Mr. Klauber currently works as a Chief Computer Engineer of 37 years creating Hospital Computer Systems for Multi-service Military Hospitals. Author of the Poway Stamp Club Newsletter, the column “Authors Corner”. He is also the Vice-President of the Poway Stamp Club, Poway Ca.
cover image: Original Digital Rendering (By D. Klauber:)
Recently, the use of non-fungible tokens (NFTs) for stamp collecting has become a very hot topic and many are wondering what NFTs might mean for Philately as a whole. Now more than ever, NFTs seem to be all the rage with some organizations even claiming that NFTs will be the revolutionary panacea solution for bringing the next generation into stamp collecting. I would like to say that you should be very wary of this untruth, for that matter, it may be no truer for our hobby than it will become the solution to fine Art Collecting or any other form of collecting. The following article will explain why I believe this to be so. Moreover, I will attempt to clearly describe the terminology surrounding NFTs and bring this often technical subject down below 1000 ft. for the computer novice.
What is a Philatelic NFT? - First Philatelic NFTs are extremely technical things, but ultimately, any NFT (non-fungible token) is simply information that is stored in the form of “Data” in a blockchain. And a blockchain is essentially a distributed digital ledger of transactions that are duplicated across the many computer systems on the blockchain itself. Philatelic NFTs use blockchain technology which is similarly used for items such as cryptocurrency, specifically Ethereum and Bitcoin. Those selling them claim that NFTs are unique digital “works”. In reality, an NFT is just a unique piece of data in a blockchain stored as a highly overpriced Metadata Label (JSON). Ok, “Metadata Label”, that’s a real mouthful, but what it means in layman terms, is that they only store the description of your image and not the actual image itself. Wow, I’m glad that’s over!
Due to their unique identifiers, Philatelic NFTs are being sold to buyers making it appear as if they represent a secure digital certificate (a guarantee) of ownership for an exclusive (one-of-a-kind) digital rendering (e.g., a jpeg) of a Stamp or a piece of art. It is very important to understand that a Philatelic NFT is not:
- A stamp digital or otherwise
- A right to copy, disseminate, or display a stamp
- Exclusiveness of the versions of the JPG image which serves as the digital substitute for a physical stamp.
- Useable as postage
This means that when a person buys an NFT of a Stamp, all you purchase is a certified (yet non-exclusive) copy of the information about a piece of digital media.
The Arguments - The supporters of NFTs more often focus on the wealth prospects of NFTs claiming that they are an opportunity for collectors to capitalize on and contribute to an emerging market, one that brings new, unparalleled value to digital media and digitized collections. The detractors state emphatically that these hopes are misplaced: NFTs may very well turn out to be speculative bubbles built on digital technology, which is burdened with both moral, financial, and even environmental liabilities including GAS fees which are another form of Carbon Tax. When selling NFT Metadata, there may be no justifying the massive environmental impacts of minting a single NFT (or a blockchain itself) amid an energy crisis.3
Philatelic NFTs do nothing for provenance, and actual stamp ownership rights, a job that most of the current stamp sales methodologies and Auction houses already do much better. Further, for Philatelists, it’s the difference between tactile ownership vs the ownership of a line of code that is at the mercy of the blockchain. In some/most cases you don’t even own the item that is digitally pictured leading many to assert that Philatelic NFTs are simply a scam.
Digital Philately - Philately entered the digital age in the middle of the 1990s with the entry of stamps on the internet and the infancy of selling stamps online i.e. (eBay, etc.) At first, it was a big change, but we have been slowly but surely dragged kicking and screaming into the 21st Century.
With the historically greatest concern of philatelists being the future or our hobby, many collectors seem to be in a giant hurry to jump on the next big thing. Since this is an opinion piece, there will be those who will disagree with me, and I respect their opinions. Don’t get me wrong, people have the right to generate income, and I am not saying or even implying that NFTs in and of themselves are somehow malevolent, but for me, NFTs fall outside any definition of value because they create wealth from literally nothing, and buyers should never forget the Latin phrase Caveat Emptor.
Authors rendering of the holy PNFT (By D. Klauber)
Some have and do make the argument that our greenback itself represents the same thing, that cash symbolizes a value simply because enough people agree that a dollar is equal to a given amount of physical things. So, if you want to call a Philatelic NFT a massively overpriced and oddly portrayed Cryptocurrency then I think we might have some agreement.
What are the Risks of NFT’s to our hobby? - For collectors when you go to a stamp dealer and exchange your hard-earned cash you get an actual “physical” stamp. The proof of ownership is that with a match you can burn or destroy it. With an NFT you technically own nothing that you can touch. It has been written that some of the Art NFTs have already been lost in the ether. This makes this technology a huge risk. Charles Epting, President/CEO at H.R. Harmer Fine Stamp Auctions related recently in Conversations with Philatelists; that he would hate to see the destruction of our hobby from the potential ill that could be created. He warned that what happened in the 70s and 80s to people who invested heavily in near valueless FDCs might happen again with NFTs. I say it’s worse than he thinks because you won’t even have that nice unaddressed envelope to wipe away your tears. Besides, there’s a whole lot of cool stuff going on in the digital Stamp World, shows are reengaging, clubs are using virtual apps to meet and communicate, SMI opens our eyes to the value and Open Access now allows collectors/buyers to travel the stamp world millions of times over each day. These are the digital innovations that deserve our hobby’s attention and perhaps not the NFTs.
The Next Generation of Collectors – Let’s just say I think the hobby will survive NFTs. And for the record, the “kids” are going to be alright based on the industry information out there. According to PC Magazine, “Most of the negative reaction to NFTs comes from the younger generations. About 51% of millennials think NFTs are a scam, but an overwhelming 82% of Gen Zers feel the same.” This is compared to 60% of the general population. Interestingly, less than 10% of people consider any NFT a serious investment.
“The Kids Are Alright: 82% of Gen Z Thinks NFTs Are a Scam”1
In Conclusion – It is the writer’s position that NFT sellers and sites profit from the obfuscation of what an NFT is and is not. Revolutionary NFTs they are not. However, they may be just another pump and dump4 scheme wrapped up in a high-tech package with a colorful Crypto bow. Worse, no governing body exists to enforce resale commissions when an NFT changes hands. Little to no protections exist for buyers. Purchased NFTs still “live” in the purchaser’s “wallet” on the company’s server and may just disappear without any recourse for the owners.2 This author does not intend to spend a single of his hard-earned shekels purchasing NFTs and would strongly suggest that others be wary of riding the wave, the reef is very sharp and the water shallow. Some will however ride this wave and profit from the ignorance of others. If you enjoy standing in the cold surf while tearing up $100 bills then you should buy thousands of Philatelic NFTs, but seriously, I can already hear the waves crashing the shore.
Endnotes:
- https://www.pcmag.com/news/the-kids-are-alright-82-of-gen-z-thinks-nfts-are-a-scam
- https://mcn.edu/mcn-insights-nfts-are-a-scam/
- https://www.theverge.com/2021/3/15/22328203/nft-cryptoart-ethereum-blockchain-climate-change
- Pump and Dump, https://en.wikipedia.org/wiki/Pump_and_dump