Like most traps, they’re mysterious and then appealing and then it’s too late.
An NFT is digital treasure chest, a status symbol and an apparent item of value.
Like a Pokemon card, or an original Picasso drawing or the actual frame of a Disney animated film from 1955, NFTs are designed to be the one and only, a shred of non-fungible reality in a world gone digital.
You either own this thing or you don’t.
To make it really clear, consider Honus Wagner. A Honus Wagner baseball card is quite rare (Wagner didn’t permit the card to be made because he wanted nothing to do with cigarettes, foreshadowing some of the stuff below) and so there were fewer than 200 all in before production shut down. One of the cards last sold for more than $3,000,000.
Owning a Honus Wagner card doesn’t mean you own Honus Wagner. Or a royalty stream or anything else but the card itself.
For years, this was part of the business model of the collectible card industry. Make billions of cards, most get thrown out, some rookies get famous, some cards go up in value.
The trap, then, is that creators can get hooked on creating these. Buyers with a sunk cost get hooked on making the prices go up, unable to walk away. And so creators and buyers are then hooked in a cycle, with all of us up paying the lifetime of costs associated with an unregulated system that consumes vast amounts of precious energy for no other purpose than to create some scarce digital tokens.