Opinion: The Real Value in NFTS


William Boone, PaperClip Staff/Writer

NFTs, or non-fungible tokens (a piece of data stored on the blockchain that can be sold/traded), have blown up over the past few months and people seem to think they have value. Unfortunately, people tend to place the value on the wrong aspects of the NFTs.

People tend to place value on the NFT itself which, frankly, is the least valuable part of the whole situation; in fact, it’s basically worthless. The real value is in the tech behind NFTs, that being the blockchain.

The blockchain basically works as an open and transparent ledger that records transactions. For example, Bitcoin uses the blockchain to record the exchange of cryptocurrency between two or more parties.

Blocks (an entry on the blockchain) on the chain contain 3 things: the data being stored, the block’s hash (the block’s fingerprint/ID code), and the hash of the previous block in the chain. This means if a block in the chain is altered it renders the rest of the chain invalid. 

The usage of computers allows for the rapid recalculation of the rest of the blockchain to make it valid again. Blockchains use something called proof-of-work to reduce this. 

Proof-of-work is a mechanism in the blockchain that slows down the creation of new blocks; for example, Bitcoin uses this mechanism to make it take 10 minutes to create a new block on the chain.

Blockchains use a peer-to-peer network to verify chains. This means when anyone joins the network they are given a full copy of the blockchain. 

If a new block is made it would be sent to everyone on the network and each copy of the chain would check with every other copy to make sure the block wasn’t tampered with. After the new block is verified each and everything checks out, each copy will add the new block to their blockchain.

Zachariah Goldenberg, the money management teacher at PHS, stated that blockchain technology is valuable but the NFTs themselves are basically worthless. 

When asked if he thought NFTs deserved the hype they received thus far Goldenberg said, “Definitely not, I think the initial technology wasn’t well understood… There is some good underlying stuff, it’s just very rare that the good stuff comes from the first round”