This Brutal Takedown of NFTs Explains How Each New Investor Is a Bigger Fool Than the Last

The excitement around NFTs is hard to ignore, having established a cult-like following that is gaining an ever-growing foothold in mainstream technology. What if an entire financial system was built around little more than hype backed by a handful of tech millionaires?

Dan Olson of Folding Ideas has put together an in-depth critique of cryptocurrencies and NFTs, and while this deep-dive is more than two hours long, it unpacks a highly complex series of ideas and structures, and I’d argue that given the growing influence of alternative financial systems, this is essential viewing.

Ten months ago, I spent a few weeks exploring NFTs and wrote a piece arguing that it was a pyramid scheme. Olson refines this idea explaining how the entire system relies on hype: each investor evangelizes as a result of the potential value of their holdings being entirely dependent on optimism and the arrival of new investors — the bigger fool.

This is not to say that you are a fool for investing in NFTs; it's simply a means of explaining how the system functions. If you are an investor, however, I’d strongly urge you to spend a few hours watching this video. Buried within the NFT marketplace are some excellent ideas — such as a means of selling digital artworks and artists always receiving a commission on future sales — but for me, these small positives are overwhelmed by a crypto culture that is void of ethics and littered with serious problems.

Andy Day's picture

Andy Day is a British photographer and writer living in France. He began photographing parkour in 2003 and has been doing weird things in the city and elsewhere ever since. He's addicted to climbing and owns a fairly useless dog. He has an MA in Sociology & Photography which often makes him ponder what all of this really means.

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The Greater Fool theory.

As a matter of logic, if the only difference between a digital asset, and a digital asset with an associated NFT, is the existence of the NFT, then the value is in the NFT as opposed to the digital asset (which you don't get to own anyway).

It is also noteworthy that most of the people buying NFTs are doing so on a speculative basis; which means their value is perceived, as opposed to intrinsic.

And Twitter is one hell of an echo chamber.

That said, there is a company called Flow, which has developed asset oriented language; they have addressed the issues of scarcity, ownership, and much of the environmental concern, vis-a-vis energy use (at least that's the claim); they will be worth watching.

All the above notwithstanding, artists/photographers are making money, so cool.

Edit: I commented before watching this. The dude is sharp, and it's worth the time.

You weren't kidding about brutal, Andy. Thanks for posting.

2hrs, really!

2:18... And worth every minute

Absolutely learned a lot, like how I hate when youtubers crop in on themself, then out, then in, then out, then in, then... When first seen, you can't distract from it.

But on the subject, it was absolutely worth it.

Cryptocurrencies are proof that a fool and their money are soon parted. Anyone who thinks that governments all over the world will give up their authority to set monetary policy, fiscal policy, taxation policy, etc. and turn it all over to people with computers mining ones and an idiot.

Yep! Thank you so much for saying this!

I watched this a few days ago and while I'd normally have popcorn watching anything for two hours this video is an excellent (sometimes opinionated) explainer on how crypto came about leading to NFTs and the culture surrounding them. He does an admirable job breaking down jargon but there were still some terms and acronyms I was unfamiliar with.

Still, it's worth the watch for the curious.

Well worth watching.