In the late 1990s, Americans became fascinated by 7” stuffed animals, turning them into a global phenomenon. These plushies, called Beanie Babies, were sold at local toy stores and had a unique production cycle that made them collectible.
This cycle led to a market in which prices of Beanie Babies were up to tens of thousands of dollars.
The fad was also a significant factor in eBay’s early success, contributing to about 10% of its first-year sales after going public. What is even more remarkable about the Beanie Baby phenomenon is not the high asking prices for fabric friends but the sharp decrease in value they have seen in the year since the hype has worn down.
This sharp decrease occurred because the market had created a bubble in which prices flew up arbitrarily, disconnecting from their original value. Nowadays, Beanie Babies are a dime a dozen, and even highly coveted Beanie Babies like the Princess Diana Memorial bear can be found on eBay for as little as $0.99.
Even many first-generation originals that some projected to be highly profitable beanie babies will only sell for about $50-$100 at the most.
Over 20 years have passed now. The internet has become a mandatory part of existence, the world has become increasingly digitized, and most importantly, in 2008, the economy collapsed.
Predatory mortgage loans led to a domino effect that destroyed the American economy, causing bank closures ruining millions of American lives.
This period saw a significant decline in quality of life for many people, and all the while, the rich kept getting richer. The self-evident nature of these loans that ended up affecting the lives of working-class people had a profound and permanent effect on those directly affected.
Faith in our financial institutions plummeted. Americans grew to either resent the system they lived in or tried to replicate the Banksters who took advantage of them and tried to game the economy.
In our current paradigm, the latter exists in the form of internet-based get-rich-quick schemes which revolve around the trading of digital assets and currencies, namely cryptocurrencies and NFTs.
By now, most people should be familiar with cryptocurrencies. In summation, they are a digital form of money that initially aimed to solve the problems of fiat currencies issued by governments, such as hyperinflation.
Cryptos went mainstream with the rise of Bitcoin around 2013, with the idea to bring the anonymity of cash into the digital realm while limiting the amount of oversight during transactions.
Since then, none of those pipe dreams have come true, with Bitcoin being too expensive and slow-moving to handle regular commerce.
Moreover, it did very little in the way of lifting working-class people into affluence as many of the top beneficiaries of crypto exchanges are already millionaires like the Winklevoss Twins and financial criminal Jordan Belfort.
It may also not be very secure as the government has tracked Bitcoin during the Colonial Pipeline hack. These circumstances put the currency in a position where its principal uses were speculation and buying drugs.
This setup is necessary to explain the vast problems that NFT’s and their markets create. NFT’s (non-fungible tokens) were the hot topic of 2021.
One could even say they are the Beanie Baby of 2021. The tokens are a code stored on a public ledger known as the blockchain.
This code allows buyers of digital assets, whether they be images, audio files, games, or video, to ensure the authenticity of an original item. There is something of a simulated physical scarcity imposed upon digital files through this. Most NFT’s take the form of digital art, and it is the expression of the trend with which most people are familiar.
This authentication process would supposedly help independent artists profit from their work without relying on the gig economy. It would also allow buyers to have a digital certificate of authenticity with the art.
What makes NFT’s different from a regular JPEG file is that artists exchange them with smart contracts. These contracts ensure that people appropriately trade NFTs and anything else the artist may code into the contract.
Everyone would soon find out that there was quite a disconnect between what the supposed uses and effects of the tech would mean for the world and the real-life consequences of its existence.
Given that most NFT’s are digital art, many of those who rushed into the concept was online-based artists who typically have a hard time making money off their work.
Many artists realized that there was a small secondary market for NFT. Furthermore, many, if not most of the high sale NFT trades were from minor internet celebrities selling memes after mining them into NFT’s and pre-established artists like Beeple, who sold an NFT at Christie’s for $69 million.
Although many headlines feature stories of high-priced digital assets, most of those who participated lost money. Additionally, the ability for anyone to mint and NFT without creator consent has created a whole world of art theft within the marketplace.
The holes within blockchain technologies are too numerous to go over, making many people wonder what draws dedicated groups of buyers (including many notable celebrities) to trade, sell and make NFT’s. In short, the whole thing is a grift based on a bigger fool scheme, being that it necessarily requires someone to buy the item for more than the original buyer paid for it.
However, this half-assed and volatile gambling effort is only the beginning of the problematic aspects of highly complex programs essentially managing and codifying finance rules.
One example is a scheme in which someone places NFT’s into wallets without the owner’s knowledge. The NFT has a smart contract that will steal their funds if it is deleted or moved in any way.
The decentralization of the storage and the cumbersome nature of the market makes it a playground for untraceable fraud.
Blockchain technologies are worrying and don’t seem to be stopping anytime soon. The disaffection that Americans built up in the wake of 2008 was no joke, and even all these years later, we see our wealth gap growing and our wages remaining stagnant.
There will always be a market for people that want to earn more and live better through quick and risky means as long as there are poor and desperate people.
However, what is most important to understand is that the implementation of blockchain technologies will not be a democratization of our finances but merely a change in management.
And yes, NFT art is hideous.
