Early this month, Litecoin creator Charlie Lee has clarified on how most popular non-fungible tokens (NFTs) currently for sale are not really as valuable like many people assume.

Charlie Lee stated in his own words:  An NFT is a digital certificate to a collectable that can be easily, cheaply, and perfectly duplicated.

Imagine if we have technology that can perfectly clone a piece of artwork to the last detail where it’s indistinguishable to the original even by experts.

Then we can duplicate, for example, the Mona Lisa. And every person can hang a perfect replica of the Mona Lisa on a wall at home. That reduces the value of the original Mona Lisa because no one can prove that it’s the original.

But what if there’s a certificate of authenticity, let’s say signed by Leonardo da Vinci himself. And this certificate cannot be duplicated or even counterfeited unlike the artwork. That is the NFT. How much is this NFT or certificate of authenticity actually worth?

It’s definitely worth something. But is the full value of the Mona Lisa transferred to this certificate? I argue definitely not. If everyone can have an exact duplicate of the Mona Lisa hanging on their walls, most wouldn’t care much to own the certificate of authenticity.

Part of the value of owning a collectible is the prestige to be able to say only I own it and can display the collectible. And no one else in the world can do that. NFT reduces that value to only I own and can display the certificate of authenticity.

The majority of the value of owning a collectible is lost by switching the ownership from the actual collectible to its certificate of authenticity. That’s basically what NBA TopShot NFTs are. They are digital certificates to a short video Moment that anyone can download.

It’s true that with NBA TopShot, you can point to an nbatopshot URL and be proud to say look it says I own this Moment. This wears off pretty quickly though. The value of the NFT actually comes from the NBA brand and not the tokens themselves.

Without the NBA’s continued backing of TopShot, the NFTs themselves are not worth anything. For example, what happens to the value of the TopShot NFTs if the website nbatopshot goes down? The link between the digital certificate and the artwork is now broken.

This is different from traditional baseball cards. The manufacturer or even the league can cease to exist, but the physical card can still retain value. For example, the brand Fleer no longer exists, but the 1986 Fleer Michael Jordan rookie card is still worth $500k+ today.

He concluded stating, I will end this thread with this image I found on Reddit. It’s funny because it’s true. What’s the value of an NFT of a song when everyone in the world can own the actual song for $1?