Vitalik Buterin, founder of the second-largest cryptocurrency by market cap Ethereum, has weighed in on NFTs.
What Happened: In a blog titled, “The Most Important Scarce Resource is Legitimacy,” Buterin commented on the recent attention that non-fungible tokens had received, raising concerns that they could be a missed opportunity.
“There is little social value in helping Elon Musk earn yet another $1 million by selling his tweet when, as far as we can tell, the money is just going to himself,” said Buterin, who commended Musk for eventually choosing not to sell.
“If NFTs simply become a casino that largely benefits already-wealthy celebrities, that would be a far less interesting outcome,” he said.
Why It Matters: Despite the Ethereum founder’s concerns that the current attention around NFTs has been somewhat misplaced, he proposes a solution to help “shape the outcome.”
According to him, if everyone agrees that one NFT is interesting and another NFT is lame, then people will strongly prefer buying the first because it would have both higher value for bragging rights and personal pride in holding it and because it could be resold for more because everyone else is thinking in the same way.
This public perception of NFTs essentially determines how “legitimate” it is, and Buterin believes that if this conception of legitimacy is pulled in a good direction, then there is an opportunity to establish a solid channel of funding to artists, charities, and others.
He proposed that a decentralized autonomous organization or “DAO” could validate the NFTs for a guarantee that some portion of the revenues goes toward a charitable cause, ensuring that multiple groups benefit at the same time.
Alternatively, he said that social media platforms could work with NFT marketplaces to enhance their visibility and also give buyers a way to show the values that they committed not just their words but their hard-earned money to.
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