The NFT art market is incredibly hot.
Collectors spent $22 billion on NFTs in 2021, up from $100 million the year before.
Late last month, Canadian videographer Dan Olson released a two-hour video about his strongly held views on web3 and blockchain technology titled “Line Goes Up — The Problem With NFTs.”
In a nutshell: Olson asserts that web3’s technological limitations are such that it will never deliver on its vaunted promises. He goes a bit further, essentially describing cryptocurrency as a scheme that creates more problems than it solves, is inherently inefficient, and allows early adopters to fleece later entrants until the system runs out of greater fools.
I asked John and Alex to share their thoughts on Olson’s video as a point of departure for discussing the state of the crypto industry in general. Here’s where we ended up:
- Walter Thompson: NFTs are scarcely minimum viable products
- John Biggs: A shakeout has to happen for the tech to take off
- Alex Wilhelm: I just don’t want your NFT
Walter Thompson: NFTs are scarcely minimum viable products
It is factual to describe cryptocurrency projects and non-fungible tokens as speculative in nature. It’s also inarguable that early crypto adopters, who enjoy a tremendous advantage over later entrants, are prone to gloss over widely discussed ethical concerns about how much energy is required to produce these digital items and how they are marketed. That’s important, but there’s another issue at work here:
Right now, NFT projects are, just barely, minimum viable products blockchain investors are using to validate their assumptions.
Non-fungible tokens have all the hallmarks of an MVP: a high barrier to entry that discourages all but the most enthusiastic early adopters, a minimal feature set, fluid use cases, and suggestions of future benefits that will more than offset today’s growing pains.
A Pew Research survey found that about 16% of Americans have bought cryptocurrency so far, which shows how quickly it’s catching on. Publicly traded companies like Nike and Visa are spending millions to get in early on these unregulated, highly speculative investments.
Also worth noting: most U.S. residents couldn’t put their hands on $1,000 if they had an emergency expense.
As Steve Blank, an entrepreneur who helped popularized the MVP framework, once wrote, “you’re selling the vision and delivering the minimum feature set to visionaries, not everyone.”
NFT auction marketplace OpenSea, home of the Bored Ape Yacht Club, closed a $300 million Series C last month that valued the company at $13.3 billion. According to CEO Devin Finzer, the platform increased its transaction volume by “over 600x” in 2021, earning hundreds of millions in transaction fees.