The NFT hype has taken over the crypto space in the past few weeks. But not all veterans are convinced.
You’re not alone if you’re skeptical about non-fungible tokens (NFTs), the shiny new crypto hype that is either overvalued or the next market frontier depending on whom you ask.
Litecoin creator Charlie Lee is on the side that is not completely sold on the NFT hype. For the uninitiated, these are a type of cryptographic token that can be used to represent something unique, be it art, in-game assets, or real estate in the real world.
“The problem with NFTs is that they are Non-Finite Tokens. There is zero cost to create an unlimited number of tokens,” said Lee in a tweet this morning, referring to the cheap cost of issuing such tokens compared to, say, an actual artwork.
NFTs, on the other hand, create artificial scarcity. Because of the near zero cost to create another NFT, the market will eventually be flooded with NFTs from artists trying to cash in on this craze. Supply will overwhelm demand and the prices will eventually crash.
— Charlie Lee [LTC⚡] (@SatoshiLite) February 15, 2021
“Sure, Justin Roiland’s NFT is unique and awesome. But what’s stopping Matt Groening or Mike Judge or thousands of other artists from creating millions of new NFTs?” Lee added in his tweets.
The Litecoin creator said that real-world art is not “zero cost” unlike the NFT market. He said the amount of time, money, and efforts that artists put into a single art piece is effective “Proof of Work,” with many artists only creating a few thousand pieces in their entire lifetime. “This limitation creates scarcity, which helps keep the value high,” he explained.
But the NFT market is none of that, he insisted. “Because of the near-zero cost to create another NFT, the market will eventually be flooded with NFTs from artists trying to cash in on this craze,” Lee said, adding:
“Supply will overwhelm demand and the prices will eventually crash.”
Lee’s own NFT is now on OpenSea
Despite the tweetstorm, Lee clarified that his position on NFTs did not mean that digital artwork—as a whole—did not take time or effort. He noted that such work took both time and effort and held value, but the NFT, as such, was not the artwork. “Creating the NFT is cheap,” he said.
Market speculators have pumped the digital token art sector in the past few weeks. Data shows over $20 million worth of such tokens exchanged hands in the past month—over four times that of the month prior.
— Nick Tomaino (@NTmoney) February 10, 2021
Meanwhile, wanting to be “proven wrong,” Lee issued his own Twitter profile picture as an NFT on OpenSea, a popular digital art marketplace. Users have already bid over 1 ETH ($1,797 at current rates) for the rights of holding Lee’s Twitter profile picture. And for all you know, some degen might just pick that up for a few hundred ETH.
For more information, explore all NFT coins on CryptoSlate.