Here’s what you should know before jumping into NFTs
The crypto-space has suddenly seen a wave of interest rush into the sphere of non-fungible tokens [NFTs]. NFTs that transform digital work of arts and other collectibles into one-of-a-kind, verifiable assets that can be traded on the blockchain have already seen many artists make use of it. However, despite paving the way for a novel financial avenue for artists, there remain some underlying problems.
These were highlighted recently by popular investment strategist Lyn Alden during a recent edition of Peter McCormack’s podcast. She said,
“One is, the problem with digital art is you can get an identical version rather than just a similar copy. For example, if someone has a Van Gogh, another person can get a very good replica of Van Gogh. But it is not identical down to the brush stroke. It is very similar to the untrained eye, but it is not an identical product.”
According to Alden, the problem with NFTs is that one can have an identical JPEG version of an art piece, but not necessarily a signed version. Here, another problem that can rear its head is the sustainability of the blockchain the NFT is based upon, she said.
Channeling Picasso, the strategist went on to say that users may invest millions to buy an NFT based on a certain blockchain, something that may not exist in the next 50 years. This is a real problem, especially given the growing popularity of crypto scams and the huge number of ‘weak projects’ entering the race.
“Based on how much you’re paying for, you better hope that blockchain continues to be a leader in that field. It might not have to be the biggest blockchain, it might be, say, a utility blockchain, but it better not get displaced by competitors over the next 10-20 years, otherwise, it just takes away from the value of that product.”
While NFT products are being looked at as double-edged swords, there have been artists who are reaping benefits from the same. However, we might have to wait for the crypto-space to evolve a little more to solve these problems highlighted by Alden and for the market to even gain a level of maturity to invest in a specific blockchain.