ELI5: - NFTs, The Good, and the Bad!
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The way NFTs took over the trend is still unbelievable to me. How a 5-word tweet was sold for $2.9M, how funky apes JPEGs are starting from $200K. I read all of it and tried to breakdown NFTs, the good and the bad.
What is NFT?
So, transactions usually take place digitally or physically. You spend money and buy goods. Recently, the purchasing behavior has changed and the transaction over digital platforms have too. Now, you purchase a cool-looking skin (digital good) in your favorite game and that brings a change in purchasing nature.
Now, let’s say you’re an artist who wants to sell a landscape you drew on a canvas. The chances of that painting getting pirated are pretty less, many various methods can easily identify the original one. But if a digital artist makes the same art, exports it as JPEG, and uploads it on the internet for sale. Pirating that is just as easy as a right click, and checking the authenticity of the actual art is next to impossible. NFTs are trying to change this by creating ‘Token of ownership' that is owned by the creator. So, when you’re buying or selling NFTs, you’re basically buying or selling the ownership of that product.
NFT stands for Non-Fungible Tokens. When something is fungible, it means it is interchangeable, like cash. NFTs work on blockchain technology, just like cryptocurrencies, which helps them verify the original creator behind a digital product.
NFT also brings various helpful opportunities to the table like,
NFT brings a new way of earning that lets the supporters support the creator by letting them buy a piece of share in their art rather than just donating through PayPal or any other service.
NFTs have helped with the contracts by making it more easy and streamlined so that creator can leverage and make rules for its assets to be accessed. No more long, hard-to-read contracts.
An artist can make it so whenever a painting has made a profit, the artist gets some sort of commission from the profit.
Collectors love one thing for sure, and that’s rareness of a product. To collectors, NFTs provide that adrenaline punch to collectors because they know they can own something rare, and that too authentic, thanks to the fool-proof system of the Blockchain.
Take this Charizard pokemon card as an example, sold for $220K not because of its fighting abilities, but how rare it was.
NFTs allow not just creators but investors to earn from the digital content too, because NFTs can be traded, it holds a market value. Just like this CryptoPunk NFT which was originally bought for less than $30, but ended up selling for $11.8M.
No matter where you are, you want to feel relevant, right? NFTs do that by making you feel you belong to a community you have an interest in. Take this Bored Ape Yacht Club for an example, where people who own these NFTs are part of a club and they use this as a sense of pride.
As much as I cherish new tech and the benefits it brings, there are some downsides to it too, like,
While the major purpose of NFTs was to support the digital artist without harming their assets, business people took this opportunity to make money by creating random bunch of JPEGs in bunch and tweaked them a little, and are ready.
Take an example of the ‘Lazy Lions’, another collection of 10,000 “unique”, expensive avatars, just as ridiculous as ‘Bored Apes’ but in the Lion form. Seeing how ‘Bored Apes’ were selling like hot cakes, someone created 50, or so unique characteristics and then use a piece of code that simply picks these 50 inputs, randomly combines them and creates 10,000 random outputs. No creativity, no thought process, just a way to benefit from the trend.
The extent to which people have gone to cash-in themselves in just ridiculous. There’s a project called ‘Next Earth’ where it’s mapped up the entire planet, and allows the users to buy digital land for a certain price. I’m sure the creators must’ve thought, ‘Now that everyone’s interested in digital content, let’s sell digital land.’ But physical land has a purpose. One may wanna live there, rent it out, do farming, etc. What can you possibly do with a digital land, other than brag about it? No one wants to hear someone brag about themselves.
Also, who has given these ‘Next Earth’ creators rights to sell the land that already someone owns? And that’s just one platform I was talking about. There are other platforms like Earth 2, SuperWorld, so even if someone tries to buy Taj Mahal on one of these platforms, it isn’t even that you possess something rare, as that land can be bought in any of these platforms.
Things have got so worse that people are using deceased persons for their NFTs. Stan Lee, creator of Marvel Comics, was used to promote a NFT collection of a superhero. I’m pretty sure this wasn’t what he’d have wanted, asking his fans for money for some JPEGs.
Another one is Bob Ross’s NFT, the post talks about his legacy of creating and investing in the art of painting, which is false. He wanted people to buy the paint and make the art. He said that he didn’t want his name to be endorsed in any kind of unreasonable marketing tactics or profits, but his name’s goodwill is being used for every dollar that can be made.
He was also an environment and nature lover, and NFT’s not helping in that either.
Every transaction that takes place for buying or selling NFTs is powered by Ethereum which is bad for the environment, it uses a security mechanism called proof of work which is incredibly thorough and is a big part of what makes NFTs so fraud proof but the problem is that this kind of security requires a lot of computers around the world to be contributing their power to this network and that uses a lot of energy.
People are copying copyrighted stuff, manipulating a bit and posting as theirs and then they have the audacity to debate on which one’s real.
Someone has created a portfolio of Marvel Characters, except Marvel didn’t have any intel on this, this isn’t official listed on Marvel’s listed, Marvel hasn’t licenced them.
If you buy any NFT from packs like these, not only you’re spending your money on a non-legit thing, but also committing a crime by buying copyrighted stuff.
I believe one should only invest in the NFTs created by legit creators that even if market comes or even crashes any day, you’re happy with your purchase.
That being said, let’s wrap it up here! If you enjoyed reading the story, consider following me (Bhavesh Rawat). Peace
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