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Instagram is jumping on the NFT bandwagon. Adam Mosseri, head of Instagram, announced on Twitter on May 9 that NFT testing for creators will begin this week.
The Meta-owned social media platform will issue NFTs on the Ethereum, Solana, Polygon, and Flow blockchains.
“NFTs are decentralized and have the associated benefits of being accessible and tamper-proof,” said Hugo Feiler, co-founder and CEO of Minima, a blockchain designed for smartphones. “It seems that Meta’s approach to integrating NFTs on their various platforms is another signal that they do not truly understand the underlying technology.”
Meta changed its name from Facebook in October 2021 to position itself as a leader in the metaverse.
Since the advent of bitcoin in 2008, decentralization has become both a buzzword and an important concept in securing freedom for individuals. As a buzzword, many centralized companies are using it to describe their mission and underlying technology without embracing its concepts. That has many decentralization purists resisting those corporations and their plans to co-opt blockchain, cryptocurrency, and metaverse technologies.
“Blockchain wasn’t meant to be leveraged by a few powerful parties to increase stickiness and ad revenue on their platforms,” Feiler said. “It’s a technology that, when used correctly, empowers individuals—from artists to art lovers, and everyone in between.”
While there are many different definitions of decentralization, most proponents of blockchain technology agree on three things:
The internet started as a decentralized asset;
Over time, a few centralized entities have taken over;
And blockchain technology promises to decentralize the internet again.
This decentralization is important for advancing the freedom, privacy, and security of individual users of the internet. But how do NFTs play a part in that?
A non-fungible token is a one-of-a-kind asset. In other words, there’s nothing else like it. It’s unique. By contrast, a fungible token is a token that can be exchanged by another token just like it. Like bitcoin.
A common illustration involves a dollar bill. You have one and your friend has one. He gives you his; you give him yours. You both still have a one-dollar bill, albeit a different one than you each had a moment before. During that exchange, neither of you lost any value. Both dollar bills look the same, feel the same, and are valued the same. That’s fungibility.
Let’s say, for the sake of argument, that you decided to turn your dollar bill into a token. You scan it to make a copy of it, go to OpenSea, and create an NFT of your dollar bill. Only one. Now, you have a non-fungible token that represents a dollar bill.
In this example, you have an NFT of a dollar bill. But is it decentralized?
No, not really.
In March 2021, an artist illustrated that in an NFT rug-pull scam executed on the OpenSea platform. He exchanged the art that NFT collectors purchased for images of carpets after the sale, showing that centralization is alive and well on decentralized architecture—much like the internet itself.
What’s the point? In a nutshell, there’s nothing about non-fungible tokens that inherently makes an asset rare or decentralized.
Nevertheless, rug pulls aside, NFTs are valued because people are willing to spend money on them. When artists and their fans agree on that value, whether the asset is decentralized or not, fungible or non-fungible, or is peddled on Instagram or OpenSea, both parties can achieve more personal freedom in transacting with each other. There is more value for both parties, however, if each one enters that transaction with eyes open and critical of claims that make use of buzzwords.