Fighting Stigma: Why NFTs Have A Bad Rep And What We Can Do About It

December 8, 2022 by Mimi Phan

“NFTs are a scam! Why bother buying NFTs? Aren’t they just super expensive cartoons?! Who wants a JPEG on their phone anyway?”

If you’re into NFTs – or even if you’re not – you’ve probably heard some of the above before.

At Meta Hollywood, we’re NFT aficionados. We know that this blockchain-based technology has the power to be transformative; likely beyond our wildest dreams. Why? Because NFTs represent a shift in the way creators are perceived, respected, and paid. They offer democratization and equal access for talent in all sorts of hard-to-crack industries (cough Hollywood cough).

So why do NFTs have a bad rep? Why do people not support NFTs? Is there a downside to NFTs? Are NFTs a good investment (maybe they’re just hiding their potential very well in this bear market)?!

Let’s take a look at NFTs, the stigma attached to them, and what we can do to change perceptions.

What Are NFTs?

NFTs truly burst into public consciousness in 2021. From nobody ever having heard of these mysterious, blockchain-based assets, to “NFT” taking the Collins Dictionary Word of the Year title in 2021 (for context, in 2020, “lockdown” nabbed the spot – this is a serious business!), it’s clear that NFTs quickly made an impression on our hearts and minds.

Just in case you were MIA in that time period, here’s a quick recap. NFT stands for non-fungible token. The secret sauce behind NFTs are the smart contracts – complex pieces of code that allows NFTs to do all the cool things we know and love, such as enforcing royalties for creators and linking digital assets to physical ones (hello “phygital” revolution!).

An NFT can be a piece of digital art, or a certificate stored on the blockchain (no more losing your college degree!). The possibilities of this technology are wide and wonderful. But let’s face it: there are a whole lot of haters out there. Why, though?

NFTs And Scams

Anyone heard of NFT scams? Oh, everyone? Yeah, we thought so – NFTs haven’t had the easiest ride in the media. In fact, media attention has almost solely focused on the red flags.

With the way NFTs burst onto the scene and then suddenly became celebrity fodder, with Bored Apes trading for six figures – well, it’s admittedly hard to get your head around. The concept of paying the value of a house for virtual squiggles that don’t “exist” in real life can be understandably baffling at first. And a fair few NFT scams have seeped into mainstream understanding – from Justin Bieber’s dodgy dealings to the rug pulls we warn about here.

Meanwhile, NFTs are often linked to cryptocurrencies within popular consciousness (they all exist within the same Web3 ecosystem, to be fair!). And whether it’s the recent crash of FTX (an indictment of its management and centralized ecosystem, rather than crypto itself), or Kim Kardashian promoting questionable crypto tokens… Well, you can see how a certain perception builds.

But forget all this for a second. The industry is young, and yes, you should be careful when buying into projects. But NFTs – and the technology behind them – have the potential to change almost every industry. Bear market or not!

NFTs And Stigma: What’s Behind It?

To learn more about NFTs and stigma, we turned to a known voice in the community to discover what they had to say about the technology’s bad reputation.

Kyle Klemmer is COO and co-founder of Mech.com. Klemmer co-founded the biggest no-code gaming engine in Web3 – but before this, he was the CMO of one of the largest meme tokens: Floki.

“The reason why NFTs have such a bad rap is because they’ve strayed so far away from their actual utility,” Klemmer says. “Somewhere along the way, they turned into expensive JPEGs with no real utility. That’s not what NFTs are intended to be used for.”

There’s certainly some truths in this perspective. The general public – non-tech experts, non-crypto natives – see a digital “JPEG” that doesn’t “exist” in real life. So how do we show what NFTs can do?

For Klemmer, it’s about less talk, more action. “In the gaming space, NFTs signify ownership. Ownership of in-game assets in ways you don’t currently have in Web2. Web2 games have spent millions of dollars over the years, preventing people from creating any sort of secondary market.

“In addition, when a player has finished playing a Web2 game, their assets essentially disappear – forever! In Web3, assets can exist forever and be sold or given to someone else to carry the torch, so to speak. This is all possible with NFT technology.”

In the long term, benefits like this will become increasingly and glaringly obvious, according to Klemmer. 

How Do We Beat Stigma Around NFTs?

For Klemmer, it’s the narrative around NFTs that needs to change. “An understanding of their fundamental technology needs to become more publicly known. Once that happens, the stance towards NFTs will change. Currently, they are associated with cash grabs and bad art. That, like everything, will change – it just takes a little time.”

For us, it’s about shouting from the rooftops about all the cool things NFTs can do – and the things they’ve already done! From shares in movies for fans (plus producer credits and set visits) to the first ever house sold via NFT this year (see you later, escrows) – the underlying power behind NFTs will be realized sooner rather than later. Any technology that can empower creators and artists as NFTs do shouldn’t be sniffed at.

There’s a complex balancing act in play here. As more of us learn about NFTs, the less easy it will be for scammers to pull off rug pulls. And the quicker adoption grows, the more likely it is that vital regulation (which itself will increase trust) is written – and hopefully written right.

Elsewhere, Web3 natives are exploring other options. We know the technology and use cases behind NFTs are solid. But many people already think they are scams! So what to do? Well, perhaps the secret lies in a strategy used by discussion website Reddit.

Since the product was launched this summer, three million users created Vaults – Reddit’s name for a blockchain wallet. Of these Vaults, two and a half million were set up to purchase Reddit’s own collectible Avatars (which is what the site calls its profile picture tokens).

Notice anything about this? Well, the word “NFT” wasn’t mentioned once. Reddit essentially onboarded three million people into Web3 without mentioning NFTs by name. And it was a conscious decision.

Meanwhile, other projects are seeing similar success using the same method: referring to our old friend, the non-fungible token, as something infinitely less stigmatized. Enter the digital collectible. (Pssssst – it’s the same thing as an NFT!)

One thing is clear in all of this. Whatever we decide to call it, this token technology isn’t going anywhere. Long live NFTs!

Featured image by Jonathan Borba on Pexels