Vitalik Buterin discusses how to utilize NFT for “the better cause”

In a recent blog post titled “The Most Important Scarce Resource is Legitimacy,” Ethereum’s co-founder Vitalik Buterin shared his thoughts on the recent NFT hype and the “social” function of NFT’s. Buterin believes that the NFT technology can be good to put use and be applied to socially relevant causes such as charities and funding public goods. However there needs to be a change of mindset away from the current one that considers it a “casino that largely benefits already-wealthy celebrities,” since “there is little social value in helping celebrities add another $1 million to their bank account by selling NFT’s.”

Buterin said that public attention and resources are often allocated to whatever most people perceive to have legitimacy:

“Which NFTs people find attractive to buy, and which ones they do not, is a question of legitimacy,”

He added:

“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.”

This implies that people act in a coordinated fashion if they perceive that everyone else will do the same, and especially if it benefits them personally. The NFT market is a clear example of this with the hype spurred by this effect.

Buterin said:

“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.”

Buterin shared his concerns over the influence of celebrities such as Elon Musk or Jack Dorsey, currently have on the NFT hype and is worried that the potential for NFT’s to have any real social impact could be lost.

“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.”

In order to utilize NFT’s for the better cause, Buterin made two suggestions in his blog post:

The first is to set up a decentralized autonomous organization which, with the collective approval of its decentralized governance community, would “sanction” certain NFTs if it was guaranteed that a portion of the sales revenue would be passed on to charitable causes.

Another way to secure NFT’s societal contribution would be to have social media platforms to integrate NFT displays into users’ profiles, allowing them to show off the thing they invested their money into. According to Buterin, in combination with the first suggestion, this could work to “nudge users toward NFTs that contribute to valuable social causes.”

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