This should be the death of NFTs

In 2008, the economy collapsed. This is the prologue to both our current reality and to Line Goes Up The Problem with NFTs, which is the most recent video essay from YouTube creator Dan Folding Ideas Olson. This feature-length video is a thoroughly researched biopsy of crypto and non-fungible tokens. And, in a sane world, it would stop the technology dead in its tracks.

Of course, in 2008 the economy collapsed and made it clear to everyone that we do not live in a sane world. Olson skips over some of that evidence. Like, for example, AIG paying bonuses to executives using taxpayer bailout money. Or how about the government neglecting to prosecute anyone for knowingly selling toxic assets to pension funds? My personal favorite is, after bailing out the banks, the Obama White House returned approximately $200 billion in Toxic Asset Relief Program funds instead of using that to stop home foreclosures (there were millions).

What does this have to do with NFTs? Well, its the same thing that it has to do with GameStop meme stock rally from January 2021. The U.S. government, no matter who is in charge, has repeatedly taught us the lesson that we are on our own. They will save banks and billionaires, but if you want to get yours, youre going to have to take it from some other sucker.

As a defense mechanism, the only responses to an environment like this is nihilism or apathy. But the apathetic create a space for the nihilistic to take what they want using new, mutant grifts. Because if there are no consequences for the rich, then you can justify anything in the pursuit of riches.

This is where NFTs come in, and in response, this is where Olson begins his critique of the technology.

Line Goes Up performs a detailed examination of NFTs, the blockchain, and cryptocurrency. You should watch the entire film, but it has some key criticisms that pop the hype bubble surrounding the tech in the gaming space.

For every futuristic promise, NFTs have a litany of issues intrinsic to its functionality. People pitch crypto as a means for conducting private transactions, but everything is public on the blockchain to anyone who knows how to parse the data. The techs evangelists also present its decentralized nature as inherently more secure, but its actually trivial to launch attacks against an individuals personal crypto wallet. Even the idea that original artists can get a cut of every future sale of their work isnt guaranteed and is not inherent to the tech.

Recently, weve heard more claims about the potential for play to earn to empower people in the developing world to make money by playing games. But that model requires a sustainable, growing in-game economy and it is notoriously challenging to balance a video game economy. That is a frightening proposition when digital items have real-world value, and if people are playing to earn money in a game, that kind of drain on currency will force a studio to make changes. This is already happening with NFT-based game Axie Infinity. Its studio is tying to prevent a collapse of its NFTs, and that has caused what players earn each day to drop below the poverty line.

Olson goes into all of these problems and so much more, and the crypto communities defense is still that the haters dont get it. In the face of such a dense work, it would be absurd to continue arguing that.

NFTs and crypto are about finding the next sucker, and its easy to feel justified doing that in a world where the economy collapsed in 2008 and left so many of us to fend for ourselves. But this will only make video games worse.