(Washington Insider Magazine) -NFTs, or Non-Fungible Tokens, is a form of a digital asset that ranges from digital images to video files. What differentiates these assets from images found on Google Images or YouTube is they utilize blockchain technology to verify and track ownership. NFTs have recently hit the mainstream as major transactions, namely the purchase of Beeple’s “Everydays: The First 5000 Days”, have sold for significant price tags. Many art experts and blockchain experts alike see NFTs as a major part of the future of the art world. However, for the laymen, it seems NFTs are confusing, esoteric and without value. Below is a breakdown of the relatively new technology including all the pros and cons.
Like physical art, digital assets of all varieties can easily be copied with just a few clicks of a button. NFTs use blockchain to create verifiable, un-hackable proof of ownership between a consumer and the asset. In the early stages, NFTs have been used as a way for artists to sell their digital art securely. For the consumer, it is a way to support and sponsor your favorite artists. Additionally, the ownership of an NFT gives you usage rights; yet it is worth noting that given the nature of the internet, it is difficult to track and police the posting of images and videos.
While you may not see the value of NFTs in it’s use in the art world, the technology may see applications in other industries from gaming to real estate. For example, in gaming world, players could earn NFT assets within a game and sell those assets for real-world currency. This potential new eco-system lends itself to the idea of the “Metaverse”, a virtual reality world where one can access and visit a completely new world digitally. Though this concept may seem futuristic, Silicon Valley companies are beginning into invest in this future, most notably in Facebook’s upcoming rebrand.
Given the potential applications, what are the pros and cons to NFTs?
Pros
- NFTs and Blockchain are inherently secure. The technology decentralizes transactions which protects assets from censorship.
- NFTs provides a new path to sponsoring art, music, and culture.
- Collectors and consumers will have a way to verify the authenticity of their purchases. Unlike purchasing a piece of art that can be counterfeit, NFTs over a sure-fire confirmation of authenticity.
- Unlike traditional banks and financial institutions, blockchain has no bias against gender, race, or ethnicity. NFTs and blockchain offers a path for marginalized groups to build wealth through assets that was previously only accessible by privileged developed world.
Cons
- Blockchain technology is not fundamentally understood by many. While the concept of Bitcoin, Ethereum and even NFTs are becoming mainstream, few average consumers truly understand the implications of this new paradigm.
- The technology is complicated making it the barriers to entry high. With many different digital currencies, and various NFT marketplaces and apps a laymen will find it difficult to enter this world.
Conclusion
Ultimately, NFTs is slowly surely garnering mainstream attention and support. Experts in the area see widespread applications that span industries. However, in its current state NFTs are esoteric, convoluted and not widely understood. Adoption of this new technology will require the simplification of accessing NFT markets and cryptocurrency. Time will tell if this innovative new technology is riding the crypto-hype or pivotal moment that changes how we interact with digital media.
