Rarity, by its very nature, cannot be too abundant. The more plentiful it becomes, the more it loses its defining property. There is only one original Mona Lisa, but every NFT project spits out a combinatorial number of images all built from a small number of assets and pretends they are all rare.
Each NFT is indeed unique, but since there are tens of thousands similarly unique NFTs - most or them are not really rare. One could claim that rare paintings are the same - that if NFTs are not rare because there are other NFTs, then by the same logic Mona Lisa should also not be rare because there are other paintings. But the Mona Lisa's rarity is real, because no other paining is valued like it. The second most valuable painting is The Last Supper is also very rare and valuable - but it's not the Mona Lisa.
If you try to make the same claim about NFTs - e.g. "Bored Ape #4444 is rare, but it is not Bored Ape #5555" - I'd reply that this claim can be reversed - "Bored Ape #5555 is rare, but it is not Bored Ape #4444". This doesn't work for the Mona Lisa and The Last Supper - "The Mona Lisa is rare, but it's not The Last Supper" doesn't make sense, because the Mona Lisa is the most famous painting in the world. The Last Supper is more famous that any painting other than these two, which makes it still very rare and valuable, and while the ordering is not always precise and can vary from evaluator to evaluator, there can usually be a rough estimation of "about <ballpark> other paintings are at least as famous as this one". The lower that estimation - the more rare and valuable the painting is.
Are there NFTs that are more rare than any other NFT? Probably. But there can't be that many of them - certainly not as many as the NFT advocators pretend there are.
And this is enough to explain why they are looked down upon, but not enough to explain why they are ridiculed and even hated.
My hypothesis is that the hatred they receive recently is related to Facebook's big announcement about the metaverse!
Rarity is a finite resource, but that does not mean its total amount is some physical constant. The thing that determines how much rarity there is to split between the rare things is the number of people interested in it, and the amount of resources and attention they are willing to put into that market (that's, of course, a simplification - because there are many intersecting markets. But it's good enough for this discussion). In order to get more people into NFTs and increase the value of existing NFTs (assuming the demand increases faster than supply), the NFT investors need to get non-investors into that market.
Facebook coined the term "metaverse", and changed their name to indicate how serious they are about it, but there is still very little consensus about what exactly the metaverse is going to be. The NFT people sees this as and opportunity - they want to push for metaverse assets to be managed by NFTs. They are already working on profile pictures (how are profile pictures related to the metaverse? Well, we can't agree what the metaverse is, so could you really say they are not?) to be NFT verified. They want the VR aspects of the metaverse to also be NFTs - so if you get a sword in a game, you get the NFT of it so that it's registered in the blockchain as yours. Same for virtual land, same for everything else.
And these are all things that people just assumed would be free. Or at least nearly free. And there is no reason for them not to be free. But the NFT guys want you to pay for your virtual things on more computing power for verifying your ownership than the computer power spent on their graphics and physics, just so some other avatar won't have the same instance of a virtual shirt as your avatar.
This is an obvious scam that people are seeing from miles away - and they are pushing back by attacking NFT and crypto on social networks.
The metaverse idea has been around before Facebook changed their name.
True, but Idan Arye's point could still be accurate. Facebook isn't very popular these days and them announcing that they're heavily investing into an ominous-sounding thing related to NFTs could indeed increase anti-NFT sentiments.
That said, I think NFTs were already hated in some circles before the Facebook announcement. Discord initially announced some NFT extension, but the CEO back-pedalled on it after massive backlash.
I‘ve tried to make this post fairly nuanced and with a lot of steelmanning, in contrast to much of the material on this subject. My opinions on crypto as a whole are more complex and deserve a separate, more in depth post. None of this is financial advice, I am not a financial advisor, etc.
When it comes to paintings, people care a lot about having the “original” painting. There can only be one original, “real” Mona Lisa, despite all the hi-res scans you can get. Even if you could make a copy so good that nobody could visually tell it apart from the original painting without painstaking chemical analysis, the original is still going to be worth many orders of magnitude more than the copy. While some people argue that the impossibility of making an exact copy of a physical object is the reason why the original is distinct from the copies (and therefore the crux of why this doesn’t generalize into the digital world), and that therefore the small difference in chemical composition or whatever makes up for those orders of magnitude, I think that this view is pretty silly. A visually indistinguishable painting has the same aesthetic value, and conveys the same historical value to the viewer, and even if you argue that there is some premium to having the original, it seems pretty absurd to suggest that the minor visual differences and chemical composition are worth, within a rounding error, $870 million of the $870 million the Mona Lisa is valued at, and that the actual content of art itself modulo some small errors is worth basically nothing in comparison.
I think it’s pretty clear that people don’t actually care about the chemical composition of their paintings or whatever. Rather, I hypothesize that the reason people care about the original is because this enforces artificial scarcity. You can always make more replicas, but there is only one “original”. By ensuring that more supply cannot ever be added, you ensure an effective monopoly on the painting until you decide to sell it.
This then brings up the question: Why care about the original and not the 15th copy? One might argue that since physical objects cannot (for all practical purposes) be copied exactly, every painting is unique, so if we only cared about uniqueness, we shouldn’t expect to favor the original. I think there are two main reasons behind this: first, the original is a far more natural Schelling point than any other copy. If you made a list of every copy of the Mona Lisa in the world and asked people to pick which one they think everyone else would pick, basically everyone would pick the original. Of course, having the one that everyone else wants bodes well for your selling prospects. And, more qualitatively, would it be more impressive to brag about owning the Mona Lisa or some mass produced copy?
Second, fungibility is relative. To explain this, let’s take a brief detour into the world of coin collecting. As legal tender, a penny is a penny is a penny. If you’re just using it to pay for things, any penny is fungible against any other penny, even if one is rusted more than the other, or they have different years, or one has a special limited run inscription, or so on. However, collectors care a great deal about extremely specific coins and their quality, and so some particular coins no longer funge against other coins because people care a lot about this specific coin. Less popular but still valuable coins are more fungible, with coins within a rough band of assessed quality being mostly interchangeable. The upshot is that whether things are fungible depends a lot on where people draw their reference classes.
Tying this all together, people care about and want to pay big money for the original because there is only one original and because everyone else cares about and wants to pay big money for the original, and non-originals are worth less because the supply is generally unbounded due to fungibility in the context of the people who are willing to pay big money for paintings. Said more pithily, expensive paintings are expensive because everyone thinks they are. There’s no “intrinsic” value in there, or vanishingly little of it compared to the sticker price, it’s simply worth a lot because everyone is willing to pay a lot for it. This definitely isn’t specific to paintings or anything; we see this pop up basically anywhere you can collect things with limited supply, and oh boy do humans love collecting things.
(Some exercises left for the reader, along similar lines of reasoning: Why are some paintings worth a lot more than other paintings, often with little relation to how good the art is? Why are some famous forgeries worth quite a bit, too? Why does art suddenly get more valuable after the artist dies? Why did Banksy’s painting increase in value from being partially shredded? Why is it that forks of bitcoin don’t dilute the market share of bitcoin very much?)
So.. how does this all have to do with NFTs? I think NFTs are essentially the pure distilled essence of what makes expensive paintings expensive. At their core, NFTs aren’t really about crypto; the crypto part is just an aesthetic that makes it appealing to the kind of person that already likes crypto. (There is a bit of a platform risk argument, but putting things on chain introduces a different set of platform risks, which forms a different risk profile that makes it appealing to the kind of person that already likes crypto.) NFTs drop all pretense of pretending to care about the physical continuity or chemical composition or whatever and just flat out creates the scarcity and the Schelling point by declaring, by fiat, that whoever owns this particular digital asset owns the thing, and there can never be another of the thing. Said differently, NFTs are the pure distilled essence of the concept of owning whatever the thing is that differentiates the original Mona Lisa from a copy of the Mona Lisa, independently of any physical constraints. This is why I think all the people who talk about right-click downloading NFTs are missing the point—it’s like the equivalent of making a visually-indistinguishable facsimile of the Mona Lisa. The point of owning the Mona Lisa isn’t to have something that looks identical to the Mona Lisa, the point is to own the Mona Lisa. The fact that digital data can be copied losslessly doesn't actually differentiate this from the physical art case because for all intents and purposes, nobody really cares about the minor differences between the original and the copy beyond the fact that they serve to delineate the original and constrain its supply.
Also, there’s a whole other rabbit hole about what it means to “own” something when it comes to digital assets. I don’t want to get too deep into this rabbit hole but the fact that you’re owning the intangible essence of scarcity rather than any specific thing or copyright or other rights makes things a lot simpler: the fact that it’s stored on a particular ledger as a ledger entry doesn’t really matter; the ownership of the vast majority of assets is defined by rows in databases. I think all the star registry comparisons are sort of misleading because there is in theory a Schelling point, for each particular NFT, of which registry to trust. In other words, I think the problem of multiple competing NFTs claiming to be the “real” NFT is a solvable problem and not a huge fundamental issue (in fact, less of a problem than with real paintings, since the author can just sign the hash of the one they endorse and cryptographic signatures are more reliable than real signatures or chemical composition).
(also, both NFTs and expensive paintings can be used for laundering money, so they’re functionally interchangeable regardless)
So.. are NFTs good? Well.. I think the whole thing with wanting to own the™ thing is kind of silly when taken too far, for the same reason that I think expensive art is kind of silly or collecting extremely valuable stamps or coins or baseball cards or anything else like that is kind of silly. I simply don't derive very much pleasure from owning something rare. As such, I am personally not interested in buying or collecting NFTs, though if someone wants to give me a whole bunch of money to NFTize something I wouldn’t say no.
I think the fact that NFTs are crypto-coded is probably a big reason why they’ve become so prominent: partially because it appeals to a base of people who have a much higher risk tolerance than average, and partially because crypto is a huge scissor statement that gets everyone talking about it.
Lots of actual implementations of NFTs are way worse than the theoretical platonic ideals of NFTs that I talk about here, though I’ll admit I haven’t spent a lot of time looking into the details. Also, the vast majority of NFT related things (as are most crypto things) are downright fraud/scams, so I think that’s a reasonable first approximation when dealing with crypto stuff without an inside view, but that perspective is low hanging fruit that everyone has already talked about a million times before. I also wouldn’t be surprised if NFTs in their current incarnation totally stopped being a thing not long from now—Schelling points are only as strong as everyone thinks everyone else thinks they are. At the same time, however you feel about NFTs, I think there’s a pretty fundamental aspect of how humans think and coordinate in there that might be worth thinking about.