Celebrity endorsements are as old as celebrity itself. Some are triumphs that remain well-known after decades: think of Jane Fonda’s workout, which has outlived many of her films since its release on video in 1982, or George Foreman’s grill. Many people who have bought the Lean Mean Fat-Reducing Grilling Machine, which was launched in 1994 using his name, will have no idea he was a boxer.
But not every endorsement is a guarantee of quality. Countless celebrities and influencers have marketed dubious wellness products, gadgets, gambling sites and more to their fans.
So we could be forgiven for feeling wary as we now see Oscar winners and sports heroes – from Reese Witherspoon to John Terry – promoting the latest online innovation: NFTs.
The result of their support has been a huge boost in the popularity of online collectibles. One range of NFTs, named Bored Apes Yacht Club, involves 10,000 customised images of cartoon apes – each granted a unique combination of features by algorithm. The apes now trade for an average of $310,000 each, making the total collection worth north of $3bn.
Major brands have been attracted to this get-rich-quick opportunity, especially in sport. Video games maker EA Sports, which makes the market-leading football title Fifa, has committed to NFTs, while the NBA basketball league is selling “top shot” NFTs, short clips of players scoring in games, sold in offline collectible-card style packs.
What is an NFT?
NFT is short for Non-Fungible Token. Like Bitcoin and cryptocurrencies, these operate on the blockchain – effectively an unalterable public register of who owns what online. But while Bitcoins, like pound coins, are all much the same as one another (meaning they are “fungible”), each NFT is unique, like an artwork.
The idea behind NFTs is to make it possible to own the “original” of something on the internet. Anyone can copy any normal digital image – a gif or a jpeg – simply by right clicking it and hitting “save as”. While the image of an NFT can also be copied just like that, the theory is no-one can replicate the blockchain entry saying that your image is the original one – like owning the original Mona Lisa rather than a print bought in the Louvre shop.
Just like physical art, there is little intrinsic value in NFTs beyond what a buyer is prepared to pay.
All of England’s top football clubs are said to be considering selling NFTs. So no wonder the Premier League made a legal intervention to stop John Terry, the former England defender, including an image of its trophy in his own NFT series of 9,999 cartoon primates, the “Ape Kids Club”, which he has been promoting online with the support of other players.
Even Melania Trump has got in on the act, selling an NFT of a hat she had worn as US first lady as part of a “Head Of State Collection”. The sale appeared to have fetched around $180,000 – until Bloomberg News suggested the collection may have been bought from Melania Trump’s own online wallet, indicating that she (or her representatives) may have purchased it from herself.
As Trump’s auction suggests, not everything is what it seems in the world of NFTs, where scams abound. Sometimes people steal the copyrighted work of real artists – often dead ones – and list them as NFTs, meaning the buyer only actually ends up owning a receipt on the blockchain falsely saying they own the digital rights to the image.
Sometimes algorithmically generated art series don’t bother actually making each one unique, instead just throwing together images and selling them on for a profit before people notice.
Hackers see NFT collectors as high-value targets: someone using a Bored Ape avatar is signalling they have at least $300,000 worth of assets stored on their computer. That is well worth the hacking effort – and once the NFT is taken, there’s no obvious way within the system to have it returned.
The NFT marketplace OpenSea announced last weekend that it was investigating a “phishing attack” costing 32 users a total of £1.25m. The company’s investors include the talent agency CAA, which represents the actress Reese Witherspoon (who plans to adapt NFTs into movies and TV shows) and talkshow host Jimmy Fallon (who discussed his NFT collection with fellow owner Paris Hilton on air recently).
Even when there is no deliberate wrongdoing, NFTs aren’t always as permanent as people might hope. Instead of lodging which account owns which NFT directly onto the blockchain, many of them just save a web address – meaning that if the platform which sold the NFT fails or closes, all the buyer is left owning is a dead web address.
The result is that NFTs have become immensely divisive: some see the future of digital ownership and a new era of technology, whereas others see nothing more than an online version of tulip mania – when the value of the fashionable plants’ bulbs, and contracts to buy them, began rocketing in 1634 before crashing in 1637.
Could this too be a bubble that will leave many buyers losing all of their money? The trading of NFTs and cryptocurrencies remains unregulated and the Government is considering a crackdown.
Some celebrities have faced a backlash. When the cricketer Ben Stokes shared a pixelated cartoon of himself in a blue helmet holding a bat, saying he had been made an “Honorary Ape” by yet another NFT collection – this time the Antisocial Ape Club – many of his Twitter followers ridiculed his endorsement.
“If you think I’m quote ‘scamming people’ by saying thanks to a company for creating something that I MYSELF think is cool then you got it SOOOOO WRONG,” replied Stokes, adding that he had put “six months of research” into NFTs.
The Financial Times writer Jemima Kelly has argued that it’s “a bit sickening” that Damon, narrator of the documentary Inside Job about the 2008 financial crisis, now appears in adverts for crypto.com, which sells NFTs.
Former New York Times writer Nathaniel Popper holds the unusual position of seeming to believe both points of view, at least to an extent – setting out his stance in a recent Twitter thread.
“Yes, the space is rife with scams and I assume 95 to 99 per cent will go to zero,” he states.
“But at the most simple level, NFTs have given me, for the first time, a visceral understanding of the most basic innovation of crypto: What it means to digitally own a unique digital object… With NFTs you can own a digital item, carry it around between different online ecosystems and do interesting things with the item when you prove you own it.”
For example, people can use the same image as wall art in The Sims, and then as their profile picture on Twitter, and then again in some new metaverse world. It’s this sort of usage – rather than the get-rich-quick aspect – that interests Shiv Malik, CEO of the online data company Pool.
“Even most stalwart crypto people are now sick of the hype around NFTs and the financialisation of jpegs,” he says. “But in the end I can see NFTs integrated into everyday tech because they’re a really great way to record your own digital story. Want to prove you were at the 2022 FA Cup final? Show me your NFT. Want approved credit ID? That’ll be given to you as an NFT so you can show it to any bank.”
These uses might be exciting for those heavily involved in the NFT and blockchain movements – but the question is how many fans seeing celebrity endorsements are weighing up the benefits of NFT involvement in such a way.
Given that the NFT world is rife with scams, involves buying incredibly volatile assets in such a way that effectively amounts to gambling, and can make you a highly attractive target to hackers, celebrities could easily be exposing their fans to substantial financial and personal risk.
Analysis by Footprint Analytics last month found that celebrity-backed NFTs were the best-performing on the market, suggesting that less sophisticated new entrants to the industry were keeping the sector at fever pitch. The phenomenon is by no means restricted to US and British stars, with an NFT collection named Phanta Bear performing most strongly last month thanks to heavy promotion by Taiwanese celebrities.
The truth is the celebrities have that money to risk and to lose – or to get rich by getting in early enough. Snoop Dogg is rumoured to have an NFT collection worth more than $20m, but few of the rest of us have several hundred thousands of dollars to risk on a picture of an ape.
Generally speaking, unless you’d take advice on highly-risky stock market investments from a particular celebrity, it might be best not to take their advice on investing in NFTs – as everything could end in digital tears.
James Ball is the author of The System: Who Owns The Internet And How It Owns Us (£9.99, Bloomsbury)