A response to “The Case for Not Treating NFTs as a Scam” found in Christianity Today
I recently read an article called “The Case for Not Treating NFT’s as a Scam” in Christianity Today.
I’ll say from the get-go that as a Bitcoiner, I approached this article with both intrigue and skepticism. To this end the article did not disappoint. Before reading my response, I would encourage you to read the article for yourself. It can be found here.
Ultimately, I believe the authors, Stephen and Patrick, have the right intentions, but the wrong application. They have the right biblical heart but are misguided.
Let’s start with what the authors get right.
First, I commend Stephen and Patrick for their desire that Christians not be late to the game in adopting and adapting to new technology. Christians were late to both the internet and the social media game. As a result, they say, 19 of the 20 top Christian Facebook sites have been created by “nefarious, foreign troll farms.”
As Christians, we do not want to be late to the game on new technology. I wholeheartedly agree with this.
Second, I love the evangelistic tone of the article. I commend the author’s desire to want to reach people for Jesus, and the openness they have toward using new technology to that end.
Third, I commend the authors for speaking out against greed. The NFT space is rife with a get-rich-quick vibe. As Christians we are to guard ourselves from every form of greed (Luke 12:15). Their warning is clear on this point.
They articulate how NFT’s are an emerging innovation. Musicians are releasing their new songs as NFT’s. Artists are releasing their paintings as NFT’s. Sports networks are releasing photographs of famous moments as NFT’s. All of these give the impression that this is a growing trend with no sign of stopping in the near future.
I too believe blockchain technology makes owning digital property possible. But there are many problems with NFT’s that I can summarize in 3 points:
- All benefits from an NFT can be copied and distributed at no cost.
- An NFT is only as secure as it’s underlying blockchain.
- Ultimately NFT’s are a distraction to the real problem that only Bitcoin solves.
Allow me to work through these points.
1. All benefits from an NFT can be copied and distributed at no cost.
Digital property sounds like an enigma, simply because once something is digital, it can be copied. This blog, for example, can be copied and reposted elsewhere. Someone else can even take credit for it!
This is because all digital information can be replicated at no cost. This applies to digital art and music. Art is simply composed of pixels on a screen. The average song is about 3 MB of data in MP3 format.
The authors give the example of borrowing a digital book from someone via an NFT. The issue is, that if I am digitally borrowing that book, then I can make a copy of it. I can screenshot it and post it on a public website that can be accessed by anyone. If this happens, then everyone can access a form of that book. They can read it and benefit from it without ever knowing it was an NFT.
Here’s the key: In order to stop me from doing this, copyright laws must be applied from outside the NFT ecosystem. Some form of rule of law, such as from a government, must intervene to prevent its reproduction.
Pictures, music and books are all simply information. If I can see or hear it, I can digitally reproduce it at zero cost. If it’s free on the internet, the value of my ownership of it diminishes.
NFT proponents will respond by saying, “Even if everyone on Twitter changed their profile pic to a jpeg with my blockchain verified NFT crypto ape, people could still look on the blockchain and see that it belongs to me, and that is what’s important. In fact, the more it’s reproduced the better, as it brings more notoriety to me as the true owner.”
There is some concession to give here in the sense that being the true owner of a good means something. Anyone can look up images of the Mona Lisa online, or go see it in the museum, but the original art piece is still worth millions. In fact, the more digital pictures of Mona Lisa are shared, the more popular Mona Lisa becomes, and the more valuable the true picture becomes.
To this I would ask, what is the benefit of owning the Mona Lisa? When one looks at the picture, perhaps there is some form of benefit from the beauty of the painting. However, this benefit can come just as easily through a digital copy as through the orginal, maybe moreso. Perhaps a digital scanned version of the Mona Lisa can actually allow users to see the beauty of the painting better than the original.
So why own the Mona Lisa? For two reasons: for the status it brings me, and the hope of selling it for more later on.
Don’t get me wrong, status symbols can be significant. NFT’s are a form of a Veblen good. The picture is really irrelevant. All that matters is cost. The more expensive it is, the higher the demand.
In many ways, NFT’s are the opposite of Bitcoin.
When you own Bitcoin (whether a whole or a fraction), the only person who benefits from owning it is you. Bitcoin cannot be copied. No one shows off their private Bitcoin keys in public (because knowing the private key is akin to owning it). It is a monetary good that is designed to do one thing: hold and transmit value.
Owning Bitcoin is not a status symbol. Because it is a raw monetary good, it’s unlike other status symbols that carry wealth, such as a house, or a gold necklace, or a rare car. All those things have a dual purpose. They function to broadcast how wealthy you are to others in addition to being a store of value.
How do you extract that wealth to move it to something else you may want? You sell it. For a home, you must find a buyer who wants to live or rent out in that location. For gold jewelry, you must find a buyer who wants that specific style. For a rare car, you must find a specific buyer who values it more than you do.
But what if the thing you were holding was actually money itself?
In this way, Bitcoin is different. It’s just money, pure and simple.
Being money, one doesn’t need to find a special purchaser who values it more than you do. Why? Because money is the thing that everyone wants. It can be used to exchange for anything.
Money is an intermediary “good”. It’s not a product in and of itself. It’s the thing that we all want, and can never have enough of. With money, demand ALWAYS outstrips supply.
Therefore, there will always be a market for money. In fact, money is the measure of the market itself. Because Bitcoin is the best money (and this realization is growing every day), it will always be in demand.
Let’s go back to the digital music analogy.
If I own a song as an NFT, nothing is stopping that song from being replicated on mass and everyone having access to it unless a government stops that from happening.
If I own Bitcoin, the only person who can access it is me. What value does it bring me? All the value that money provides: exchange for anything.
This is why Michael Saylor calls money the highest form of energy that humans can channel. Because money can be used to do anything.
There is a caveat here in that Bitcoin is not yet ubiquitous, and most people who sell goods only deal in locally acceptable currencies, often under threat of violence from their government. Yet even with that threat, voluntary Bitcoin adoption is growing fast.
Money is the largest and best use case for a blockchain. It is why the technology first emerged as a form of money when Bitcoin was released by Satoshi Nakomoto in 2008. It remains the case to this day.
2. An NFT is only as secure as it’s underlying blockchain.
Furthermore, an NFT is only as good as its blockchain. The most popular marketplace for NFTs is OpenSea on the Ethereum blockchain. There are other blockchains, but we will focus on Ethereum since it is the second cryptocurrency created and the second-largest by market cap. So the question must be asked: how secure is Ethereum?
The purpose of a blockchain is to be decentralized. Being decentralized means it is beyond the control of a single person, company or even a government. One way to simply test whether something is truly decentralized, is to ask the question: how many phone calls from the president would it take to shut this down?
With Ethereum, the answer is three. Three simple phone calls could shut the whole thing down. Who would be called? Vitalik Buterin, AWS, and Infura.
Vitalik is the outspoken founder of Ethereum. Changes made to the system have often come due to his leadership, or as some would call it, his “bully pulpit”.
Because Ethereum has such a large block size, the average person cannot run a node on their personal computer. The distribution of nodes is an indication of the security of the network. Because of this, Ethereum nodes are operated primarily by Amazon Web Services and a company called Infura.
How about Bitcoin? How many phone calls are needed? The government would need to call well over 10,000 individuals (node operators) who are scattered around the globe. This is far more decentralized.
Furthermore, Bitcoin is battle-proven. It has already proven it can survive a nation-state attack, as China recently banned Bitcoin mining in the country, and the hash rate recovered to all times highs in only 6 months. Users on the Bitcoin network (like me) barely noticed anything had happened. Transfers took slightly longer than normal for a bit, and that was it.
The point here is that if you are hoping to store thousands or millions of dollars in an NFT on Ethereum (or another even less decentralized network), you must be prepared for the counterparty risk of having the whole network shut down.
3. Ultimately NFT’s are a distraction to the real problem that only Bitcoin solves.
NFT proponents have lost the plot. I’ve asked people who are into both NFT’s and altcoins, “what problem in the world is this solving?” The answers that come back are slim.
Does anyone have a need to verify the ownership of a crypto kitty? In our world that is filled with problems, does this even make the list?
Do you know what the biggest problem in the world is right now? Our money is broken.
Here’s how:
Every person I know who is younger than 30 in my country can’t buy a home and have no hopes of ever owning one in the future. They have been priced out through asset inflation. Why? Because the money is broken.
Venezuela is a country rich in natural resources and filled with smart people, yet the economy is in ruins and the grocery shelves are empty. Why? Because the money is broken.
With broken money, people turn to other resources in order to secure their wealth and their future. They buy up homes or they hoard food. What happens when things that we need, like shelter and food, become monetized?
In the words of Michael Saylor, “When you monetize houses, people go homeless. When you monetize food, people starve.”
On the contrary, there are no ill effects to monetizing Bitcoin. Rather, all other goods like food and shelter stay at fair valuations that people can afford.
When money breaks, civilization breaks too.
When money is scarce, goods and services are abundant. But when money is abundant, goods and services become scarce. This is why having a scarce form of money is so important.
The vision for Bitcoin was embedded right in it’s genesis block. Upon release Satoshi Nakamoto ingrained these words, taken from The Times: Chancellor on the Brink of the second bailout for banks.
Right at the founding of this revolution was a laser like focus: Central banks around the world are robbing people of their future through confiscating their wealth through inflation. By being a money with a fixed supply and utterly transparent monetary policy, Bitcoin solves that problem.
Bitcoin is a way to allow your work to mean something again. It is a way to stop wealth inequality. It is a way to stop government overreach.
Bitcoin is a means to fix the money and thereby fix the world.
And you’re shilling your crypto kitty NFT.
It’s dumbfounding.
This is why I believe so strongly that Stephen and Patrick are misguided in their article. They have the right heart and they want to steer Christians toward the next trend, but they are terribly off-mission if they think NFT’s are the big solution.
Case and point: Christians should care about the global poor.
Do Christians even know that El Salvador, through adopting Bitcoin as legal tender, just helped move their country from being 70% unbanked to 70% digitally banked in only 6 months? That’s millions of people who now have the ability to store and grow their wealth.
Do Christians understand what it’s like to live on remittance payments and have to rely on Western Union to receive money from a relative in another country? Bitcoin saves those people a 3 hour bus-ride to the nearest physical branch, with the threat of gangs, and instead puts the money right into their phone in either BTC or USD and brings their cost of transfer down to pennies.
Do Christians understand that people in countries with hyper-inflation are losing their life-savings, and there is nothing else in their country they can own to stop it? Bitcoin gives them a way to secure those savings.
NFT’s are misguided. Maybe they will accomplish something someday. Maybe there is some use case out there.
But compared to the mission of fixing our money, NFT’s are an utterly useless distraction. I hope that Christian (and non) can understand this quickly and get on the right path.
Before you start looking into how NFT’s may change the world, take it back to where this all started. Learn what it is and how it is differentiated from all other cryptocurrencies and blockchains (such as through this article from Fidelity).
Get Bitcoin right first.
HODLing Jesus 