And why you shouldn’t jump in headfirst
Non-fungible Tokens, or NFTs, have become something of a buzz word in the news lately. Thankfully, understanding what they are, what they mean, and what might come from them in the future is actually very simple.
Originally theorized sometime around 2012, a NFT was simply thought of as a unique coin on a blockchain that could symbolize real world assets and, due to the nature of blockchain, would also thereby prove real world ownership. The turning point for NFTs came around 2018 when artists started picking them up and exploring them as a way to expand markets to sell their digital creations; mix in a few other newsworthy items in the financial markets between 2018 and today, and NFTs were bound to reach the spotlight too.
NFTs hold a speculative future as a critical part of digital life. They have all the important requirements to solve one of the key problems in the internet: ownership. With a NFT, there’s a decentralized source of truth to who owns what and that truth is (at least conceptually) impossible to be manipulated. Are they really worth it though?
NFTs are only a digital claim of ownership and, thereby, suffer almost all of the same problems as ownership in the physical space. Having a digital token claiming I own the Mona Lisa, for example, is only good as long as my digital wallet isn’t lost or compromised. Losing my wallet is like losing the actual receipt of purchase; having my account compromised is like having my signature forged on a bill of sale that declares I sold it to someone else. Either way, what I used to own is no longer really mine if that happens.
Additionally, for all but the reasonably tech savvy, maintaining that ownership safely usually requires trusting a third party company. I only need to point to the recent Log4j vulnerability that kept the tech community very busy last December as a sign of how easy and fast a company can be compromised and anything within that could be lost or stolen forever.
NFTs also are struggling to find a reasonable foothold. As they begin to rise in popularity, they are building in a space that never had a real system of ownership. Plagiarized NFTs are severely harming well established online communities. One piece, sold by someone only known as Pranksy, claimed to be the famous Banksy artist and attempted to sell a piece of artwork for well over $300,000. While that story ended well and the money was returned after the lie was discovered, smaller artists in various sites aren’t always so lucky. Some artists have reported to quit online art altogether and many others are feeling the pain of fraudulent claims.
All of this, of course, is also meaningless if the blockchain that NFTs rely on fails. While most NFTs are built on established chains like Bitcoin or Ethereum, blockchains at large have real world challenges around power consumption, law, and governance that they have to get through to keep going. Personally, I am not sure blockchain’s future is as bright as some may think.
[C. Credence, Server Architect by day and Church Sound Engineer on the weekends, lends a helping hand to many in need of his expertise.]
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