The sales of NFTs on various online platforms have increasingly rolled over to the market value of millions of dollars. Similar to the narrative surrounding cryptocurrency, a lucid understanding of NFTs are required to properly know how they work.
What Is An NFT?
An NFT (Non-Fungible Token) is a digital asset whose value is not expressive of the other. Just as how cryptocurrencies operate, NFTs are based on blockchain, which is a digital ledger where the transactions of these assets are kept.
NFTS is comparatively new and intangible assets that are formed under digital artworks like images, GIFs, video clips, audio files, etc. In essence, it is the blockchain network that enables the availability of these digital arts in the marketplace.
Following the explosion of NFTs into the global market with a large pool of interest, it is important to access some considering factors to investing in digital assets.
1. Changing Trends
NFTs have been able to make their way to the spotlight of cryptocurrency since its inception in 2016 and there is an apparent difficulty in affixing that the trend will be stable. However, there are speculations from the consumers who believe the industry is still at its early phase with the growing demand for NFTs.
Today, an interest in investing in NFTs is favored by people who have previously an investors in cryptocurrency and how it works. As it stands, the longevity of NFTs in the marketplace will be dependent on the large number of traditional art collectors who are interested in the incorporation of digital assets in their portfolios.
2. Global Warming
The activities of miners in the process of NFTs are a contributory factor to global warming, which consequently puts our environment at risk. In a similar process to other cryptocurrencies like Bitcoin, the miners are saddled with the responsibility of solving complex mathematical puzzles which would later be added to the blockchain as a new block. They also verify NFT transactions and add them to the blockchain.
A “proof of work” is often provided to the miner, which is a security framework designed to keep all transactions tamper-proof. Earning the proof of work is of a high price, hence computers used to achieve this process are characterized by energy wastage.
It is important to note that every consumer buying or selling on the NFT marketplace is directly/indirectly responsible for the emission of obnoxious products. So it is at the prerogative of everyone to decide if making potential monetary profits would be at the expense of the moral standard of doing away with global warming activities.
3. Digital Art Theft
Although the security of blockchains is almost impossible to be compromised with the leaders tamper-proof, digital art theft is still a concern to address. This is because the likelihood of artwork impersonation can not be undermined coupled with some bits of disruption blockchains and ledgers can be subjected to.
It could be recalled that artist Derek Laufman spoke out on the microblogging platform (Twitter) about the vulnerability of NFT buyers to being scammed. According to his claim, this impeding activity is totally against the appeal of the NFT marketplace as the blockchains ought to verify artists’ works for authenticity and safety.
Given this, the dangers of blockchain and ledgers must be considered before investing in NFTs.
4. Electronic Ware
There is a need to also be real on how NFTs can be susceptible to wearing temporally. It is noteworthy that physical pieces of art are always prone to wear and tear through different events like cracks in the paint, direct radiation that blurs the art, distortion from art transportation, etc. It is to mitigate this value loss that millions of dollars are always spent on museums to create a favorable environment where these artworks can live in.
The narrative is different for NFTs as such protection is not in existence in the digital world. Susceptible to some unfriendly effects over, digital artworks can suffer wear from pixilation, fade images, skip contents, etc.
Therefore, the future implications of digital art wear must be considered when investing in NFTs. This translates to its value having a good worth at the time of production as it might wear with time under pristine conditions.
It is no doubt that there is huge interest in investing in NFTs, but it is important to take to heart its vulnerability to scam, environmental cost through global warming, and susceptibility to wear as it goes on with time. Also, ensure the purchase and investment fit well into your life before your commitment to permanent transactions on its blockchain.