Non-Fungible Tokens or NFTs provide proof that the world has gone mad and been driven there by people who are far cleverer than we are. Just ask them, and they will tell you. They will also tell you that, according to them, NFTs are designed to provide non-fungible value for digital art. Whatever a fungible might be.
NFTs are the latest fad taking markets by storm. And the last thing a market needs is a fad.
This fad is based on something that is happening on social media (another warning sign, a big red warning sign) and is being led by characters such as, wait for it, surely not – Elon Musk. He is reported to be selling a techno track about NFTs – as an NFT.
Do you get the feeling you are being toyed with? Or you have accidentally strayed into a bad science fiction movie in which the world goes mad?
Two generations ago, if you were lucky enough to have a portfolio of shares, you would have lunch with your stockbroker once a year to discuss your short term aims. Your short terms aims were about 10 years.
Then came instant profits and computer-based trading. The problem was that these computers were given triggers. And if a stock hit a trigger price, the computer would instruct the brokers to dump the entire holding, sending the whole market into chaos.
Welcome to the world of artificial value.
Now that we have things such as NFTs, we are in the territory of people properly taking the piss out of entire financial structures. And if they are not stable, it is the innocent who get hurt.
Whether it is driven by boredom during a pandemic that has locked us away or a financial tendency towards suicide on a mass scale, it is hard to understand.
The reason that NFTs are even a ‘thing’ is that they are bound together by a blockchain.
So that’s alright then.
NFTs are, of course, not alone in creating insane ways of trading your way to riches or ruin; it arrives in the wake of the equally insane manipulation of the market by the GameStop story. Ordinary people were able to twist markets out of shape and traders out of billions of dollars because if enough people buy something, its perceived value will increase.
Even if it has none.
NFTs and other digital fads put us in mind of tulips. Let us hope that those digital artists it is meant to protect do not get hurt by greedy crypto players.