From Revolutionary Potential to Scam Haven

The Rollercoaster Ride of Blockchain and NFTs

Ok let’s get things straight I LOVE the technology behind most cryptos and NFTs, I think blockchain has a huge potential as a technological platform for many different uses. And NFTs I think are a great spinoff where in theory a lot of digital artists could compete somewhat on equal footing in a market where they could safely trade, sell and produce property rights for bits, which for many years was a monopoly of art being done with atoms.

But, sadly the early adopters of this technology, or the early people getting into this market hasn’t been (in its majority ) artists and art enthusiast who are finally seeing a way to monetize and trade property rights for art they love and appreciate, but a whole wave of crypto bros and scammers that have wrecked the marketplace and will probably leave the steaming crater of what NFTs could have been for a while now.

And I think a lot of examples have been done but a couple of days ago I came across a story where it transcended both fields, on one hand, ridiculous scam-like behavior of greedy speculators getting into the NFT artspace and also of just plain old lack of 

Why am I an optimist

When I first started hearing about blockchain around 2012 or 2013, I kinda paid no attention to Bitcoin and the other early coins that started a couple of years afterward. It seemed like a great idea, especially for transferring money with almost no friction, it was a great disruption in the remittance market (which is projected to reach an estimated valuation of over 331 Billion worldwide) and it could also benefit the hundreds of millions worldwide supporting their families in other countries through this. So Bitcoin offered a cheap safe alternative that could reduce the cut taken by remittance companies while offering a safe and good alternative. Also, it could have been a great way for countries that have been slow in digitizing their financial services and overall uniting the world under a single decentralized financial service. 

Very utopian I know but if you have ever read any of my articles in the past that’s like the entire point of this, besides giving me an excuse to be writing something that makes me and hopefully you happy every week (as always thank you to all the readers and supporters <3) But still, I’d rather be an eternal optimist and read and dream up about beautiful possible futures for humanity than being dragged down to the mediocrity of linear pessimism. 

Then I started reading about blockchain as a whole and that’s when I saw the TRUE value of this technology, as a potential solution to so many problems of trust in the digital world and at the same time an optimization platform for contracts between humans in a safe cheap and secure manner.  Because It solves what is called a principal-agent problem which is an entire field of study in economics dedicated to how we design systems/institutions/contracts among people and organizations that align our incentives and that at the same time can prevent destructive behavior to occur among ourselves.

And Blockchain offered a platform for interconnected solutions the likes of which could (if properly implemented) be of great value, for example, let’s say you’re renting an Airbnb, and the lock on the door is connected to the platform which in turn only activates the contract and unlocks the door once the transaction with the bank is approved so to prevent in a very physical manner any sort of scam but, at the same time automating and easing the management f a property like this. And of course, this is somewhat of a silly example but it could be used for traceability and trust in the supply chains of almost every product. A clear certification that every step of the manufacturing process of our products could certify its environmental impact or the sustainability of its ingredients from an outside and unbiased(mostly) observer. 

Or NFTs which is going to be my most controversial take, but I believe(d) that NFTs have the potential to be a great revolution in the digital art market ( beyond the current shitstorm that it has created) Because in principle na NFT is a certificate of authenticity and ownership for a digital piece of art. It provides clear ownership of an easily copiable asset, as well as providing a transparent list of previous owners on a blockchain ledger. Also providing a somewhat steady source of income where you could code into the specific NFT blockchain that a % of every purchase of the NFT after an initial auction goes to the artist. Solving a big issue on how can you profitably sell a piece of art that anyone can just ctrl+c ctrl+v a million times, on a million computers killing the scarcity-driven valuation of physical art. Now digital art had a tool for attaching a unique (and scarce) code embedded into a decentralized safe and transparent platform.  

But then we have something stupid like this

In 2022 a businessman from Miami (of course) had recently bought an original drawing from Frida Kahlo at an auction house Then he set up an event to announce something related to his recent purchase. Some people were speculating maybe a donation for a museum or just an event to showcase his new purchase with his millionaire friends as a show-off party. (is that even a real thing). But then in front of the press and the attendants he decided to burn the original piece while in the background an image of the same drawing came into frame, and with it the announcement most people had been invited. 

A recently formed company called Frida.NFT was launching 10.000 NFTs of the image for sale. Then it was a vomit-inducing cavalcade of buzzwords talking about how the picture had been “permanently transferred” to the Metaverse now. And that sort of tale is the reason why I’m looking forward to seeing Miami drowned under the warm waters of the Atlantic. Nonetheless, these sorts of scams or PR stunts for another pump-and-dump scheme using NFTS are so tiresome and hurtful to the cultural heritage of humanity. So much so that the dude who burned the Kahlo drawing is now facing potential charges pressed by the Mexican government. Which is great! 

Frida’s spirit while this Crypto Bro was thinking he was making bank.

Also, other artists have done similar stuff a anonymous collective called BurntBanksy did exactly what it says in its name they collectively purchased a piece of Banksy's art, burnt it on live stream, and then sold NFTs of the original piece. Or (god-damned) Damien Hirst who sold a crazy amount of his own paintings and gave the buyers the option of having the original painting physically OR an NFT of said painting and those who chose the NFT proceeded to destroy the physical copy. 

Now I have nothing against this like it’s your art you can do whatever you want with it, But Let’s just say buying a piece of art (regardless of how bad or crude it could have been) to then just burn it and try to scam 10.000 people into being “the bigger idiot” for a nice profit… it is kind of a dick move if you ask me. 

The insurmountable world of scammy crypto bros.

Since the main focus of this is on NFTS I’ll try to avoid talking too much about FTX, Shitcoins, and ALL the other whole world of scammers that have been birthed on the cryptocurrency world that is the shittier, darker, and (even) more shady side of the coin that is blockchain (if this side wasn’t already kinda shady and filled with scammers the cryptocurrency world makes some NFT bad practices like it is child’s play. 

We can begin with MT.gox a website that began as an exchange for Magic The Gathering trading cards where people could buy and sell rare cards online. Then it started accepting Bitcoin as payment for the cards (one of the first online stores to do so) but then it decided to open up an exchange for people to buy and sell Bitcoin as well and it became its most profitable business unit. So much so that at one point between 2013 and 2014 MT. Gox was the largest exchange of all Bitcoin trading around 70% of all Bitcoin transactions and being the largest intermediary in the world. But then after a couple of reports of theft going inside their exchange, it was found out that over 740.000 Bitcoin had been stolen from their exchange, and without a clear trace of who had done it, the company was sued for millions it went bankrupt and a lot of people lost a lot of money. 

Then, there are a lot of tiny controversies and scams of worthless coins of exchanges trying to convince people to use them as a platform for buying and selling when in reality it was just a honeypot once they had enough customers where they totally promise they had bought or sold a certain amount of Bitcoin, but in reality, they then disappear with the money, 

I’m not going to get too deeply into FTX but in short, it was probably the biggest crypto scam where they managed to raise hundreds of millions in an investment where they had investment firms making 5Dimension chess moves to beat the market and at the same time run a Cryptocurrency exchange when in reality the two companies where subsidizing each other with the money of the investors and providing them with fraudulent results of their portfolio. And it has also a whole drama regarding Polyamory, Effective altruism, and other stuff it is juicy drama but for more info check this out : 

But it is surprising when you look at all the many cases of scams done in the crypto-verse and see just how many billions of dollars in multiple countries have been laundered/stolen and so many other creative ways to steal, scam, and rob other people out of their money. Talking about a Lemon market am I right? 

So is Blockchain dead? 

Honestly, I think not, I think these scammers and get-rich-quick schemes that have burst into the world in the early years of cryptocurrencies, and now into NFT and other Bockchain-based applications is just the wild west period of a new technology that still hasn’t been found it’s footing and is still struggling with being on the peak of its hype cycle. During this peak, it is chaos, people with not a deep understanding of the technological prospects for value creation but a keen eye for exploiting failures in systems are getting in and turning the market into a scam-ridden industry. 

Yeah, we are different from SBF bro, we went from Stanford to MIT, not the other way around.

But as I mentioned beforehand the potential usage for solving great need problems and needs for millions of people is still there, I think we just need to wait for the HYPE to die down and then just see how the progress and regulatory framework for this technology evolves and then we will be seeing the great plateau of growth for this industry where solutions for old problems using blockchain might be a commonplace occurrence. Where more entrepreneurs have come up with great solutions that we cannot think of at this moment may be enhanced by AI as a connected environment for deeper developments and it might just be a trendy tech that will never reach its full potential because of the endless stream of scams and con jobs that have plagued the industry and damaged its reputation that just no one is willing to get into it or develop anything with it.

It seems like the resilience of the industry is incredible because even after all the horrible things we’ve seen in the last few years Blockchain is still a very active and growing industry so let’s see how things develop I honestly hope we can get some of the dreams that came up from the initial optimism and excitement accompanying blockchain in it’s earlier days and I cannot stress enough how much I desire comeuppance for the scammers and crypto bros trying to make quick pump and dump schemes just for a quick buck.