Thread by @Spoonamore

Con-call with 3 collegues. All #Banking #Security pros. They noted, via twitter, I had attended the @SCSpikes #NFTClassic. Asked me if I was into #NFTs, he is. No. I'm not. I'm like #baseball. Why? Three Reasons. I was asked by them to post my response.

1 - #Crypto/#Blockchain, like all complex mathematics fascinates me. I love it from a technical perspective, AND have worked on two functional commercial applications. But as an operational Day2Day transactional currency? It is loony-tunes impossible to make it pencil.

I was hired by a major credit card company to write a think piece on a 100% of the annual transaction and settlements. One major credit card company on blockchain by year 5 would consume 12% of the world's electrical generation. That alone...is nuts.

The world has massive issues with #energycosts, #climate, #water, #chips etc etc. It's possible a theoretical future #quantum solution may exist. But that is not near or mid-term. I know, #CryptoBros have theories etc etc. I just do math.

2 - With all due respect to the brilliance and elegance of the algorithms and resulting mathematical stability points mined to make a "coin", there still needs to be backing entity and management structure. Today, that is flexible, opaque and subject to massive failures.

That too may change, but the decentralized and small-d "democracy" of a distributed ledger makes it - by definition - impossible to regulate against money-laundering, illegal-action, extortion etc. In fact, the BEST use case for Crypto today is...data hostage payments.

Type volatility and non-transparent market factors are not only a given with this structure - they are inevitable. Eth is up 50% over the last 7 days on ... no news? Vs. down 300% the prior 3 months for ... reasons? Speculative assets are not really a modern currency basis.

Now again, #crypto/#blockchain has real world uses - and there are some - are gaining legit status- but they will remain wholly on the fringes until 1 and 2 are addressed. And that brings us to NFTs and collectables.

3 - Humans like collecting things. Pogs. Coins. Stamps. Beanie Babies. Baseball cards. Cranberry Glass cups. Polyhedral Dice. Nothing wrong with this. But NFTs now exist entirely because almost no-one was willing to sell any of these RW things to someone using #cryptocurrency.

So Crypto miners kept minting. And had a hard time calling the product a "currency" and collecting an algorithm isn't really something most humans want to collect so to make it an "asset"... they added a picture of a (fill in the blank here) to a discovered math stability.

And that is what an #NFT - I prefer to call them #Nifts are. It's an image stamped on top of a math stability. And some will end up more valuable than others. Just like coins, stamps and beanie babies. And if you find them attractive, then collect them.

But don't pretend they something more than that. They are not. And please, I have been involved in developing projects that uses #blockchain to track custody of known-valued asset class digital and RW assets. But NFTs? I have seen none I would choose to collect.