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While there is no social benefit in having Elon Musk make another $1 million in the NFT industry, Ethereum’s Vitalik Buterin believes the technology can still be put to good use.
NFTs, according to Ethereum co-creator Vitalik Buterin, can be used for socially important causes such as charities and supporting public goods, but only if the technology is only perceived as a “casino that mostly helps already-wealthy celebrities.”
According to the editor of the Ethereum whitepaper, there is no social benefit in assisting celebrities such as Elon Musk in adding another $1 million to their bank accounts by selling NFTs. Non-fungible tokens, he believes, will have a huge effect on other aspects of society if they are supported and coordinated.
Buterin stated in a blog post titled “The Most Important Scarce Resource is Credibility” that public interest and money are often devoted to anything most people consider to have legitimacy — a game theory word he describes as:
“A pattern of higher-order acceptance. An outcome in some social context is legitimate if the people in that social context broadly accept and play their part in enacting that outcome, and each individual person does so because they expect everyone else to do the same.”
In brief, people behave in an organised manner when they believe that someone else will do the same, particularly if it helps them individually. The NFT market, which has seen a half-billion-dollar volume increase in the last few months alone, is also influenced by the ever-changing powers of mass public opinion.
“Which NFTs people find attractive to buy, and which ones they do not, is a question of legitimacy,” said Buterin.
“If everyone agrees that one NFT is interesting and another NFT is lame, then people will strongly prefer buying the first, because it would have both higher value for bragging rights and personal pride in holding it, and because it could be resold for more because everyone else is thinking in the same way,” he added.
Celebrities like Elon Musk wield immense power and influence. The Tesla CEO has been credited with influencing the Bitcoin (BTC) and broader cryptocurrency industry on several levels, both favourably and negatively. Buterin praised Twitter CEO Jack Dorsey’s decision to sell off his “first tweet” NFT to charity for $2.9 million.
However, if the emphasis continues on those individuals, the opportunity for NFTs to have some significant social influence could be missed, according to Ethereum’s co-founder:
“But they could also be a missed opportunity: there is little social value in helping Elon Musk earn yet another $1 million by selling his tweet when, as far as we can tell, the money is just going to himself (and, to his credit, he eventually decided not to sell). If NFTs simply become a casino that largely benefits already-wealthy celebrities, that would be a far less interesting outcome.”
Buterin introduced two possible alternatives to help make NFTs more “legitimate” as a financing source for causes that supported a social good.
Buterin proposed establishing a decentralised autonomous entity that, with the mutual consent of the decentralised governing group, would “sanction” such NFTs in exchange for a promise that a part of the sales proceeds would be donated to charitable causes.
Another option will be to collaborate with social media sites to embed NFT displays into user accounts, enabling them to brag on what they spent their money on. Buterin wrote that when combined with the first proposal, this solution could “nudge users towards NFTs that lead to important social causes.”