More On: NFTs
Senators and regulators explain why the $60 billion collapse of a major cryptocurrency is not the industry's Bear Stearns moment
Could purchasing an NFT in the same way that one purchases a bag of Cheetos help to deconstruct the process?
It's easy to overlook the storefront in Manhattan's Financial District that houses the "world's first NFT vending machine." The windows, squished between a sandwich store and a tailor, are drenched in pink neon light, with flashing letters announcing "NFT ATM." When you come through the door, you are greeted by a tiny booth with a vending machine and rows of small paper cartons that resemble cigarette packs. There are only two items available: a $5.99 "color" and a $420.69 "party pigeon."
I was here to spend part of the Guardian's money on a non-fungible token, or NFT. NFTs are built on a blockchain technology known as a "smart contract," which functions similarly to a virtual vending machine. Send some of your cryptocurrency to a smart contract, and it will generate a unique token – essentially a digital receipt – stating that you now own this cat image. Anyone else can still right-click-save and share Mr. Whiskers, but you'll know, as would anyone else who looks at the blockchain, that the image is yours. At least, that's how the logic goes.
According to Jordan Birnholtz, the Chicago-based co-founder of Neon, the firm behind the vending machines, the major issue users face is that blockchain is too technical. When he called, the 30-year-old introduced himself by saying he was heating up green tea in a skillet because he didn't have a pot or a kettle. ("I believe my ex stole them when we split up," he explained.) And, just as you can cook water in a frying pan, Birnholtz is determined to show that you can acquire NFTs without using cryptocurrency.
Birnholtz, who used to work in progressive politics (a "completely different" side of his life), says Neon's target customer doesn't want to get into "19th and early 20th century lessons about economics," they just want to support artists they like and get a little token of "conspicuous consumption" they can show off, such as a digital version of a band t-shirt. Neon's stated goal is to make purchasing an NFT "as simple as purchasing a toothbrush," which means utilizing an old-fashioned credit card and an actual, physical vending machine rather than fussing with smart contracts.
I didn't think my editor would like the pigeon, so I ordered it in a different color. This turned out to be a piece of paper inside the carton with a randomly generated code, allowing me to "mint" an NFT claiming ownership of one of 10,000 distinct hues. Birnholtz attempted to clarify, saying, "It's impossible to possess a color." What you possess is a Solana blockchain ledger representing that specific color. We also allow users to gather certain hues in order to trade and sell them."
I'm still not sure what that implies, but I wasn't about to let petty worries get in the way. I keyed in my choices and touched my credit card as if I were buying a bag of Cheetos. The machine beeped, the metal coil began to turn, and suddenly there was silence. My NFT has become stuck. I slammed on the glass, but it wouldn't budge. I became self-conscious when I observed two security cameras observing me. Was I the first person in the world to lose money while purchasing an NFT in person?
I got another one to push the previous one off because I didn't have any other options. I already got the first one, but the second one refused to drop. I didn't want to keep buying them, so I abandoned the second one. I knew in my heart that I owned it, but there was no way for me to prove it.
I informed Neon's co-founder of what had occurred. "That stinks, I'm very sorry," he admitted. "Vending machines, uh, are still not ideal." He promised to refund my money if I sent him an email with the approximate time of my purchase and the last four digits of my credit card number. I began to wonder if crypto would have been simpler.
When it came time to receive my gift, there was another obstacle. I scanned my QR code, which took me to a website and instructed me to register for an account on the Neon marketplace. Then, to mint my NFT, I had to enter a 12-digit sequence on my little scrap of paper. Instead of a color, I got a five-digit string that resulted in a blank square, based on a random six-digit "hex code" utilized by web designers.
"That's embarrassing; it seems like you got a mistake," Birnholtz added. But, I reasoned, the imperfection might make my NFT more appealing. "Yeah, maybe future generations will look at your error with the same satisfaction that they did at numismatic blunders," he speculated.
There didn't appear to be much else I could do with the NFT other than put it for sale - and I wasn't confident anyone would purchase it. "You are accurate. "You're buying it to show off," the co-founder explained, adding, "We give no guarantee of future value." I would never sell something to someone saying, "Oh, this is a fantastic investment." That's nonsense. "I believe you should buy anything if you like it and have a connection to it."
On the subject of money, Birnholtz's startup has secured $3 million in seed capital. The co-founder stated that he intends to open more vending machines in a half-dozen cities this summer, most notably Las Vegas, Chicago, Los Angeles, and Miami. The plan is for the machines to draw enough attention to turn Neon into a buzzing platform. "Goods like people having fun, acquiring things, flaunting their taste, flexing, and connecting with other individuals online." That's fantastic. It brings me joy. Every morning, I get up excited to talk to artists that want to sell on Neon."
But I wasn't sure who I could flex to. Hundreds of people passed by as I remained outside the ATM for nearly half an hour after my transaction, on a busy street during lunch hour in FiDi, but only one other person stopped to look at the booth. "Oh my god," he said as he snapped a photo with his phone. I approached him and inquired if he had any NFTs. "A few," he said, but he was already on his way down the street.
** Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of USA GAG nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.