NFTs Are Designed For Much More
Problems and the way forward for NFTs
What will you learn if you stop people on the street and inquire about non-fungible tokens (NFT)? Maybe something about Twitter profile images and outrageous rates for ape cartoons.
mumbling about cryptocurrencies out of the blue.
a few well-known faces.”Bubble” is the term.
In conclusion, a story of frivolity, glitz, and unreasonable ecstasy. Which isn’t wholly off-base. NFTs can and will signify much more, though. In fact, they already do if you look under the surface. Many are doubting the viability of NFTs as a technology and a cultural movement as their market value and popularity have fallen. Were these only speculative investments that would vanish once the NFT market bubble burst? What use, after all, do NFTs serve?
Utility, meanwhile, isn’t really the objective of aesthetic or valuable NFTs nowadays. In the end, it isn’t the standard by which we assess the importance of tangible works of art by Rembrandt or Damien Hirst, musical compositions by Mozart or The Beatles, or opulent items like Fabergé eggs or Birkin bags. Although few NFT artists may be compared to Rembrandt, at least one of them is Damien Hirst.
The idea of NFTs as a new medium for creating collectibles and art is crucial. Technology advancements over the years, such as the invention of oil paints, the electric guitar, and photography, have permanently altered how art is created and displayed. NFTs are a component of this extensive historical arc. A thriving community is exploring its creative potential through art created by machine learning, art that evolves as its surroundings do, community-driven artistic output, and much more.
NFTs can also have utility, and this utility will grow with time. NFTs, for instance, can aid in resolving important issues in conventional art markets. Provenance and royalties are two of them.
Problems and the way forward
Today’s NFT marketplaces are plagued with issues. Illegal copying is widespread. The same goes for wash trading, which creates false trade activity to stimulate sales. It can be difficult to stop the deterioration of tangible pieces of art, like sharks preserved in formaldehyde. The same issue exists in digital form with NFTs. The NFT ecosystem’s archival integrity might end up being a ticking time bomb because many NFTs include information that is kept in paid cloud services and could vanish if payment falls behind.
The invasion of bots is yet another significant issue. NFTs are commonly sold in drops, i.e., in the form of a collection of thousands of NFTs given at once for sale. Schemers frequently use bots to acquire NFTs during a popular dip in order to resale them for a profit afterwards. It has been difficult to impose a fair cap on purchases made by each consumer.
Thankfully, blockchain systems are developing in a way that will allow people to offer unique identities and confirm facts about themselves while maintaining their anonymity. For instance, my Cornell Tech group raffled off a digital artist’s NFT. We set up the raffle so that each participant could only get one raffle ticket (for free) by utilizing privacy-preserving oracle technology to show us they had a Social Security number.
The decentralized identification notion is a wide one that the blockchain community is aiming toward. In essence, this is a user-controlled credential system that protects privacy. Imagine having a digital copy of your driver’s license that you could use to prove some facts about yourself online, such as that you live in California but hide your birthday. The implementation of purchase limitations and other features by NFT markets will be made possible via a decentralized identification system. One NFT artist, for instance, informed my group that he would want to be able to automatically give discounts to other artists. There is currently no effective method to accomplish this, but it will be feasible in a decentralized identification system that certifies artists.
A robust identity management system can also aid in ensuring that consumers purchase NFTs from authentic producers rather than fraudsters.
NFT markets may eventually have a “policy engine” that gives producers the ability to control the lifespan of their works in a wide range of ways. They may impose terms on sales and resales. Their NFTs may be made dynamic. Fans may receive discounts and incentives from them. Similar to how galleries work to develop devotees in conventional art markets, they may do the same in the realm of NFTs. The fun-eroding “speculative pricing and investment mentality” that prompted the Microsoft (MSFT)-owned video game Minecraft to ban NFTs earlier this year is perhaps another issue that a policy engine can help with.
Looking towards the horizon: More than digital art
The human population is moving online and becoming more and more engrossed in visual and digital experiences known as the metaverse. Young adults are letting go of their material goods.
Many technologists think that NFTs will eventually come to stand in for things in the metaverse, including everything from land parcels to magical swords. They will influence how we interact with the metaverse, whatever form it finally takes. The recent integration of NFTs into Instagram by Facebook, which just changed its name to Meta (META) to reflect the rise of the metaverse, is not a coincidence.
NFTs may be used for a wide range of other things, including the depiction of real-world items. An apartment was sold as an NFT, which may be a sign of things to come in the real estate market. They are used or issued by well-known businesses like Nike (NKE), TIME Magazine, and Tiffany & Co. (TIF), and they also provide a platform for an event ticketing system that is richer in experience elements.
Don’t be misled. NFTs have a lot of promise, but they are not a perfect force for good. Nobody should defend the excesses they’ve encouraged, including new crimes like artist identity theft as well as fraudulent sales like those seen in some cryptocurrency exchanges. These factors make technical tools like those discussed here and community-based consumer protection measures crucial.
In any event, NFTs will keep developing in intriguing and potent new ways. They, or something like, are a cultural force that will never go away, whether you like it or not.