The Hype Over NFTs Shows Our Need for Ownership

Nonfungible tokens, or NFTs, have recently been the subject of an enormous amount of hype. For the uninitiated, NFTs are tokenized versions of assets that owners receive virtual certificates of sole ownership for, which are tracked and traded on a blockchain. In essence, NFTs are speculative financial assets that can be attached to a multitude of virtual goods, such as memes, GIFs, songs and more. One driver for the recent boom of NFTs could be the Covid-19 pandemic, which has potentially resulted in a greater need for vehicles of self-expression through digital channels. NFTs are not entirely new (the technology started in 2015), but their value and popularity have recently exploded. Many brands have capitalized on the frenzy by offering their own NFTs, including Pizza Hut, Taco Bell, and even Charmin, which rolled out an NFTP. While some are hailing NFTs as revolutionary and game changing, others predict the market is a soon-to-burst bubble. Still, others contend the fad is reminiscent of long-established practices in the art world. The market for NFTs reflects an even broader fundamental psychology of ownership with deep historical, cultural and evolutionary roots. Humans enjoy owning things Many scholars believe that humans have an innate need to possess. Developmental psychologists have shown that recognition of ownership and the feeling of "mine" emerges relatively early in childhood, around age 2. Other experts contend that possessive tendencies are a product of socialization or a combination of biological predispositions and social practices. Philosophers and psychologists have also long recognized the importance of ownership as a means of defining who we are and shaping our identity, both to ourselves and in the eyes of others. A substantial body of research in consumer psychology provides empirical evidence, showing that goods that feel like "mine" are incorporated into our sense of self and identity. As a result, owning goods often produces a positive and uplifting effect on the owner. Researchers have also shown that feelings of ownership don't need to have any legal or real basis. People can feel ownership over goods owned by other entities, brands, teams they support and more. Some work shows that consumers feel that their personal territory has been infringed on when they infer that others feel ownership over the same things. Ownership in a digital world Psychologists have shown that feelings of ownership can emerge for digital goods and technologies. For example, video gamers often describe feeling a genuine sense of ownership over their weapons, cars and wardrobes in fighting, driving and role-playing games, respectively. NFTs are distinct in that they give us the chance to genuinely claim and experience the feeling of ownership over unique digital versions of things we have long felt are ours but couldn’t really claim as our own in any meaningful way, such as songs, artwork, memes and more. Moreover, they offer this experience without sacrificing control over the good or limiting the accessibility of those goods to others, which has historically been the case when someone buys the rights to things like music, artwork or images. Perfectly suited to satiate Scholars have identified several factors that can increase our desire to own certain goods and heighten our sense of ownership once they are in our legal or physical possession. For instance, we are often more interested in owning goods that reflect our self-identity or fulfill an identity motive. We are also more strongly drawn to items that are unique, scarce or offer social currency, such as goods that signal we are in the know, trendy or high status. It’s no wonder NFTs are so popular; they offer the chance to proclaim sole ownership over unique and scarce goods that can reflect our personality, affiliations, taste and interests that, at least for now, come with social cachet. Moreover, NFTs give consumers the ability to display and prove ownership over goods through digital channels, which feels particularly appealing at a time when physically displaying ownership of goods through socializing is limited as a result of the pandemic. While NFTs may be a unique manifestation of our possessive tendencies, the psychology behind NFTs is not. And it’s possible that NFTs could have staying power, but they might also disappear as quickly as they arrived into the mainstream. Regardless, this won't be the last time we'll see the emergence of a technology that allows for greater feelings of ownership over digital goods.

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The Hype Market for NFTs Shows Our Need for Ownership, Even Over Digital Assets

Humans enjoy claiming things, which has especially grown during the pandemic

Anne Wilson

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Anne Wilson