[Viewpoint] The Core of NFTs Is Not the Community

Whenever a business announces involvement with non-fungible tokens (NFTs), stock prices soar. When an artwork is created as an NFT, its price skyrockets. Even artists who have never sold a piece before can sell their works at high prices by releasing them as NFTs.

NFTs can be seen as a bubble, or they can be viewed as providing opportunities to artists who have previously gone unnoticed. Nowadays, when interpreting the mechanisms by which asset values and economies operate, there may be right and wrong perspectives, but there seems to be no absolute right or wrong in determining market value.

In this context, for NFTs to not just fade away as a passing trend but to sustain growth, claims such as “a community ecosystem is necessary” or “the core is the community” are continuously raised. Although the term “ecosystem” sounds sophisticated, at its core, it can be interpreted as saying that for NFTs to succeed, they need a large number of people and attention. CryptoPunks, which use NFTs as a means to express one’s status or identity within a community, have been very successful. At first glance, this seems like a reasonable argument.

Now, let’s replace the word NFT with other terms. “For the internet not to disappear as a passing trend but to sustain growth, a ‘community’ ecosystem is necessary.” “For the metaverse not to disappear as a passing trend but to sustain growth, a ‘community’ ecosystem is necessary.” These all make sense. But something feels a bit off. To understand better, consider the following sentences: “For the job market not to disappear as a passing trend but to sustain growth, a ‘community’ ecosystem is necessary.” “For the Korean Wave (Hallyu) not to disappear as a passing trend but to sustain growth, a ‘community’ ecosystem is necessary.” Now, the odd feeling becomes more concrete.

For readers who want to deny that communities are only necessary for investment and economic ecosystems, here are more examples: “For archery not to disappear as a passing trend but to sustain growth, a ‘community’ ecosystem is necessary.” “For table tennis not to disappear as a passing trend but to sustain growth, a ‘community’ ecosystem is necessary.” “For badminton not to disappear as a passing trend but to sustain growth, a ‘community’ ecosystem is necessary.” “For gymnastics not to disappear as a passing trend but to sustain growth, a ‘community’ ecosystem is necessary.” These are phrases often heard after the Olympics.

In fact, the argument that communities are necessary is not only applicable to sports but was also popular during the blockchain and cryptocurrency boom in 2017. Common sense tells us that if a community where people gather and actively participate is thriving, whatever it is will inevitably succeed.

The claim that a community must be built for NFTs to succeed may sound reasonable at first, but it subtly avoids the core proposition of “why NFTs must succeed.” Saying that communities are important for NFTs is either a statement made out of ignorance of other methods or a normative assertion made with a special purpose that cannot be refuted.

Communities are naturally important?not only for NFTs but for all social phenomena. However, the core of NFTs is not the community. The focus should be on the content that the NFT’s electronic registration of an automated asset certifies, and on protecting the rights of consumers who purchase those NFTs.

Professor Hong Ki-hoon, Department of Business Administration, Hongik University