Back in January, the Associated Press announced the launch of their own NFT marketplace, which would allow collectors to purchase NFTs of the agency’s award-winning photos and videos. (If you don’t know what NFTs are, here’s a brief explainer.) Most of the marketplace’s offerings are what you might expect from the news agency, but on February 24, the AP announced that they would be selling a video “of migrants drifting in an overcrowded boat in the Mediterranean.”
This announcement was met with a swift storm of criticism accusing the AP of seeking to profit from human suffering. The AP quickly backtracked, admitting that the video was “a poor choice of imagery for an NFT,” and canceled the sale. (The AP’s handling of the controversy was also criticized after the agency’s “Director of Blockchain” was caught banning critics and deleting their messages from the Discord created specifically to discuss the NFT marketplace.)
Many would probably agree that selling a video of migrants in desperate circumstances for non-journalistic purposes is tasteless, but also, a poor decision that’s probably just an isolated incident. However, I suspect that Dan Olson would argue that the AP’s proposed NFT wasn’t just a one-off, but rather, something indicative of the state of NFTs as a whole. In other words, this sort of behavior isn’t an unfortunate bug; it’s a defining feature.
Shortly after the AP’s January announcement, Dan Olson — a popular YouTuber who has released videos on Ralph Bakshi’s Lord of the Rings, flat earthers, and The Snyder Cut of Justice League — posted a two-hour-long critique of NFTs and cryptocurrency titled “The Problem With NFTs” (watch it below). It’s a daunting watch that covers a lot of material, ranging from the 2008 economic collapse to the in-game economy of the Axie Infinity video game. (Fortunately, Olson’s video is broken up into thirteen chapters for easier viewing.)
Now, I haven’t exactly been silent re. my own concerns and critiques of NFTs and crypto. But whereas I’ve been skeptical, Olson is downright scornful. He makes absolutely zero attempts to hide his disdain for NFTs and crypto as well as for those developing, promoting, and profiting from them. For example:
- Vitalik Buterin, the creator of Ethereum — the crypto technology that serves as the backbone for a lot of NFT activity — is a “butthurt warlock main” (on account of Buterin’s frustrations with World of Warcraft).
- Camila Russo, who wrote The Infinite Machine about Ethereum’s origins and development, is “a failed journalist turned crypto shill.”
- NFTs are the “aesthetically vacuous representations of the dead inner lives of the tech and finance bros behind them.”
You get the idea. All snark aside, however — and there’s a lot of snark — Olson has clearly done his homework. As he unravels crypto’s convoluted lingo and world, his criticisms are not easily dismissed, something that even crypto enthusiasts admit. (More on that in a moment.) Along the way, he makes numerous observations about crypto’s empty promises and reveals how, contrary to its claims of decentralization and democratization, it really only benefits elites and early adopters.
If I had to sum up Olson’s hours-long commentary in a single point, it would probably be that NFTs and crypto are ultimately a “greater fool” scheme, i.e., they’re only valuable if you can convince someone else (a greater fool) to buy them from you at a higher price — a speculative model that’s far from sustainable or equitable. (For the record, Olson is not the first person to make this observation.)
With over 6.3 million views to date, Olson’s video has clearly struck a chord. But has it received any substantial response or pushback beyond angry tweets or YouTube comments? (While I’m skeptical of NFTs and crypto, I don’t want to be so skeptical as to dismiss them out of hand.)
One of my favorite tech journalists, Casey Newton, had this to say about Olson’s video and what it means for the NFT/crypto community:
Few of Olson’s criticisms are entirely new, and on my Twitter timeline this week, I saw many crypto enthusiasts dismiss them out of hand. Few people working in the space will be surprised to learn that crypto3 is awash in grifts; that current blockchains are energy inefficient and expensive; or that digital wallets are difficult to use and fraught with danger. Many web3 builders will also bristle at Olson’s tone, which is smug and hectoring in the house style of the YouTube video essayist; his audience is not people working in crypto, but rather everyone he thinks ought to be afraid of those people.
And yet the collective force of Olson’s arguments is substantial. His essay explains the rise of cryptocurrencies through the lens of rising inequality; pandemic-era isolation and loneliness; self-dealing venture capitalists; and a desperate sense among young strivers that the future is only ever getting smaller. All of which feels particularly timely, given this week’s crash in crypto prices.
Time’s Andrew Chow interviewed crypto investor Tascha Che to get her thoughts on Olson’s critiques. Turns out, Che agrees with most of them, but she nevertheless remains optimistic about crypto’s future. I found her responses less than convincing, though. Most of them seemed to be variations of “Things are terrible right now, but I’m sure they’ll be better someday.”
In response to Olson’s critique that crypto merely recreates the flawed systems of the past, Che does make a valid point that emerging technologies tend to emulate pre-existing ideas. (Consider the “desktop” metaphor that still defines computer operating systems to this day.) Therefore, it shouldn’t be too surprising that crypto does the same. Still, I think that sidesteps Olson’s claims that there’s something about crypto, in its current form, that’s fundamentally unethical and inequitable. In other words, changing crypto for the better is going to require far more effort (and perhaps even oversight and regulation) than Che’s comments might suggest.
Camila Russo responded to Olson’s “failed journalist” accusation in a video from The Defiant, a crypto-journalist website of which she’s the CEO. (The segment begins at the 19:35 mark.)
Like Che, Russo acknowledges that Olson makes some good points. Not surprisingly, though, she defends her book (which Olson called a “journalistic abortion”) as being factual and accurate while acknowledging her own pro-crypto bias. One of her co-hosts, Ash Bennington, then pivots to an optimistic stance akin to Che’s, i.e., things are bad and confusing right now because crypto’s in its infancy, but crypto has a lot of potential, so just wait a few years for the good stuff to happen. He does clarify, however, that “it’s going to be a long slog to get there.” Which begs the question of why, if that’s the case, should anyone who isn’t a tech or finance “bro” get involved in NFTs and crypto right now, besides FOMO?
Prior to releasing the video containing Russo’s response, The Defiant released another video in which Robin Schmidt addressed Olson’s claims.
Like the others, Schmidt admits that Olson makes a lot of good points and calls his video “methodical,” “deeply researched,” and “very astute.” He even offers to host Olson in a livestream or podcast for an actual debate of the issues.
But Schmidt also takes offense at Olson’s “journalistic abortion” quip and defends crypto’s legitimacy by basically asking “If crypto’s really a scam, then why is it still around?” Which is a rather curious defense that seems to ignore both Olson’s criticisms concerning crypto’s hype-driven nature as well as the fact that elites currently profiting from crypto have a deeply vested interest in ensuring that it thrives in its current state, i.e., that the scam keeps on scamming.
There’s no doubt that some have legitimately prospered from NFTs. But, as art critic Blake Gopnik wonders, do NFTs actually add anything to art? Do they do anything to enhance the artistic experience? Look past the hype, and it’s hard to see NFTs, as a whole, serving any real purpose beyond promoting cryptocurrency and giving their owners some bizarre bragging rights. (To be clear, NFTs aren’t limited to art; anything can be an NFT. But currently, the vast majority of NFTs exist within an artistic context.)
That being said, one potentially interesting use for NFTs comes from an article by Platformer’s Casey Newton about the differing responses to crypto between gamers and music fans. Newton’s article includes several examples of artists and festivals offering NFTs that could, among other things, be redeemed for exclusive physical merchandise. He writes:
The music industry has so far approached crypto as a way to sell extras to an artist’s most hardcore fans, and it’s natural that those hardcore fans have not rioted in response. They like the artist; they like the festival. If some people want to blow a lot more money on it, what’s the big deal?
Looking at music NFTs, I see flashes of something that goes beyond a scheme to get the world to buy crypto. Festival passes, digital art, pressure on record labels — there’s a hint of something practical there. And it seems telling that, in the court of public opinion at least, it’s those nascent projects that seem to be getting a pass.
Plenty of questions still remain, however. All hype aside, what real and practical advantages do NFTs have over other methods for granting fans access to exclusive content and merchandise? How, exactly, do NFTs make it easier to connect artists with their fans? What current problems and shortcomings do NFTs actually address and solve?
Returning to Olson, I think his point here would be that newer systems like NFTs and crypto don’t automatically equate to better systems, especially if the newer systems end up promoting the same old power structures — albeit in a newer, cooler, tech-ier guise. And it would certainly be foolish to adopt something simply because it’s hyped by celebrities and influencers, it dominates Super Bowl airtime, or is otherwise surrounded by a distinct air of FOMO. (And the less said about certain cringe-inducing YouTube videos, the better.)
NFTs and crypto aren’t going away anytime soon. The Wall Street Journal recently reported that $1.14 trillion worth of cryptocurrency was exchanged in 2021 on Coinbase compared to just $120 billion in 2020 — and that was just on one exchange.
In my more cynical moments, I’d say that’s probably because a lot of elites and rich people have too much invested in the scene to let it just fade away. Which, of course, means that they’ll remain in power alongside the imbalanced system that they perpetuate and benefit from. At the same time, there are those who could legitimately benefit from the technology. NFTs and crypto may very well become a lifeline for Ukrainians hard-pressed by the Russian invasion, for example — which does seem to be more in-line with crypto proponents’ lofty statements.
However, if NFTs and crypto are really going to live up to such statements — if they’re ever going to become truly mainstream and effect any sort of wholesale and widespread positive change — then they might have to change in some pretty significant ways.
Becoming more reliable and accessible, and less prone to scams and grifts, would be a good start. Which likely entails becoming more regulated and more accountable. Bad actors will need to be tracked down and punished, especially those who take advantage of volatile situations like the invasion of Ukraine. Consumers will need to be protected, not merely educated. Trust will have to be established and maintained.
Considering the elitism and idealism that surrounds crypto and its vision of a decentralized economy, however, I don’t see any of that happening any time soon. On the flip side, given both the complexities of crypto and politicians’ ignorance regarding even the simplest internet technology, I don’t have high hopes for sensible crypto-related legislation happening in the near future, either. (For what it’s worth, the U.S. government is working on crypto legislation, but it’s kind of all over the place right now, hence President Biden’s recent announcement. Plus, we all know how smoothly Congress works these days.)
Skepticism aside, I do find cryptocurrency fascinating from a technological perspective, and I can certainly appreciate some of the philosophy behind it. In theory, I do think there’s something to taking the decentralized approach that made the internet so successful and applying it to finances — to creating a financial system that isn’t beholden to governments and other barriers. (Again, consider the situation in Ukraine.)
But as we all know, power abhors a vacuum. Crypto might be unbeholden to governments, but that doesn’t make it intrinsically more fair and equitable. We can already see how it’s beholden and more favorable to elites, to those who can use their already-considerable wealth, power, and resources to dominate the space. (This vast gulf between crypto’s ideals and crypto’s reality is what drives a lot of my skepticism.)
Putting my cards on the cable, I’d like to see cryptocurrency (or something like it) succeed — albeit in a form that’s more dependable, more trustworthy, and yes, more environmentally friendly. The current strain of NFTs and crypto — which is commonly lumped under the term “Web3″ — feels like a fanciful (and very costly) test run to me. If and when Web3’s bubble bursts in a manner similar to the early ’00s tech bubble, then maybe, just maybe, we’ll see something truly useful emerge in its place. Something that holds to some of the same freedom and utopianism as Web3, but with a bit more realism and perhaps even some humility and appreciation for the fact that not everything in life can or should be treated as a transaction on the blockchain.
Updated 3/11: Fixed a broken link to that so-weird-it-has-to-be-a-joke-but-you-know-it-isn’t Cryptoland trailer.