NFTs and Value
Don’t miss part 1: NFTs and Essentialism
Let’s begin with a not so bold claim: every NFT (non-fungible token) is unique. Can we all agree on that? In fact, that may be the one universal truth that’s undeniable about NFTs. Uniqueness is baked in by immutable contracts, seared into the machinery of the blockchain. Furthermore, tokenizing imbues one, out of an endless set of perfect digital clones with essential qualities beyond the rest. But here’s the rub: uniqueness on its own is insufficient to explain value. And yet, I find article after article extolling this very basic fact as the reason for why NFTs are considered valuable assets. I can draw a scribble in MS Paint and mint it as an NFT and it certainly won’t be worth Beeple’s $69M NFT. There must be more driving NFT value than mere scarcity.
Starting with a dictionary definition of a word is the worst form of analysis, but in this case, let’s make an exception because it’s useful. Merriam-Webster defines value as, “relative worth, utility, or importance.” Reductive as it may be, each of these terms can apply to NFTs. Some have worth, some are useful, and some are important—but not all necessarily apply to every NFT. In fact, NFTs that hold all these aspects of value are a subsection of the market. To simplify the broad stroke question of “do NFTs have value?” let’s reframe the question into constituent parts for these three components of value, starting with worth.
