Remember Beanie Babies? Yeah, there are still people who will cry if you take the tag off in front of them. Those tags cost less than a penny to make, yet the world got together and agreed that those tags conferred value. NFTs act in exactly the same way. It’s a value we collectively ascribe. So to decide whether NFTs are a scam, ask yourself if Beanie Babies were a scam. I promise we’d all come up with different answers. Are NFTS a good investment after all? There certainly are some Beanie Baby ballers. But to find out for certain, we talked to a blockchain-and-music entrepreneur and did a deep dive into crypto, OpenSea, and Web3. If none of that means anything to you, you need to read this article.
So let’s talk about art, blockchain, and value. Maybe it’s not up to us. Maybe it’s up to the people who stand to benefit? Or is it up to the people who feel like they’ve wasted money on it? And does anyone who actually owns an NFT feel like they wasted money on it? Finally, should we be asking people who aren’t involved in that world and who don’t own or want one about its legitimacy? I’m thinking no, so I asked a musician who plans to release one: “why, though?”
So are NFTs a good investment? Brenna Damatta is the right person to talk to. In 2020, she and her partner Cannon founded Uni Streaming, a blockchain-based music submission platform. Blockchain, which came into the collective vernacular around cryptocurrency (as the thing that allows it to operate), is also critical to NFTs. The blockchain connection between crypto and NFT’s is one reason that people are skeptical of NFT’s: like crypto, they’re new, unknown, operate on a blockchain system we don’t fully understand, and because of all this they strike people as unstable.
But Brenna has dove in and learned a lot. She stans not just NFTs, but the revolution they’re a part of, a revolution not many know too much about. Web3 refers to a version of the internet that’s entirely blockchain based. It would create a crypto world, where currency, banking, and even the internet is completely decentralized (taken out of government or institutional hands), as well a token-based economy (think bitcoin). Brenna sees it as a real revolution: “The future is independent, and that goes for all kinds of business structures. The people are demanding equality, freedom, and humane working conditions.”
And Brenna’s Uni is going to be a big part of that. She is proud to share, “I think more than anything, NFT's give my music a new platform that isn't saturated yet, but that will change as the space grows. Long term, NFT's give independent musicians more tools to create long term and sustainable fans/supporters, [especially] if we can bring the tools all in one place, which is what we are working on with Uni.”
I came up with this article thinking I was sold on the idea that NFTs are scam-adjacent. But in writing it, I may be changing my tune. Salon undermined its own argument against Brenna. They found an “expert” to explain to you why NFT’s are a scam, but they may have gone too far by decrying crypto as a scam too. Crypto has been around a long time, has upended the entire stock market, and has been moving tech commerce and investment for years and years. I was hoping to find real proof NFTs were a scam, but I was persuaded in the other direction when I heard the “NFTs = Scam” side is trying to snag shares and retweets by “controversially” lumping it in with crypto. I was not persuaded that “everything’s a scam, tech’s a scam, your whole life is a scam” was a valid argument, save for convincing our flat-earther friends.
But there’s a great debate still raging. Are NFTs worth it? One possible answer is, “if it works out.”
Molly White, editor of Web3IsGoingGreat.com, takes a more measured stance, stating a simple fact: "regulatory agencies have not really cracked down," on all the scammers and hackers who treat blockchain like the wild west of the internet. Molly goes on, "The hype and noise undermine a lot of the trust most people need to get involved. The scams are hard to avoid."
For one thing, the largest NFT marketplace, OpenSea, is already a hacking victim and embroiled in much controversy. Over $2 million in NFTs have been stolen. In March, OpenSea tumbled 80% from where it was in February. That 80% number might be the death of them. It’s also the percent of, “items created with this tool [that] were plagiarized works, fake collections, and spam.” This number and admission illuminates that NFT scams are being perpetrated at scale and with efficiency and speed.
So are NFTs a scam? Well, where there’s a scam there’s usually a scammer. But OpenSea didn’t create NFTs, NFTs created OpenSea (who became “the scammer” in question). So like any new industry, where people naturally know less, it can open you up to NFT scams. Scam victims are those who just don’t know enough to avoid the scam. NFT’s aren’t a scam, but they create a vibrant new world for scams to flourish. CBS News lists three types of blockchain and NFT scams to avoid here.
Problems with OpenSea seem to know no end: “In September last year, OpenSea’s own head of product, Nate Chastain, resigned following allegations of exploiting information to make a profit. The senior staff member was reportedly caught using a secret Ethereum wallet to purchase front page NFT releases before they were published to the public, suggesting insider trader concerns.”
Aja Trier, a painter in San Antonio gave an interview with NBC News: “Her career had evolved in a way she never expected, courtesy of an NFT cash grab. After years spent carving out a reputation in the local art world, Trier was horrified to find tens of thousands of listings of her work up for sale on OpenSea, all procured without her permission.”
So NFTs have the potential to be legit. They have the potential to make a difference in the lives of those selling them. They are even inherently legit, because in the art world the purchaser assigns the value. But at the moment, the market is not legit. It is unregulated and throws smaller artists under the bus. It’s creating a world in which stolen art is okay and normal. It opens itself up to being victimized by the people working in it, who engage in unethical and illegal business practices, like Chastain’s practice of buying NFTs before they were up for sale.
But if you’re selling your own art and doing it right, I’d refer you back to Brenna: “Before we knew about NFTs, Uni's mission was always for independence, and making the artist the business. NFTs are like the brick & mortar storefront for each musician. Leveraging ownership, collaboration, and creativity, Uni will provide the container for this great ecosystem.” So I ask one last time, and I’ll leave you to answer: “Are NFTs worth it?”
Brenna and Uni are going all in on NFTs and Web3. But their take is a measured business decision with real plans and goals attached. She sees exactly how NFTs can benefit her as a product, but also a marketing tool:
“With every IRL merch purchase from Uni, the buyer also gets a "POAP" receipt as an NFT. We notify them and help them set up their Web3 wallet to receive their NFT! Another way I've onboarded a couple of people is through minting 411 music NFT's from my single "Sweet Rain" each person I onboard will receive one of those music NFT's for free. That's been a great way to get people interested. Typically if FREE stuff is involved, that's a good motivation to try something out. During SXSW 22' Uni hosted a panel, every attendee received a POAP as well.”
This is to say, Brenna and Uni represent the very best of us–and the very best of the blockchain and NFT world. They’re a small upstart, unlike OpenSea, who does not steal art. They simply use a new idea in an innovative way that makes their customers happy–and frames Uni as trustworthy. They’re the future of blockchain and Web3. To have a decentralized world, we need to decentralize away from the OpenSea’s of the world. We need to put power in the hands of the Uni’s–and we need to let them do their thing until doing our things the right way becomes the norm in this niche.
Final Tally: Are NFTs a scam? Or are NFTs a good investment?
Through Open Sea? Yes. Through Brenna, Uni, and similar small businesses? Hell no. Do it.
In parting, Brenna sums it all up best: "Music Tech is Musician empowerment"