The case against NFTs

The rise of things to own in the digital world marks a new age of status anxiety. Do you still want to play?

NFTs are shaking up the digital art industry. Reuters

I am a futurist and non-fungible tokens – NFTs for short – make me queasy.

At the Dubai Future Foundation we have been trying to understand this burgeoning world of owning digital assets and what NFTs are all about. How can they be sold as art, how are they secured despite being so easily copied, what makes them unique (or not) and how does pricing work?

The artist VESA said something that intrigued me at a seminar we recently hosted about his experience in participating in an online simulation. When he first began meeting people in this virtual reality, he was just a simple stick figure. Those he was meeting had (virtual) designer clothes and shoes – purchased at great expense. The virtual world - like the physical one - is already a capitalist place. Clothing, game accessories, art and more can be purchased to own and show off for one’s online avatar.

So, when you have your virtual friends over for a virtual dinner, in your virtual house, you can show off your outfits, collection of digital art or footage of unique moments in history, film or sport. Indeed, you would be able to show real-life, NFT-savvy friends your digital collection. And so we are drawn into this league of digital investors.

This reality explains a few important points about NTFs.

A visitor at an art installation that will be converted into an NFT and auctioned online at Sotheby's. Reuters

First, status anxiety has become digital. Alain de Botton, philosopher, writer and author of the 2004 book Status Anxiety, describes how, even back then, we lived in perennial fear of being seen as unsuccessful. We compensate by overcompensating, leading to excesses and anxieties. Our digital lives are so expansive and public, not least thanks to social media, and promoted by in-game economies that the digital space is where this newfound anxiety is expressed or conquered today. Facebook’s own recently leaked research into mental wellbeing issues associated with Instagram bears this out: social comparison is made worse by Instagram in a quarter of the platform’s young users.

The second point is that an important aspect of the digital world is the opportunity for new world orders. I can be anyone I want online: pick a name, a gender or a preference of any kind, and that’s who I am. I can even declare something to be scarce and valuable, like with an NFT. This means the opportunity is there to strike it rich just thanks to my intellect, a computer and an internet connection. This makes me wonder: Is selling an NFT real success, or just the appearance of success? How do you define time well spent?

Of course, this will be a race to the top – and to appear successful. Hence, investing in NFTs is hailed as an opportunity for everyone to gain digital ownership of something others may want – an opportunity to once again create haves and the have-nots.

Digital artists such as Beeple, whose work is shown here, have already made millions. Courtesy the artist and Christie's

NFT ownership of significant digital art has recently moved to India. Eager buyers are claiming that cypto is an equaliser between the West and the Rest. To try to level the field, Vignesh Sundaresan and Anand Venkateswaran, early cryptocurrency investors, have splurged $69 million for a digital canvas by the artist Beeple, who never expected to make so much from his art.

In my mind the big-ticket NFTs will always be within reach of the wealthiest

That’s a third, and perhaps much less disturbing, aspect of NFTs. They present an opportunity to reward artists during their lifetimes. Even so, in my mind the big-ticket NFTs will always be within reach of the wealthiest, regardless of whether their wealth was made in the last bitcoin cycle or over generations.

But don’t forget: investing in any form of art, or anything, in the hope of striking it rich, always carries risk and uncertainty.

Sure, you could go to Paris with millions of euros in the hope that the Mona Lisa is up for sale. Or, you could buy cheap paintings from art students on the Rive Gauche in the hope it’ll fetch millions one day. Just because NFTs are today's trend does not mean they’re a sure bet.

Somehow, though we are fed daily rations of digital investments, mostly by sellers, as being a route to wealth – if I had only bought bitcoin at $5 (or even at $30,000), or that cute cat NFT. That’s because we want to feel part of the savvy crowd, even if that means looking at a pixel on a screen rather than a painting.

So when you feel that urge to spend real money on a new NFT, know that you’re suffering from digital status anxiety. And isn't there enough of that in the real world already?