I spent some time learning about the current hot topic, NFTs. Beeple sold his piece this week “Everydays – The First 5000 Days” for $69.3 million at auction. I would not say I know enough about the space yet to provide meaningful commentary. However, the current prices seem quite high.
Forgetting about pieces that are selling for millions (which only a small percentage can participate in), a lot of pieces going for a few ETH (in the range of two to ten thousand dollars). For the majority of people this is not an insignificant amount of money. Are there really that many people spending that much money on art work in their homes?
I realize that people are viewing these NFTs as an investment opportunity but I have a couple concerns with this.
When you want to sell your NFT someONE has to buy it. These pieces are much more illiquid than just owning Ethereum since you can’t simple exchange it on the markets. This means if prices crash, they are crashing all the way down. You can’t get out whenever you want to.
These pieces have no intrinsic worth. Prices are solely determined by what other people believe the value is. At least when buying stock in a company, the company has assets which can support the value. If the artist goes out of style? The trend fades and you are stuck with this virtual model of an F1 car that you paid hundreds of thousands for?
“Buy the rumour sell the news” NFTs are ALL over the news right now…
They don’t yet have any functional purpose. At least some other block chain technology such as Bitcoin and Ethereum aim to solve a problem. Just adding block chain to something doesn’t make it good, quite often it makes it worse.
While I am not ready to fork over thousands of dollars for NFT’s, I do find the space interesting. I am curious to see what other markets will be brought in. I find semi-fungibility especially interesting and if it will give the average person new opportunities to participate in ownership of larger entities such as sports teams and real estate.
Still making up my mind about NFTs but some thoughts for now.
– Mitch
Quote of the Week
Television offers viewers a variety of subject matter, requires minimal skills to comprehend it, and is largely aimed at emotional gratification - Neil Postman
Favourite Things of The Week
The Alchemist - Paulo Coelho
A classic. I have not decided if I liked this book or not. It was an interesting read but also quite “foo foo”. I appreciated that it was short.
Amusing ourself to Death - Neil Postman
Finished this book this week. Thought provoking commentary on how the medium of shared information affects its impact. If anything it forced me to look more aware of the information I am consuming and then unintended effects it may have. However, the statement “computers are overrated” didn’t age well…
Vikings - Netflix show
I generally try and avoid tv shows as much as possible because of how addicting they are. However this week I got sucked into the vortex that is Netflix with the show Vikings. I would rate it 6.75/10. Started strong but beginning to loose interest.