Criticisms

It would be difficult to tell the story of NFTs honestly without talking about the criticism that surrounded them.

For a while, NFTs seemed to be everywhere. Artists were selling digital work for amounts that would once have seemed impossible, collectors were spending huge sums on profile pictures, celebrities were buying into the space and auction houses such as Christie’s and Sotheby’s were holding NFT sales. There was a feeling that something important was happening.

At the same time, there was a great deal of concern about where the movement was heading.

One of the earliest criticisms was the environmental impact. During the NFT boom, most NFT activity was taking place on Ethereum, which at the time used a proof-of-work system. This required large amounts of computing power and electricity, leading to concerns about the carbon emissions associated with transactions and minting. Artists, environmental groups and others questioned whether selling digital art was worth the environmental cost. Australian media covered the issue extensively in 2021, including interviews with artists who had decided not to participate because of the environmental impact.

There is an important part of the story that is sometimes missed when looking back at this criticism. Ethereum changed its underlying system in September 2022, moving from proof-of-work to proof-of-stake. This dramatically reduced the network's energy use. The environmental concerns surrounding Ethereum NFTs during the 2021 boom were real, but they should not simply be applied to Ethereum in the same way today.

Then there was the question of money.

NFTs became associated with extraordinary prices and the possibility of making a great deal of money very quickly. This attracted people who were interested in the art, but it also attracted people who were primarily interested in speculation. Some projects made promises about future benefits, rising prices or exclusive communities. Some delivered what they promised. Others did not.

There were also outright scams. The term rug pull became part of the NFT vocabulary, describing projects that could be heavily promoted, sell out and then effectively disappear, leaving buyers with NFTs that had little or no value. There were also fake collections, impersonation scams, phishing attacks, fake minting websites and stolen artwork. These problems became serious enough to attract attention from law enforcement and regulators.

The United States Government Accountability Office documented risks including fraud, phishing, fake marketplaces and the possibility of stolen or unwanted NFTs being sent directly to people's wallets.

There was also a more complicated question about where collecting ended and investment began. The distinction became increasingly blurred as people were encouraged to buy NFTs because they might become more valuable.

In 2023, the United States Securities and Exchange Commission took action against Impact Theory over its sale of NFTs, arguing that the way the NFTs were promoted meant they were offered as investment contracts. The SEC later brought a similar action against Stoner Cats, finding that the project had marketed the possibility of secondary-market profits. These cases were about particular projects and their conduct, rather than a finding that NFTs as a whole are fraudulent.

This distinction is important. NFTs themselves were not a scam. They were a technology that could be used for many different purposes. But, like any new technology connected to large amounts of money, the space attracted both genuine experimentation and people looking for an opportunity to make money from the excitement.

Then there was celebrity culture.

As NFTs became fashionable, well-known people began buying and promoting them. This helped bring NFTs to a much larger audience, but it also created another problem. When someone famous tells millions of followers about a project, it can be difficult for an inexperienced buyer to know whether they are looking at an artwork, a collectible, a community membership or an investment.

The distinction mattered because people could lose real money.

Donald Trump's growing association with crypto and NFTs added another layer to this for some people. His own NFT collections brought the technology into a very different political and commercial space, and not everyone who had originally been attracted to NFTs as a new way of supporting artists felt comfortable with where the wider culture was heading.

Trump was certainly not the only public figure to become involved with NFTs, and his involvement does not tell us whether NFTs themselves were good or bad. What it does show is how far the idea had travelled. Something that had begun largely within digital art and crypto communities had become part of celebrity culture, politics, entertainment and popular culture.

That brought more attention, but also more scrutiny.

There was also a growing sense among some artists that the culture around the space was changing. X, which had been such an important meeting place for NFT artists and collectors when it was still Twitter, became increasingly political under Elon Musk, and some artists began looking for other places to share their work and connect with people.

Looking back, it is easy to understand why people became suspicious of NFTs. There were enormous prices, speculation, scams, stolen artworks, exaggerated promises and people buying things they did not fully understand. The environmental debate added another serious concern, while questions about regulation and consumer protection were still being worked through.

At the same time, it would be just as misleading to say that the entire NFT movement was simply a scam.

There were artists who had spent years making digital art before NFTs existed. There were genuine collectors who cared deeply about the work, programmers experimenting with generative art and communities built around artists who had previously struggled to find an audience. There were also important conversations about digital ownership, collecting and what an artwork can be when it exists entirely on a screen.

Both sides are part of the story.

The excitement was real, but so was the criticism. The mistakes were real, but so were the experiments. There were people trying to make quick money, but there were also artists and collectors who genuinely believed that something new was happening.

NFT Weekly was there during that period, documenting some of the artists and ideas as they were happening. Looking back now, I think it is important to remember all of it: the artists, the collectors, the technology, the excitement, the environmental debate, the scams, the criticism and the people who believed that digital art was about to change everything.

History is rarely one story. It is usually many different stories happening at the same time.