AI Wealth Truth (56): Why NFTs Are Not "Digital Ownership" but "Digital Tulips"

I. "NFTs are a revolution of digital ownership!" "You can truly own a digital image!" That was the popular narrative in 2021. Bored Ape NFTs sold for millions of dollars. A JPG image. But what do you actually "own"?

II. Let us understand the technical essence of NFTs:

III. An NFT is a token on a blockchain. That token contains a link pointing to a file (an image, a video, and so on). You buy the token, not the file.

IV. Where is the file stored? Usually on a centralized server, or in distributed storage such as IPFS. But the file itself is not on the blockchain. The file can be deleted, modified, or disappear.

V. So you can get situations like this: you bought an NFT and the link pointed to a monkey image. The server owner replaces the image with a pile of trash. Now your NFT points to a pile of trash. The content of your "asset" can be changed arbitrarily.

VI. The more important question is: legally, what do you own?

VII. You do not own the copyright. Buying an NFT usually does not include a copyright transfer. You cannot print the image on T-shirts or use it commercially by default. The copyright remains with the original creator. You are not buying the artwork. You are buying a "ticket" to claim you bought it.

VIII. You do not own the original file. Anyone can right-click and save the image. Your NFT cannot stop copying. The image can be copied infinitely, and you only have proof that "I bought" something.

IX. Your "ownership" often has no legal force. If someone violates your NFT-related interests, where do you sue? Under which law? Most jurisdictions still have no clear NFT legal framework. Your rights are vague and untested.

X. So what are NFTs actually selling?

XI. They sell a scarcity signal. "I have this NFT, you don't." It is social status display. It follows the same logic as luxury logos.

XII. They sell a speculation opportunity. "I buy now, it goes up, I sell to the next buyer." It is a hot potato game. When there are no new buyers, the music stops.

XIII. They sell a sense of belonging. "I am a member of this community." An NFT may grant community access. But that value fluctuates with hype.

XIV. What happened after 2022?

XV. NFT trading volume crashed by more than 95%. Many NFTs that once sold for tens of thousands or even hundreds of thousands are now almost illiquid. Platforms like OpenSea saw volumes collapse. The bubble burst.

XVI. But the story is not fully over. Some NFT projects found real use cases (in-game assets, memberships). But that is far from the narrative of a "digital ownership revolution".

XVII. In the AI era, the NFT concept may change.

XVIII. AI can generate infinite "unique" digital content. Scarcity comes from artificial restriction, not from creative difficulty. When anyone can generate art with AI, where does the value of NFT "scarcity" come from?

XIX. On the other hand, AI-generated works may need on-chain proofs of attribution. That could give NFTs new utility. But that is utility value, not speculation value.

XX. How should you think about NFTs and similar assets?

XXI. 1. Separate technology from speculation. Blockchains may have technical value. But technical value does not mean the token you bought has value. Technology progress is not the same as investment opportunity.

XXII. 2. Ask yourself what you are buying. Copyright? No. Legally protected ownership? No. Social display? Maybe. Speculation opportunity? Maybe. At least know what you are buying.

XXIII. 3. Do not believe the "this is a revolution" narrative. Every speculation bubble is packaged as a revolution. The revolution can be real, but your investment return can be fake. A good story does not make an investment sound.

XXIV. NFTs are not digital ownership. They are tokens pointing to files that can disappear, without legally protected rights. Their value depends on how much later buyers are willing to pay. They are tulip bulbs in the digital age. In the AI era, there will be new digital asset hype. The narrative changes, but the structure does not. Learn to recognize the structure.