream of melding art and technology to foment a social revolution? Or are they marks promoting a dangerous tool that threatens to ‘disrupt’ not only the art market, but all markets (and perhaps the environment and democratic governments as well) for the benefit of a small group of investors?”
Is there another side to the story? Is it possible to use the underpinning technology of blockchain and do good for the world? It depends on who you listen to and perhaps who you believe.
There are arguments being made that blockchain technology could potentially represent a profound shift in the way the world works, in everything from money to energy production. But when and how things will change remains unclear. I’m curious to see where this brave new blockchain world might go and if something genuinely new and radical does emerge.
But in the interim, if Matt Damon appears in an ad and essentially calls you a coward for failing to jump onto the bitcoin bandwagon, just say “F-off, Damon!” No one should ever listen to any celebrity pitchperson. They’re most likely getting paid in real actual money, not Dogecoin.