I saw an early showing of Top Gun: Maverick. My ticket included a special Top Gun non-fungible token (NFT),An NFT is a unique digital asset that often functions like a sort of certificate of authenticity for a digital asset like an image, video, or song. While digital creators have found various ways to monetize their work, NFTs give them a way to sell digital creations in manner more similar to a physical item. By “minting” an NFT attached to a digital work, a creator can identify the “legitimate” owner (or owners) of that work, and those owners can resell or trade their claim to the work as well. but I didn’t really care; mostly, I just wanted to see the movie with my friends. About a week later, I got an email reminding me about the NFT and telling me how to access it. It seemed like a fun foray into the blockchain world, and I’d already paid for it, so I figured I’d give it a shot. My fruitless attempts to actually use my NFT demonstrate that the crypto onboarding process, at least with the companies involved here, has a very long way to go.
The email directed me topgun.paramount.xyz, which looks like an obvious invitation to dine at the malware buffet, but is, in fact, a website run by Recur, a crypto startup, in partnership with Paramount Pictures. To access my NFT I had to create an account with Recur. Once I did, I was able to log in and see my digital asset, a stylized image of a movie ticket:
The website gave me two options: keep the ticket, or “burn” it and turn it into one of eighteen randomly-selected Top Gun pilot helmets (which I’d have to do before July 1, or I’d be stuck with the ticket NFT forever). I went ahead and converted the ticket into the collectible helmet, which turned out to be a not-very-appealing graphic of a pilot helmet for one of the characters from the Top Gun movies.
That was it. I could log into my account at Recur’s Paramount portal and see the blocky graphic of a helmet. Funnily enough, Recur has its own NFT wallet and marketplace, which at the moment allows sales only of its “Recur Pass.”The Recur Pass offers an opportunity to get exclusive access to buy more NFTs in the future by buying one now. In one of the more terrifying examples of speculative inflation in the crypto market, they sold over $20 million worth of passes in the 24 hours during which the passes were initially available. But apparently the wallets and marketplaces are totally separate. My Recur account lets me log into the market for Recur passes and created a wallet for me there, but the wallet is totally empty. There’s no indication that I own a Top Gun NFT if I pull up my Recur wallet. I have to log in through the dedicated Top Gun portal.
And I can’t actually do anything with my NFT. I can’t sell or trade my NFT, and I can’t buy more. To do any of that, I’d have to “withdraw” my NFT, write it to a blockchain, and trade it on an NFT marketplace like OpenSea. To withdraw my NFT, I need to create a compatible wallet; Recur recommended I use MetaMask to create such a wallet. If you’re keeping track, to do anything with my new NFT, I had to create accounts with Recur, MetaMask, and OpenSea.
It gets worse. I went ahead and created my MetaMask wallet. Then I had to pick a blockchain network, either Ethereum or Polygon. Ethereum is probably the second-most popular blockchain (after Bitcoin) and by far the most popular for trading NFTs. Polygon is a series of protocols that uses “sidechains”—separate but compatible blockchains—to solve some of the problems that plague Ethereum (namely transaction limits and fees). If that sounds convoluted, it is. But Recur’s explainer on withdrawing NFTs doesn’t tell you anything about that; the only guidance or explanation it provides is that you have to pay a transaction fee (known as a “gas fee”) to withdraw your NFT to Ethereum, whereas Recur won’t charge you anything to withdraw to Polygon. That makes it seem like the obvious choice is Polygon, but of course the story has to be more complicated than that.
Indeed, gas fees are a major problem for Ethereum; they often make it prohibitively expensive to conduct business on the blockchain. And people don’t seem to be willing to pay to withdraw their NFTs to Ethereum: the OpenSea marketplace for Top Gun NFTs on Ethereum contains 55, while the marketplace on Polygon contains 22,500. The variance in supply is accompanied by a variance in price: currently, the lowest asking price for one of the Top Gun NFTs on the Ethereum block chain is about $47 (0.049 ETH), while on Polygon it’s a whopping $0.006 (yes, less than a penny, or 0.018 MATIC).Prices and statistics as of mid-June 2022. But only three have been bought or sold on Ethereum; ten have sold on Polygon. And while Ethereum (the eponymous cryptocurrency traded on the Ethereum blockchain) is pretty popular, you can’t use it to pay for things on the Polygon blockchain. To transact business on Polygon, you have to use its own cryptocurrency (known as MATIC) or transfer Ethereum from the Ethereum blockchain, which defeats the purpose of using Polygon because you have to pay the gas fees anyway.
It gets worse. Hilariously, Recur, the crypto startup, won’t let you use crypto to pay your fees if you choose to withdraw your NFT to Ethereum. You have to use a credit card to add real money to your Recur account, and then use that cash to pay the fee required to transfer your digital asset to a blockchain where you can actually trade it. That should give you a sense of the level of confidence the folks at Recur have in the assets and technology that power the infrastructure their company depends on.
It gets worse. Recur has a “Know Your Customer” policy that requires them to positively identify you before they’ll let you withdraw your NFT. Perhaps that’s admirable—decentralized blockchains are havens for criminals, and fraud is rampant. Regardless of the reason, when you try to withdraw an NFT, Recur redirects to you to an identity verification process implemented by a company called Jumio. That process requires you take a picture of an ID (driver’s license, passport, or national ID card) and submit it, along with a selfie, to Jumio, which verifies your ID and uses AI to ensure your selfie is of the person on the ID card.
It struck me as more than a little hypocritical that joining the decentralized finance revolution—which promises an entire monetary system free and independent from government or corporate interference—required submitting sensitive personal information to two random companies I know little about and don’t have much incentive to protect it (after, of course, creating accounts with three other companies I don’t necessarily have much inclination to do business with).
I didn’t do it. My Top Gun NFT remains, illiquid and useless, in the dead end of its Paramount/Recur NFT wallet. All in all, not a great introduction to the world of crypto and NFTs.