Aimee B. Davis Law P.C.

Are NFTs the Emperor's New Clothes?

{4 minutes to read} 

{3 minutes to read} I was enthusiastic to hear from Craig Jacobson, managing director at B. Riley Advisory Services, in response to my latest blog. He compared the current market for NFTs to playing a “game of chicken.” I couldn’t wait to learn more about what he meant.


Per Wikipedia “the name ‘chicken’ has its origins in a game in which two drivers drive toward each other on a collision course: one must swerve, or both may die in the crash, but if one driver swerves and the other does not, the one who swerved will be called a “chicken,” meaning a coward…”

When I asked him, Craig said “because crypto and NFTs generally have no earnings, and they only exist because the technology (blockchain) exists, buyers and sellers in this market are taking a risk that cryptocurrencies and/or NFTs will remain popular. Buyers/Sellers are relying on the ongoing existence of a market for these assets that are neither services nor products. In contrast, Apple stock has value because it makes money from the sale of its products and services. The value of Apple stock reflects investors’ expectation of future earnings.”


Next, Craig distinguished the utility derived from owning real estate versus digital assets:


“When you own real estate, you save money that would otherwise be spent on rent. Additionally, real estate earns profits when you sell or lease it, and this creates actual utility.”


Together, Craig and I struggle to understand what, if any, utility is derived from most NFTs (other than the hope of selling it for an even greater price). We can acknowledge the joy of owning them, but Craig is skeptical about the sustainability of a market for them.


Perhaps he’s right that NFTs will lose the luster of novelty soon. But, some of my clients and I remain hopeful that the universe in which cryptocurrencies have value (the metaverse) is still evolving.


Nevertheless, it’s challenging to disagree with Craig’s perspective:


“With each stage of new technology, the market often overestimates value, resulting in a bubble. People will buy more and more of it until someone realizes that it isn’t worth it. NFTs are risky investments that may end up trading at significantly lower values.”


Unfortunately, those investors will be left standing naked in the public square.


Where’s the Metaverse Going?


Assuming Craig’s correct that the NFT bubble will inevitably burst, I’m confident the metaverse will continue to exist. While efforts are being made to regulate decentralized finance (ie. blockchain transactions), an entire universe of virtual real estate development, tokenization, and game assets are being created. I anticipate innovative applications utilizing blockchain technology will continue to emerge.


Advances in technology move quickly and compared to the mid-1990s when my legal career began, technology is moving at the speed of light! I remember drafting/reviewing executive summaries for businesses, thinking: What is this new fangled thing called the World Wide Web, and what did Al Gore have to do with it???


My, have things changed!

Aimee B. Davis Law P.C. is committed to advising its clients and resolving issues relating to the legal and business matters that are important to them. If you have any questions, please feel free to contact us at (917) 617-2243 or email

Aimee B. Davis Law P.C.

122 Ashland Place
Brooklyn, NY 11201

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