NFTs: The future of digital media or another internet grift?
Unless you live under a rock you have probably heard of NFTs by now. Everyone seems to be talking about it everywhere not on Reddit, Twitter
Unless you live under a rock you have probably heard of NFTs by now. Everyone seems to be talking about it everywhere not on Reddit, Twitter crypto corner even major tabloids can't seem to have enough of it.
Recently the internet source code was sold as an NFTs for 1.2M dollars, but still, this is not the most expensive NFts as of the time this blog was published. An image of a monkey was sold for 10000.
I know you probably have tons of questions right now, How do I get started with NFTs right now? Where do I buy or sell? Is this a scam? The ownership question?
In this article, I am going to walk you through the most important. Hope you will stick around and get some knowledge.
What are NFTs
In economics "Non-fungible" means an asset that cannot be readily interchanged for another of like kind. A unique commodity. So an NFTs are non interchangable digital assets.
How they work
To understand how non-fungible tokens work you first have to understand what blockchain technology is and how it works.
"Blockchain is defined as a ledger of decentralized data that is securely shared. Blockchain technology >enables a collective group of select participants to share data. ... Data is broken up into shared blocks >that are chained together with unique identifiers in the form of cryptographic hashes"
Now that we know what blockchain technology is, think of NFTs as digital media that's on the blockchain.
Despite images being the most popular NFTs, there is a wide range of digital assets that can be listed as NFTS. Words, music, videos, source codes, or any other media can be listed as a NFT.
Platforms to trade
By far this is the most popular of all the platforms, it is easier to use, just connect your wallet and you are good to go.
Foundation is the new kid on the block since being launched earlier this year. it has managed to get a lot of traction and over 100 million USD worth of assets has been traded.
Its simple design makes it very easy for first-time users to go around.
Mintable is also one of the best marketplaces out there, it is also backed by some celebrities (if you are the kind of person who needs their validation.)
Is this the future for creators?
Despite the first NFT project being around since 2015, I can say that 2021 was the breakout year for NFTs. We have seen some of the most bizarre and also some of the best NFTs of all time being sold this year.
It can be estimated that by the end of this year the trade volume will be at 10B USD. If this isn't the creator economy at its finest then I don't know what it is.
The best thing about this is that it's just getting started. The rise of the creator economy and decentralization of work is just going to fuel the growth and adoption of NFTs.
Not yet there
But are we there yet? Is this the next frontier for creators or another Ponzi scheme created on the internet that's going to leave people broke after they invested all their life savings there?
Several issues come in the way of NFTsbeing a standard for digital art.
As there are all these great strides to the adoption of crypto-technology, some governments want nothing to do with crypto-technology in their jurisdiction, this has seen the banning of cryptocurrencies and crypto-related activities such as China, India, and Turkey.
The US govt has had its issues with crypto-technology too. see here
So can ownership of digital assets as an NFT be enforced by local authorities? What would happen if one person owns a digital asset as an NFT and someone else has copyrighted the same digital asset. Who owns it?
We are very far from the mass adoption of NFTs, most people are skeptical about them and many people have not heard from them.
Are NFTs really NON-Fungible?
Unlike most physical assets and you can lock up in a safe or put up a sign that says "Private property do not trespass", how do you ensure your NFT i.e an image is only yours and no one else can use it without your permission?
There is no way
The value of X
After buying an NFT the artist will get back to minting more, but what about you as the investor or end-user. What next after purchasing that elusive jpeg of a monkey?
What is the value of the image? HODL to it in hopes someone else who is more of a believer than you will buy it and HODL before someone else comes and does the same.
FOR the end-user(last buyer), what's in for them?
So what will happen when creators are just creating more, people are buying more but nowhere to sell?
NFTs and the evolution of ownership of digital assets is a trend that's going to be around us for a while. It will be amazing seeing thousands of artists earn from their craft. But as an investor, it is important to excises caution.
"Never invest money that you can't afford to lose."
As for the creators, go all the way in? What do you have to lose?
Let me know your views on the future of NFTs in the comments sections below.