NFTs Aren’t As Stupid As You Think

They’re much, much stupider — investing is like that

Want an NFT of this picture? Make me an offer.

Last week I was in rural Arizona, and in the course of business I met two of the older guys in town. One of them owns and operates the motel, which most likely exists because if you drive a truck from the Port of Los Angeles for a regulation-limit 11 hour day, right around here is where you end up. The other one built the RV park, and per his business card, he is also a real estate agent, dealer of premanufactured homes, general contractor, and notary public. Both of them spotted that I was here with a bunch of California tech money. (The tip-off was that I was driving what they called a “new Toyota” around the desert. It is a 2007 FJ Cruiser with the paint peeling off.) Both of them asked what I knew about bitcoin and NFTs.

If this isn’t the “shoeshine boy” moment for the grab bag of internet schemes called “crypto,” then it’s close. So I’m writing this thing. It is meant for people that are tech-adjacent, not engineers or mathematicians, that are starting to get FOMO at mainstream news telling stories of overnight millionaires. It’s motivated by my general annoyance at crypto hype that is incredibly stupid, and simultaneously, much criticism that is equally stupid.

Once more, though there are already many Explainers, this one is mine.

First of all, here is what bitcoin is: a big ledger, as in a list of transactions, copies of which are kept on random computers around the internet. Anyone can download and read it, and anyone can participate in the convoluted process that updates it. Functionally, it is the same as an append-only Google spreadsheet that everyone can see. The difference is that a Google spreadsheet is controlled by one company (Google), whereas the bitcoin ledger is just kind of…out there, on a “decentralized” network, in much the same way a file on BitTorrent or Napster used to be. The bitcoin designers used some math tricks that came from cryptography, and a “proof of work” idea that was invented in 1992 and scoffed at because it was “inefficient” (ha ha ha sob), to devise a scheme that forces everyone’s copy of the ledger to stay in sync. None of the details of how this works matter.