Andrés-Sebastián Meléndez Muñoz
NFTs are the hot new thing, and for better or worse, they are here to stay. According to a social media poll I set up, 73% of people who participated said that it would have a negative effect on the art market, whether or not they could accurately say how. An NFT (Non Fungible Token) described in lay terms, is kind of like a data point or unit of data that represents an item or group of items as a single unit. It is a grouping of data that together makes up an individual item, or as they are now seen, a digital piece of art.
NFT’s are stored on a blockchain; which works like a ledger in that it stores the specific NFT or data point in a secure way that can have parts added but not removed. Imagine a blockchain like a kind of ladder where you can add to it, but not take away. If you were to attempt to take a away part of the ladder, it would stop working. Another way of thinking about it is as something to which you add layers. You can add all the layers you want, but if you try to remove any layers, then the entire thing loses the form. A blockchain works in a similar way, to secure the NFT’s, you can add to them but you can not take away from it, this is a way of securing the artwork, a way of proving authenticity.
These digital pieces of art are very different from “normal” art objects because they can be used to continuously generate income. An NFT can be something as simple as an image or a video clip, and selling it in a blockchain allows it to be claimed by a single owner. There are downsides though, like the environmental impact it has, or the fact that it takes a lot of money to mine them, this makes it hard for anyone other than the wealthiest of people to take part in this “art.” In the short period of time that NFTs have boomed, hackers have been trying to find ways to hack, and also reproduce them as well.
It does seem perhaps a little bit insulting that those who partake in creating NFTs should be able to elevate them to “high culture”status. As an artist and designer, it is a backhand to the classical definition of “artist”. Where is the originality? Or the elegance of the brushstroke? Or the rhythm of the notes? For centuries, artists have been underappreciated, but they have always held their heads high and with pride. NFTs take the individuality and creative hand out of what is considered art.
FAQs
Since most NFT trading activity used cryptocurrencies, the devaluation of these digital currencies meant that investors had less capital to invest in NFTs. The resulting liquidity crunch was a significant blow to the NFT market, which heavily relies on the health and stability of the broader crypto ecosystem.
Why do NFTs have a bad reputation? ›
There are downsides though, like the environmental impact it has, or the fact that it takes a lot of money to mine them, this makes it hard for anyone other than the wealthiest of people to take part in this “art.” In the short period of time that NFTs have boomed, hackers have been trying to find ways to hack, and ...
Why are people against NFT? ›
Many critics see NFTs as hyper-capitalist schemes to enrich speculators by wasting energy on hypothetical value. This opposes the decentralization ethos of web3. Meanwhile, supporters view NFTs as expanding digital property rights, creativity, and economic opportunity.
What is NFT art and why is it bad? ›
By creating a unique and non- interchangeable token for each work of art, artists might lose control over some aspects of their work. They also can't easily sell or trade their art, as there is no guarantee that another party will want the exact same token that the artist is selling.
Do NFTs actually harm the environment? ›
Because blockchains use energy, NFTs can contribute to greenhouse gas emissions and climate change through their production, exchange, and storage.
What is the controversy with NFT? ›
NFTs have been used as speculative investments and have drawn criticism for the energy cost and carbon footprint associated with some types of blockchain, as well as their use in art scams. The NFT market has also been compared to an economic bubble or a Ponzi scheme.
Why is NFT high risk? ›
The risk assessment explores how vulnerabilities associated with NFTs and NFT platforms may be exploited by illicit actors for money laundering, terrorist financing, and proliferation financing. The assessment finds that NFTs are highly susceptible to use in fraud and scams and are subject to theft.
Why not to invest in NFTs? ›
Key Takeaways. NFTs are blockchain representations of an asset. NFT investing is helpful for establishing a clear chain of ownership over an asset, but it still includes the possibility of counterfeiting, fraud, and money laundering. The asset tokenized by the NFT may be nonexistent, duplicated, or tainted.
Was NFT a flop? ›
Deals like that helped the NFT market balloon to more than $25 billion last year. But almost as quickly as it rose, the NFT market crashed. And it wasn't your typical downturn: The bottom quite literally fell out of the NFT market. “I still like them, but they lost their value … they're worthless now,” Heise said.
Why don't artists like NFTs? ›
NFTs are tied to cryptocurrency and blockchain. They are often algorithmically generated. Buying an NFT is not always supporting the original artist. Shell companies can buy art and use it purely as a financial asset to shield money from tax bills or even launder it.
Flash forward a year, and the vast majority of NFTs are now virtually worthless, according to a report by dappGambl.
Why are gamers against NFT? ›
Because most of them are unfinished products. Every whitepaper you will find about most of these NFT games comprises highly complicated Jargon and a robust roadmap that they probably never would finish, and they didn't. The crypto space is full of projects that didn't see the light of day.
What are the cons of NFTs? ›
Disadvantages of NFTs
Prices of NFTs can be volatile, leading to fluctuations in value. Additionally, the illiquidity of the market makes it challenging to participate in the NFT market. Another disadvantage is the potential for fraud and scams. The asset tokenized by the NFT may be nonexistent, duplicated, or tainted.
Why are people obsessed with NFT? ›
Everyone has their own reason for wanting to own an NFT, but there are two main motives: investment and pleasure. Many people buy NFTs to make money, either by flipping them or as a long-term investment.
What are the concerns with NFTs? ›
NFT Risks.
It should be remembered that not all platforms selling NFT's verify the identity of the seller. Platforms face difficulties when checking that the seller is the original creator of the art, as anyone can access the digital marketplace and claim to be the creator of the digital asset for sale.
What is a drawback of NFTs? ›
Disadvantages of NFTs
Prices of NFTs can be volatile, leading to fluctuations in value. Additionally, the illiquidity of the market makes it challenging to participate in the NFT market. Another disadvantage is the potential for fraud and scams. The asset tokenized by the NFT may be nonexistent, duplicated, or tainted.
What are the ethical issues of NFT? ›
Other ethical issues: including those of well-being, discrimination, fairness, intellectual property rights, privacy, quality of work, competence of those involved, legal issues, the ability to give and receive critical review, lack of education for users, personal gain over public good, security, maintenance and end- ...
Why are NFTs banned? ›
This is criminalized under 18 U.S.C. § 1956. Money laundering using NFTs involves the illicit use of these digital assets to disguise the origins of illegally obtained funds. In this context, individuals create a fake record of sales on the blockchain by selling NFTs to themselves using different accounts.
