The opinions about the viability of NFT marketplaces have been polarized so far. Some people claim that NFTs have no future; others state that NFTs are the future.
Both sides exaggerate, and both sides provide credible arguments. Yet, the discussions get chaotic and intense, leaving potential investors unsure of the future of NFTs and whether they want to be a part of that future.
For that reason, evaluating the benefits of investing in NFTs should start with looking at the NFT technology from a critical and realistic perspective—taking into account all the flaws and benefits and not letting myths cloud your judgment.
This article will break down the most common concerns regarding NFT, separating NFT myths from facts.
NFT myths that prevent investors from seeing the bigger picture
Before we get to the real NFT flaws, we'll outline and debunk the most commonly mentioned NFT myths that paint a rather grim (and unrealistic) picture of the NFT future.
NFT Myth # 1: NFTs won’t last long
One of the most common anti-NFT arguments is that NFTs are a novelty that will fade as soon as the hype settles down. People who use that argument assume that NFTs first emerged in 2021—but it was merely when NFT awareness reached its peak. The truth is: NFTs have been around for at least 9 years.
The first NFT "Quantum" was introduced to the world by Kevin McCoy in 2014 and sold at Sotheby's auction for $1.4 million in 2021. So, all that time, NFTs have been evolving from an initial 'Colored coins’ concept in 2012 to unique digital collectibles with game-changing potential.
NFT Myth # 2: NFTs don’t have long-term value
Another point that NFT naysayers bring up is that investing in NFT marketplace development isn't going to deliver consistent ROI—one only can gain so much by charging digital artists fees for selling images from their platform. Even if NFTs don't fade out of relevance, the digital art industry will become competitive quickly, making it hard for businesses to compensate for the money and time they put into NFT marketplace development.
While it's true that NFT markets are becoming increasingly competitive, the entire argument is based on a false assumption that the NFT marketplace works for digital art and media only, i.e. offering limited opportunities to investors. The reality is a bit different. Nowadays, NFTs have become applicable to many purposes and are on their way to becoming a part of everyday processes.
Potentially, NFTs can facilitate end-to-end tracking of products and documents and monitor their progress across the supply chain, allowing for more transparent supply chain management.
Luxury brands are currently exploring NFTs as a way for buyers to ensure the authenticity of a product they buy online. This approach allows for preventing item forgery and even tracking stolen products.
Musicians can tokenize their albums and songs, create rewards for encouraging and motivating fan communities, and manage their royalties more efficiently (share royalties with song creators or producers).
NFT Myth # 3: NFTs aren’t trustworthy
The final argument against NFTs plays into investors' apprehension of ending up associated with scams or flawed projects. To people who haven't been monitoring digital trends, the spike in the popularity of NFTs was sudden and unexpected, making them suspicious about the legitimacy of non-fungible tokens and all related projects. After all, how is it legal to sell a Twitter post for $48 million?
However, since NFTs operate on the same transparent principles as all blockchain-based products, the chances of a mysterious corporation artificially fueling the NFT hype are next to zero. Like any innovative product, NFTs run on trust. Their rapid growth in 2021 results from their initial slow progress or accumulating user trust, meeting expectations, and building value. Had NFTs failed to deliver or proved to be an unreliable asset, their journey would have ended back in 2012.
NFTs myths that are too good to be true
After debunking the myths, it may seem that NFTs are the perfect innovation that requires no precautions—which is not true. Getting too excited about the opportunities brought by NFTs is as dangerous as missing out on them due to NFT-related fears and concerns. So, next, we're going to address the overly optimistic views on NFTs.
NFT Myth # 1: NFTs are completely safe
NFT advocates laud NFTs as the safest way to sell art and property, emphasizing transparent transactions, safety of private data, and immutable data. While all these components do improve cybersecurity, it's important to remember that no technology is completely safe if it doesn’t evolve or adopt new measures. Scammers and hackers search for loopholes and exploits relentlessly, prompting companies and developers to work on solutions to counter them. The issue is further complicated by the fact that in addition to exploiting technology vulnerabilities, cybercriminals also manipulate human vulnerabilities.
For example, here’s one of the most recent NFT-related scams: a random buyer contacts a digital artist on Instagram, offering to buy their works for a large sum of money, but only if the artist agrees to sell their pieces as NFTs on a specific platform (usually, a month-old domain without any data on the owner) and pay a $300 gas fee. Naturally, the "buyer" disappears from the radar once the "fee" is paid. This scam involves no hacks, no data theft, or twisting of the NFT structure—it's based on peoples' unfamiliarity with NFTs and how they work. For that reason, NFT safety is a constant WIP that involves introducing new security measures and educating users on the dos and don'ts of selling NFTs.
NFT Myth # 2: NFTs are the ultimate way to profit from intellectual property
NFTs indeed allow digital artists to sell their works like painters sell their paintings—they can attend marketplaces, put up their works for bidding, and make names for themselves. However, it's way too early to say that NFTs are the perfect solution. There are still many gaps to fill in and concerns to address.
For example, just like a physical painting, a digital work can get stolen before it gets minted into NFT by its real creator and then sold as an NFT by an art thief. Or, similar to physical works of art, NFTs can be resold by buyers on another NFT marketplace, with original artists not profiting from the deal—they will still be indicated as creators, but there will be no royalties attached.
Solving such issues and improving copyright protection requires introducing more features and functions to NFT marketplaces and smart contracts—which is why we keep observing new NFT marketplace platforms that aim to address those needs to gain a competitive advantage.
NFT Myth # 3: NFTs don’t cost creators anything
Many NFT evangelists paint the future of NFTs as the era where anyone can benefit from anything without paying a cent. That assumption is rather harmful and can lead to many disenchanted users as it doesn't take into account trading and gas optimization fees, which can range depending on the NFT marketplace platform of choice. Although such fees are an expected part of any marketplace, they can still become a reason for users' frustration.
It's important to remember that it's generally impossible to gain profit without investment—whether it's time, effort, or budget. This principle works for NFTs marketplaces as well. Even though many new NFT platforms offer more flexible trading and gas optimization policies to attract new users, the fees won't go away completely.
The truth about the future of NFTs
In general, the growth of NFT criticism is a good sign. The hype is gone, and people are looking at technology without bias, exposing its flaws and areas for improvement. It's a natural process for any innovation before it is adopted for wide-scale use.
So, what can be said about NFTs after we separate the wheat from the chaff?
- NFTs are still young
Compared to all other technologies, NFTs have a long way to go. They made quite an impact in 2021, allowing millions of people to take a figurative test drive and express their opinions. That means this technology will continue to grow and incorporate all suggestions into future NFT versions before it's considered a fully developed product. This includes both technical aspects, such as designing more carbon-neutral blockchain platforms for NFT exchange and solving memory storage issues, and social perception of NFTs (instilling ethical regulations and designing NFT use guidelines).
- NFTs need more regulations
Due to their innovative nature and intermediary-free transactions, the process of buying and selling NFTs remains rather volatile compared to more traditional methods of exchanging property ownership. While trusted NFT marketplaces offer reliable deals via smart contracts, many processes still need additional regulations and measures. Therefore, NFT marketplace owners continue their work on compliance solutions that would provide buyers and sellers with more safety and transparency.
Yet, this process isn't one-sided and requires detailed feedback from NFT creators and users who want a better experience. When users are clear and loud about their experience with NFTs and participate in exposing scammers, they help to reduce the number of scams and illegal activities in the future of NFTs.
- NFTs are a tool, first and foremost
Tools can't be good or bad. They simply exist for people to use—and how people use them defines the final results. Accordingly, NFTs don't bring profit just by existing. They help investors and companies benefit when they're used for solving particular tasks or accomplishing particular goals. For example, NFTs can generally be used as digital proof of property ownership, which makes them applicable to more than just digital art.
In the future of NFTs, we're guaranteed to see NFTs used in selling real estate and community building. In addition to these directions, there is potential for other uses of NFTs. However, discovering those use cases means learning how NFTs work as an instrument.
How NFTs are building the internet of the future
One thing about NFTs is certain: they have a place in our future. More and more of our routine activities are now available in digital spaces. Buying items or ordering services online, getting health consultations via messengers and virtual assistants—all of this is part of a natural routine right now. The change doesn't stop there—companies and solo entrepreneurs are harnessing disruptive technologies to become more efficient and discover new ways to efficiently sell their products…and NFTs will be a part of that process.
Despite their current flaws and imperfections, they offer too many benefits and opportunities to pass up—and the more credible and legitimate companies and investors engage in exploring and perfecting NFTs, the harder it be for criminals to exploit them. Approaching NFTs with the right, critical mindset and innovative ideas will help accelerate the future of better, faster, and more user-friendly NFTs.
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