Viral YouTube takedown of NFTs has already clocked over 5m views: Here are the biggest revelations

Business Insider US
Heiress celebrity Paris Hilton appeared on The Tonight Show starring Jimmy Fallon on Monday, January 24, 2021 to promote NFTs.NBC/Comcast
Heiress celebrity Paris Hilton appeared on The Tonight Show starring Jimmy Fallon on Monday, January 24, 2021 to promote NFTs.NBC/Comcast
  • A new, over two-hour documentary tearing apart NFTs has blown up on YouTube.
  • In it, video essayist Dan Olson details how NFTs exist to drive up the value of cryptocurrency.
  • "It's a bigger fool scam," he says, with NFTs serving as the engine for the scam.
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At over two hours long, the wildly popular new YouTube documentary  — "Line Goes Up – The Problem With NFTs"— is an exhaustive takedown of the hot new investment vehicle that everyone from Waka Flacka Flame to Jimmy Fallon and Paris Hilton is getting into.

In the video, YouTuber and documentarian Dan Olson breaks down foundational issues with NFTs and the cryptocurrencies that the tokens are built on.

Foundationally, crypto and NFTs are "a bigger fool scam," Olson says. "The whole thing operates by buying worthless assets believing that you will later be able to sell them to a bigger fool."

That's because, as Olson details, there are foundational issues with Bitcoin, Ethereum, and the other blockchain technologies that serve as the foundation for both cryptocurrencies and NFTs. 

Crypto value is extremely volatile, Olson points out, which makes it unusable as a currency in daily transactions for normal consumers. The $5 in bitcoin that you spend at, say, Starbucks could be worth $45 an hour later. Or, alternatively, it could be worth $1 an hour later. 

Additionally, different cryptocurrencies have unique issues, he says.

Bitcoin is notoriously slow to process, with minutes passing as a transaction goes through. And Ethereum transactions come with fluctuating "gas" prices — each transaction in ethereum incurs a processing charge, known as "gas" fees — that similarly make it unusable as a currency to buy the aforementioned cup of coffee.

Canadian video essaying Dan Olson in the video "Line Goes Up – The Problem With NFTs."
Folding Ideas/YouTube

If you're spending the equivalent of $69 million in ethereum on an NFT from famed digital artist Beeple, then perhaps a $50 gas fee isn't such a big deal.

Notably, Beeple converted his ethereum payout of $53 million for that art sale into US dollars soon after he got paid — he told The New Yorker he got spooked by its volatility. "I absolutely think it's a bubble," he told Fox News Sunday of the NFT market last year.

That bubble, Olson says, is predicated on speculators driving up the value of select NFTs.

"None of this is about the art at all, but about the speculative value — not what it's worth to you, but what it will potentially be worth in the future to someone else," he says. "It's not a market, it's a casino, gambling on the receipt for an image or video that's otherwise infinitely digitally replicable. The thing itself is immaterial as long as it can make a line go up."

Since NFTs can only be purchased and traded using cryptocurrency, they serve as a means of boosting the value of the cryptocurrencies used for purchase, he says. To put it more directly: "NFTs exist to get you to buy crypto," he says.

The full video goes into far greater detail, and explains how the faulty financial machinations that led to the 2008 housing crisis also directly led to the crypto gold rush.

You can watch it right here:

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