The Literally Ungraspable Allure of NFTs
Are physical goods worth more than digital ones? Is a physical painting worth more than a radical idea?
As I started investigating the non-fungible token—or NFT—craze, I wondered how and why people would pay thousands of dollars for a digital piece of art, trading card, meme, or virtual creature. According to EconClips, a YouTube channel about economics, “There are no goods of fixed value. They are valuable as long as people value them and only to that extent.”
EconClips’ video (which is also embedded at the bottom of this story) explains that people value, for instance, diamonds over water because water is still plentiful and its wide availability gives us a license to assign value to our more aesthetic desires and interests. In other words, we can pay $7,500 for Grimes’ 3D, animated portrait of a war nymph because we have the luxury of believing it’s worth it.
Still, NFTs stretch the definition of value and worth further than before, with many people—especially boomers like me—struggling to understand how anyone can pay so much for intangible ones and zeros configured into gorgeous, hyper-realistic art, clever doodles, and even digitally captured sports moments.
The token is the key
The value of this art and digital objects, though, is tied to something that is far less illusory than virtual ink on a digitally created page. On Nifty Gateway, where Grimes lists her work, each image, even duplicates, are assigned immutable tokens. I think of it like a limited set of lithographs, where each print has a number (“12 out of 250”).
So, even though you're buying something you can’t hold, put in your pocket, or hang on your wall (unless you want to display it in a digital photo frame), it is considered unique and ownable.
As Nifty Gateway explains on its site, “Until now, you could never really own a digital item. Nifties live on a blockchain, so no one can ever take them away from you, not even the person…