'The problem with NFTs is that they are non-finite tokens,' Charlie Lee said.
Litecoin founder Charlie Lee has predicted that the prices of non-fungible tokens will eventually crash — with supply overwhelming demand.
In a detailed Twitter thread, he wrote: “The problem with NFTs is that they are non-finite tokens. There is zero cost to create unlimited number of tokens.”
Lee’s argument was in response to Rick And Morty creator Justin Roiland announcing that he’s going to be releasing crypto art on Nifty Gateway.
The blockchain entrepreneur explained that NFTs create “artificial scarcity,” and the low cost associated with creating tokens means “the market will eventually be flooded with NFTs from artists trying to cash in on this craze.” He explained:
“Unlike NFTs, real-world art is not zero cost. It takes effort and time to create a piece. This is effectively Proof-of-Work. A famous artist like Picasso can only create thousands of pieces of art in his lifetime. This limitation creates scarcity, which helps keep the value high.”
Lee said that he hoped he’ll end up being proven wrong, but encouraged his followers to adopt a “buyer beware” mentality with NFTs. He later clarified:
“I’m not saying that the digital artwork takes no effort and time to create. Some digital art are amazing and the artists are extremely talented and put in a ton of effort and time into them. But the NFT is not the artwork. Creating the NFT is cheap.”
His remarks come as NFTs continue to sell for eye-watering prices, sometimes amounting to hundreds of thousands of dollars. Just last week, a non-fungible token launched by Mean Girls actress Lindsay Lohan sold for 33 ETH, worth about $59,000 at the time.
