Image source: https://bernardmarr.com/what-are-nfts-an-easy-explanation-for-anyone/
Although I have been hearing about NFTs for the last few years, I still don’t quite understand how they work and why they have the value that they do. Although I learned about some cool examples of NFTs from the video lecture, it still didn’t clear up for me what the exact purpose of them is. I understand that they are assets that have unique identification codes, but I don’t think I see the purpose of them over assets that aren’t tokenized via blockchain. I’ve started to understand more about bitcoin over the last year, but I don’t see why NFTs were created instead of just using bitcoin. Bitcoin is interchangeable, and NFTs are not, but it seems to me that Bitcoin would be more sensible.
Cons
Purchasing an NFT seems like an investment, but I am concerned about the investment losing value over time. They were extremely trendy a few years ago, but I haven’t heard them mentioned in months or even a year. For the people who spend thousands or millions of dollars on an NFT, I don’t think it would make sense to hold onto them for years as an investment. They grew extremely popular quickly, but they are becoming less trendy and practical to hold as a long-term investment. I also think that there is a higher risk of fraud with NFTs. I don’t understand how you can prove that a digital asset is worth the asking price. However, I do think that the identification codes are helpful. Being able to see the transaction history would be helpful in determining value, but the initial purchase of an NFT is what concerns me.
One of the primary things I don’t understand about NFTs is that they are mostly intangible. People spend large amounts of money to purchase digital art, but they have no way to display it. People can easily copy and paste the art to use for their own personal use, even though they don’t own the rights. I also don’t think that digital art has the same value as physical art, especially as time passes. I did like the example of the Coach NFTs that allowed the owners to receive a custom bag. Maybe I’m just a material person, but I don’t see how a digital form of assets will maintain or increase its value over time. There were also a few examples of NFTs for fashion that allowed the owner to wear the items in the Metaverse. Maybe it’s not as relevant to my age group, but I don’t think the Metaverse has gained as much popularity as it was expected to. Along with NFTs, I haven’t heard people talking about the Metaverse in about a year. Investing money into NFTs that allow you to wear trendy clothing or accessories in the Metaverse, does not seem like it would be worth it.
Pros
One of the possibilities for NFTs that did intrigue me was the clubs, such as the Bored Ape Yacht Club. Although I don’t see how joining a club like this would be beneficial for me personally, I think that this is a cool idea for those looking for a community to discuss NFTs and similar technologies. This brings a social aspect to NFTs and I think this has more value than a digital asset, such as art or virtual fashion. I also think the element of engagement that people can have with artists is also interesting. Musicians or artists are able to produce their art and interact with their fans easily. People love having interactions with celebrities that interest them, and NFTs can add another element to these interactions.
Another pro of NFTs that I appreciate is the ease of transactions and the use of the free market. Middlemen are not needed when selling an NFT, and it is convenient to be able to freely buy and sell these digital assets without restrictions. The unique identification codes of NFTs allow their transaction history to be accessed, which also seems beneficial to the elimination of fraud in buying and selling. In the lecture video, it is mentioned that NFTs are a completely free market, which is also appealing. Having the freedom to sell NFTs to anyone in the world is a factor that makes NFTs good for an entrepreneurial society.
Although NFTs were very popular a year ago, I think they are becoming less desired and relevant in pop culture, like they used to be. I think that the technology and the freedom of buying and selling are very interesting, but I wonder about the longevity of NFTs. Are there other uses for NFTs besides purchasing digital assets? Is there another purpose that they can fulfill in society that would keep them relevant in the future? From what I have seen, I don’t think that they will be as relevant or useful as they were intended. Maybe there is another way that NFT technology can be used, such as for storing confidential information. This could be a form of purchasing assets that disappears or it could become hugely popular again in the future, I really can’t tell. However, at the moment, I won’t be putting my money into NFTs as I don’t see a definitive purpose for them.