The sales of NFTs on various online platforms have increasingly rolled over to the market value of millions of dollars. Similar to the narrative surrounding cryptocurrency, a sound understanding of NFTs is required to know how they work properly.
What Is An NFT?
An NFT (Non-Fungible Token) is a digital asset whose value is not expressive of the other. Just as how cryptocurrencies operate, NFTs are based on blockchain, which is a digital ledger where the transactions of these assets are kept.
NFT is comparatively new and intangible assets formed under digital artworks like images, GIFs, video clips, audio files, etc. In essence, the blockchain network enables the availability of these digital arts in the marketplace.
Following the explosion of NFTs into the global market with a large pool of interest, it is essential to access some consideration factors to investing in digital assets.
1. Changing Trends
NFTs have been able to make their way to the spotlight of cryptocurrency since its inception in 2016, and there is an apparent difficulty in affixing that the trend will be stable. However, there are speculations from consumers who believe the industry is still in its early phase with the growing demand for NFTs.
Today, an interest in investing in NFTs is favoured by people who have previously an investors in cryptocurrency and how it works. As it stands, the longevity of NFTs in the marketplace will be dependent on the large number of traditional art collectors who are interested in the incorporation of digital assets in their portfolios.
2. Global Warming
The activities of miners in the process of NFTs are a contributory factor to global warming, which consequently puts our environment at risk. In a similar approach to other cryptocurrencies like Bitcoin, the miners are saddled with the responsibility of solving complex mathematical puzzles, which would later be added to the blockchain as a new block. They also verify NFT transactions and add them to the blockchain.
A “proof of work” is often provided to the miner, a security framework designed to keep all transactions tamper-proof. Earning proof of work is a high price. Hence computers used to achieve this process are characterised by energy wastage.
It is important to note that every consumer buying or selling on the NFT marketplace is directly/indirectly responsible for the emission of obnoxious products. So it is the prerogative of everyone to decide if making potential monetary profits would be at the expense of the moral standard of doing away with global warming activities.
3. Digital Art Theft
Although the security of blockchains is almost impossible to be compromised with the leader’s tamper-proof, digital art theft is still a concern to address. This is because the likelihood of artwork impersonation can not be undermined, coupled with some bits of disruption blockchains and ledgers can be subjected to.
It could be recalled that artist Derek Laufman spoke out on the microblogging platform (Twitter) about the vulnerability of NFT buyers to being scammed. According to his claim, this impeding activity is against the appeal of the NFT marketplace, as the blockchains ought to verify artists’ works for authenticity and safety.
The dangers of blockchain and ledgers must be considered before investing in NFTs.
4. Electronic Ware
There is a need, to be honest on how NFTs can be susceptible to wearing temporally. It is noteworthy that physical art pieces are always prone to wear and tear through different events like cracks in the paint, direct radiation that blurs the art, distortion from art transportation, etc. It is to mitigate this value loss that millions of dollars are always spent on museums to create a favourable environment where these artworks can live in.
The narrative is different for NFTs as such protection is not in existence in the digital world. Susceptible to some unfriendly effects over, digital artworks can suffer wear from pixilation, fade images, skip contents, etc.
Therefore, the future implications of digital art wear must be considered when investing in NFTs. This translates to its value having a good worth at production as it might wear with time under pristine conditions.
Conclusion
It is no doubt that there is considerable interest in investing in NFTs. Still, it is essential to take to heart its vulnerability to scams, environmental cost through global warming, and susceptibility to wear as it goes on with time. Also, ensure the purchase and investment fit well into your life before committing to permanent transactions on its blockchain.
