NFT: the end of a lark mirror


Maxime Paquay

Manager of the Entrepreneurship department

Is the NFT bubble about to burst? The balloon deflates in any case for the very trendy “non-fungible tokens”. But have these certificates of ownership affixed to virtual objects ever succeeded in demonstrating their usefulness?

NFT. The jargon term designating tokens – kinds of digital certificates attached to virtual objects – will have managed to find a place in just one year among the most intriguing technological-financial modes.

And the NFT hype will have succeeded in draining considerable sums. In 2021 alone, the NFT market has grown from 1 to more than… 40 billion dollars. Stop saying tokens, say speculative assets.

But the success is running out of steam. In the last month alone, transactions on the largest exchange site for these assets have fallen by nearly 70%. Worse, on one of the major competing platforms, the vast majority of transactions turn out to be fictitious sales. Users sell, and buy themselves their “tokens”, giving the impression of a teeming activity, when in reality it is… quite artificial.

NFTs have achieved the feat of creating property and scarcity where there was none – and where there was no need.

The speculative bubble feeds itself, before its possible implosion. However, it is difficult to speak of broken promises when it comes to NFT. Have they ever succeeded in demonstrating their usefulness?

The only value that the purchase of an NFT confers is the possibility of affirming: “I own this NFT”. However, owning one does not allow either exclusive use of a work or any valid right – apart from that of selling the famous “virtual token”. The few meager arguments in favor of their development struggle to convince. A new possibility of remunerating artists for their digital works? It is difficult to defend that a new financing channel takes the form of a very select and bizarre speculative bubble.

At the antipodes of any decentralized ideal, open access, or net neutrality, NFTs have achieved the feat of creating property and scarcity where there was none – and where there is none. didn’t need it. At this point, these tokens perfectly embody the ultimate fantasy of those who above all want to generate money with money, without worrying about investing in economic production itself. The aberration is economic, financial, societal and environmental.

So, forget about non-fungible tokens? Not necessarily. Let’s not rule out new applications for NFTs, certificates that will perhaps one day demonstrate their usefulness. But, as they exist and are used today, we can happily do without crypto punks, cool cats and other bored monkeys (among the most famous NFT series).

The latest IPCC report reminds us of the imperative and urgent need to finance the decarbonization of our economies. Above all, therefore, we need financial tools that are not mere smokescreens.

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NFT: the end of a lark mirror

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