Sadly, this can very easily happen in the world of crypto. If you connect your wallet to a bad actor and sign a malicious transaction, it is possible for someone to drain all of your assets (coins, NFTs, and so on). It's pretty terrifying. And I'm sure that a lot of people will see this and say to themselves, "that's why I don't like crypto! It's too risky. Too many scammers. Bunch of rat poison."
There is no question that crypto is risky. It's also not very user friendly. Clearly even sophisticated users can get tricked into signing the wrong kind of blockchain transaction. It happens all the time. But this is also a nascent space. And maybe this will become less common in the future as things mature.
Either way, there are things you can absolutely do today to protect yourself if you're planning to own and do crypto things. One of the most important rules to follow is this one here: you should have at least 3 crypto wallets. Let's call them cold, warm, and hot wallets (which is often how they are described in web3 land).
A hot wallet is the one you use to connect to sites, mint things, and do whatever else. Because of this, you want to keep almost nothing in it. If you want to mint an NFT, transfer in only whatever crypto is required to complete that transaction. That way if something bad happens, it's not devastating. Once your mint is complete, transfer out the NFT to a colder wallet.
A cold wallet is essentially your vault. This is where you store your Mona Lisas. These are the NFTs (or whatever else) that you plan to own for the long-term. The only transactions with this wallet should be to move things in and out of it. You should never connect it to any sites/services, even if they're reputable ones. Once you do that, it's no longer a cold wallet. It's now a warmer wallet.
A warm wallet lives somewhere in between. You connect it to sites/services that you trust, and you use it to hold NFTs that you might be looking to sell in the short-term (to give just one use-case example). In my case, brandondonnelly.eth is my warm wallet. It's where I mint the NFT photography that nobody ever buys.
I realize that all of this probably sounds convoluted, especially to those who are unfamiliar with this space. But in today's world, if you want to be crypto literate, you need to take things like this into consideration. My NFTs might be finally totally worthless, but I love my growing art collection and I like it being on ice in a vault.
Back when everyone wanted to buy and trade crypto, my friend Evgeny started a marketplace for NFT photography called Sloika. This, to me, felt like an obviously good idea, both in general and for him specifically. Evgeny had previously cofounded the photo company 500px, and so Sloika was initially conceived of as 500px, but for web3. This is a good story.
I have collected a number of photos via Sloika and, in general, I continue to regularly collect NFTs. Of course today, relatively few people want to trade and collect NFTs. The market is largely dead. What is obvious is that there was a giant NFT bubble and it popped in 2022, along with some other asset bubbles.
But does this necessarily mean that NFTs and NFT art are bad ideas?
When I think of bubbles I often think of something that Fred Wilson wrote on his blog. His argument was that bubbles tend to be directionally right; it's the magnitude that we get wrong. A good example of this is the dot com bubble. Yes, it was a massive bubble. But it was directionally right. The internet was going to matter -- a lot it turns out.
Even if we go back to "tulip mania" during the Dutch Golden Age -- which is often brought up as the pinnacle of dumb bubbles -- one could argue that it was still directionally right. Today, tulips remain the most sold flower in the US. So we still love them; we just got a little too excited back in the 17the century.
When it comes to NFT art, I like to think in terms of these questions:
Will humans continue to appreciate art? (Seems obvious.)
Will humans continue to want to collect things? (This is arguably a fundamental human instinct.)
Will provenance and authenticity continue to matter in art? (Blockchain technologies are really good at this.)
Perhaps the only question that remains is whether people will want to collect digital art. But even this feels fairly obvious to me. The challenge, I think, is that the display side of the market needs to be more built out. Because alongside the instinct to collect things is the instinct to display them. That's why NFTs initially took off as profile pics on social media.
So as a start, I think more, better, and cheaper displays would be a big help. There's something very different about projecting an NFT in your living room versus having it live in a crypto wallet on your phone or computer. You need to really experience it, just as you would a conventional piece of art. And like all art, context matters.
I haven't yet invested in a dedicated NFT display, but I plan to do that in the near future. And I'm looking forward to displaying my collection of NFTs, including the one at the top of this post. It's a drone shot of the west side of Toronto in the middle of winter, and it was gifted to me by Evgeny. Thank you for that. It's an honor to have it as part of my art collection.
Photo: Six Bling (via SuperRare)
Nearly 1,000 lots from Karl Lagerfeld's estate are soon to go up for auction. I was reading about it over the weekend in FT and, what is obvious, is that Lagerfeld liked to collect things. He had homes all over the place and in those homes were lots of nice things, ranging from art and tapestries to unique furniture and iPods.
Yes, he really liked iPods. After he passed away, over 500 of them were discovered in one of this drawers and another 70 were found in his office in Paris' 7th. Apparently he used to curate music on them and then gift them to people. It was one of his things.
Of course, Lagerfeld was a wildly successful fashion guy and his estate is surely pretty unique. But I think it's important to keep in mind that to collect is a deeply human endeavor. We have been doing it forever. And in this context, it's not surprising at all why non-fungible tokens (NFTs) have taken off in the way that they have.
Our world is profoundly digital, but before blockchains and NFTs, we were missing a way to validate ownership over digital assets. That's no longer the case. For more on this, here is an interesting TEDx Talk by Roham Gharegozlou, who is the CEO of Vancouver-based Dapper Labs (the company behind CryptoKitties and NBA Top Shot). The talk is from 2018, but it's just as relevant.