Column One of the many joys of blockchain is that it generates even more heat online than a Chinese Bitcoin mine pumps into the atmosphere. This month's posterchild is the NFT, the Non-Fungible Token, which is seen by all the right-thinking fold as practically the fundamental particle of crypto-scam physics.
You may have avoided this innovation for the sake of your sanity. As one friend remarked wearily on the observation that away from the hysteria, blockchain tech was worth watching: "Yes, but the hysteria comes with racist douchebros, libertarian grifters and QAnon paranoiacs. And I just can't even." She's not wrong.
But with a guarantee that such nonsense has no home here, this is what an NFT is. It's simply an entry in a blockchain that contains a reference to something else. Its blockchainhood means it can't be edited – it is part of the untamperable chain of mathematics – and the "something else" can be any data. The non-fungible bit merely means it's not the same as other NFTs so can't be considered as their equivalent nor traded as such. You don't care which Bitcoin you get when you get a Bitcoin, like you don't care which barrel of oil or ounce of gold you trade – they're all fungible. Your pet dog Arthur you wouldn't trade for any other dog in the world because who's the best dog in the world he's the best dog in the world yes he is? Non-fungible.
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A crypto-entity that lacks even the nominal notion of an exchangeable currency? What ziggurats of fraud could be built on that! And indeed, if you do part with hard cash for an NFT you are buying something extremely nebulous, and that if nobody wants to buy it from you, you'll be down on the deal.
There is a single nugget of magic in NFT: authenticity. If generated and constructed properly, both things that can be made verifiable, then an NFT is exactly what it says it is, and ownership of it through blockchain transactions is absolute and unfakeable. This applies to the data with it, which can be as simple as "The holder of this token is the only legitimate owner of the original artwork Pig In A Frock Playing Poker With A Chimp, Bill Gates 2021, pixel-in-DRAM." If Bill Gates has sold you that NFT for two million quid then you absolutely and incontestably own that artwork.
This has infuriated quite a lot of people, who point out perfectly correctly that a hundred million bit-identical copies of Frock Pig could exist, totally indistinguishable from each other. What on earth have you bought for £2m?
Authenticity. The entire $50bn art world revolves around it, even though it's really hard to verify in many cases. That may seem an odd example to hold up in defence of the inherent goodness of NFTs. If you know anything about the art market you'll know it is a mighty throbbing pustule of fraud and deception, where status, cupidity, ego and far too much dodgy cash swill around in posh accents and mutual blind eye turning. But it's proof that if we value anything in our culture, it's authenticity. You can buy a reasonable facsimile of the Mona Lisa for very little, and it'll look just as good on your wall as the real thing, but in the absence of a concept with no bearing whatsoever on how it looks – surely the only thing that should matter in a picture – then it's worth almost nothing.
In fact, so strong is the authenticity of an NFT that it can create the thing it is attached to. Jack Dorsey sold "The first tweet" with an NFT for $2m – and nobody knows what a tweet actually is. Is it the string of words? Is it the data in a structure in Twitter's system? Is it what appears in a Twitter client? None of that matters now: the first tweet is now a totally legitimate piece of legal property, the rights to which can be bought and sold by whatever that authenticity is deemed by society to be worth.
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It is an absolute marvel of technological culture that out of the steaming bed of manure that is the world of crypto, one of the most valuable of roses can grow. If you have a taste for the underlying questions of what "real" means and more than one Philip K Dick novel in your library, congratulations: you have inherited the world of your dreams.
Now we have the truth, what shall we do with it? It is easy to conjure up new business models that revolve around these ideas. There's little point in stealing physical objects if they can't be traded without their NFT. Videos with checksums in an NFT can't be edited, and can always be traced back to their origins – a few tools to automate that and the whole deepfake scene changes. Are any of these ideas better than what we have now? Maybe, maybe not. Let's find out. Will people try to boil oceans, build scams and hustles, fake businesses and snake oil out of flogging NFTs? Count on it. But that doesn't change the mathematics of authenticity.
Caveat emptor has not been repealed, but now, boy, can we caveat. If the truth really can set us free then it seems apt that it takes a chain to do it. ®