Art

The downside of NFTs: The Technology’s Biggest Concerns

Today we are going to play devil’s advocate and we are going to talk about the dark side of NFTs, that is, those negative aspects that technology and this sector have. Although NFTs are a great discovery and can help us in the future in many areas, like everything in life, NFTs also have their negative side and things that can be improved to be even better, that’s why we have decided to be self-critical and we want to highlight those aspects that we don’t like so much about NFTs and that can be improved, so without further ado, let’s get to it!

Scams in the NFT sector

Unsurprisingly, let’s start with the most worrying of all, scams. The NFT market is riddled with scams. From plagiarism to collections, false lies, exit scams from the authors of a collection, etc… We have a post mentioning the most common scams in the NFT sector.

Scammers and hackers try to lure unsuspecting people through social chat apps, like Discord, using fake links that look like opportunities to buy NFTs. Not only in Discord do these things happen, but phishing attempts can also be made through direct messages from Twitter and Instagram.

Since everything is decentralized and everything is found on the blockchain, it is very easy for hackers to scam without having consequences for you. It is something that is complicated to solve and you have to work as much as possible on the security of the projects and on making people aware of the aspects that they should take into account before buying an NFT from a collection.

Pollution

Another negative aspect of NFTs is contamination. The vast majority of NFT collections belong to the Ethereum blockchain, which works with the Proof of Stake (PoS) algorithm. PoS requires the massive use of computers to verify transactions through multiple complex calculations for each transaction.

Ethereum uses 48.14 kWh per transaction, which alone requires more computational power than any other average task. Extensive use of computing power requires a lot of electricity which, in turn, requires a lot of fossil fuels to be burned, leading to pollution.

The above process shows how energy intensive the process of simply verifying transactions is. NFTs are used almost everywhere in the world, which means that hundreds of thousands of transactions take place every minute that passes. Yes, it is true that if we compare what contaminates cryptocurrency mining and transactions with what can contaminate gold mining or the banking system, it has absolutely nothing to do with it, since it is much less, but it still has to be taken into account. bill.

The vast majority of NFT Collections will die

Is a reality. In the NFT world, there are many collections that promise many benefits and create great communities for life. The point is that many of them will not be able to achieve it, since, for one reason or another, people will only keep the collections that show that they are really worth it. Let’s say that we are currently in a time of “ bubble ” and sooner or later it will end up bursting, or so we believe. This does not mean that NFTs are going to disappear, far from it, but only those collections that show that they have potential will be the ones that end up being developed in the future.

The volatility

One of the great negative points of NFTs is their high volatility. The crypto market itself already has high volatility compared to the stock market, but in the NFT market, the volatility is even higher. Just as you can make huge amounts of money if a project blows up, the same thing can happen in reverse. If a project loses credibility overnight due to some events, the floor price can plummet, or, for example, if the owners of a collection decide to do Rug Pull (which basically is to abandon a project and walk away with the dough ), the NFTs in the collection become meaningless, so they immediately lose all value, causing people to sell them for any price to get rid of them.

Copyright Infractions (Theft from Artists)

Another very frequent problem that has arisen due to the rise of NFTs is copyright infringement, that is, stealing their designs/works from artists, brands, and organizations to upload them to an NFT marketplace. By uploading an NFT to a blockchain, the author of said NFT is registered, so there is a legal vacuum and small artists end up being the most affected since they cannot prove that they are really the owners. In the case of brands, it seems that they have it easier due to their power since there have already been complaints from big brands such as Nike against StockX for using their brand to sell NFTs.

Money Laundering

NFTs share this point with conventional art. It is being discovered that there are people who use this technology to launder money that comes from the world of drugs, arms trafficking, and a long list of illegal sales. Many of those who are dedicated to this world, have seen a good game to buy NFTs to launder capital and then sell it, since as the transactions are carried out in the blockchain, the banks and the state have no way of knowing where that money comes from, and then when it comes to selling the NFT, the money launderer can say that he has made that money by selling and trading NFTs. Something similar happens in the world of conventional art since criminals often launder money by buying and selling important paintings that are unlikely to lose their value.

NFT Games (Play-to-Earn)

Finally, we want to talk about NFT games, also known as Play-to-earn. You will know that we are somewhat skeptical about this, since the vast majority of NFT games that are released come with the sole purpose of generating money at any cost, which leads to games that are unpolished, uninteresting, and that people play alone. to earn money and not for fun. We think that here this aspect can be greatly improved and greater depth can be achieved in the development of these video games and that the purpose is not solely and exclusively to earn money, because if it does not lose the grace of what a video game is, which is entertainment. . On the other hand, it can be said that the vast majority of these games stay afloat when new users join. On a recurring basis, there comes a time when the number of new players decreases and the profitability offered by this type of game is much lower. If an improved reward system is made and makes sense for the player, we think that including NFTs in some video games could be great.

Despite dedicating ourselves to the world of NFTs, we have decided to make this post because we believe that we must be self-critical and we have to mention those negative aspects that the sector has and that we think can be improved so that this technology is better and better and impacts the world in a positive way.

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button