Feud of the century?
If you’ve been aimlessly scrolling through popular internet forums, like Twitter or Reddit, chances are you’ve stumbled upon the frequent and heated debates surrounding non-fungible tokens (NFTs). These debates, typically, question whether NFTs are the best thing to happen to the online art community or the beginnings of an environmentally-detrimental hellscape. Needless to say, passions run high, and both camps have picked their hills and are willing to die on them.
Here are the pros and cons that inspire such aggressively polarized opinions.
- Royalty clauses—The creator of an NFT can add a royalty clause into the token that allows the creator to earn a profit off of the token long after they’ve sold it. The creator of the token gets a predetermined percentage of the resale profit. That way, if the token becomes really popular and sees an increase in value, the original creator also continues to benefit from it.
- One does not need extensive knowledge of crypto-assets or tech-related skill sets to mint or sell NFTs.
- The lack of middlemen, like art galleries and agents, lets artists keep all of the profit made from the sale of their work.
- The creator has the freedom to sell their work internationally via the digital medium, which is not often possible with traditional art. It increases the possibility of the creator making a sale and earning a relatively stable income.
- Users can buy, sell and trade internationally without many legal restrictions, as NFTs are decentralized crypto assets not controlled by any governing bodies (yet).
- The transactions are conducted through blockchain technology, which can help ward against fraud through complete transparency in the network.
- NFTs have opened up a whole new market for collectibles, enhancing fan experience with digital trading cards, photocards, GIFs, songs and related digital art being sold.
- NFT games can help players earn cryptocurrency. NFT in-game items can only be obtained through game progress.
- NFTs are unique and give the buyer the opportunity of owning something that is one of a kind.
So far so good, right? But wait! There’s the other side of the argument.
- Theft and piracy—The blockchain hosting the NFT itself cannot verify if the minted token is made from original content. This allows individuals to steal the work of lesser-known or even recently deceased artists and make a profit from minting tokens of the stolen artwork. The lack of regulation in NFT marketplaces makes it difficult for erring NFTs to be taken down and for artists to receive their fair recompense.
- The concept of rarity and uniqueness around NFTs is ambiguous, as multiple tokens can be minted from the same artwork. Each token may be digitally unique, but it is practically indistinguishable from another copy of the original artwork that anyone can view for free.
- Partial ownership—Ownership of the NFT does not grant the buyer ownership of the original artwork, but only the token minted from it. The ownership of the token does not give the buyer full rights over the artwork like the purchase of traditional art would.
- They hold no tangible value, as they have no physical form, which, mixed with partial ownership, makes their function questionable.
- The decentralized nature of crypto assets renders them difficult to regulate and tax, making them an ideal tool for tax evasion.
- NFT minting, as well as any crypto transaction, takes a massive amount of energy to create. The token minted and purchased may be virtual, but the carbon emissions it adds to the environment are very real. This makes NFTs a significant environmental hazard in the long term.
Our two cents
NFTs, and crypto assets as a whole, are fascinating technologies but still in their infancy. Many believe that decentralized assets may be the beginning of a world of truly free trade, but it seems like a legal and ecologically distant future right now. While NFTs may have contributed to the short-term prosperity of many creators, they may not currently be viable as a long-term phenomenon. One of the major concerns revolves around making the technology eco-friendly. Till the time such developments are made, along with more streamlined guidelines around the ethical use of NFTs, it is not a phenomenon that can be wholeheartedly endorsed despite its brilliance.
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