5 Reasons NFT Is A Waste Of Time
NFTs is a term gaining a lot of popularity in the news lately, but not everyone understands its basics. Many would say NFT is short for Non-Fungible Tokens. This acronym does not help us understand what NFT means in particular. However, one generally acceptable description is that non-fungible tokens are a unit of data stored in blockchain technology. This technology makes it possible for cryptocurrencies to be exchanged against digital objects through online communities built to facilitate the sales and purchase of these digital pieces of art in what seems like a real market.
Many people across the world are beginning to develop an interest in this digital data string that enables people to originally own a specific object that exists in the virtual world. However, does it not seem ridiculous that people are buying digital items for huge amounts of money? Does it not seem strange that people are spending millions of dollars on JPEGs, MP3s, MP4s, etc? While some have claimed to have benefited hugely from this technology, some have also claimed to have been scammed. This has made them refer to it as a waste of resources and efforts. In this article, I will discuss reasons why investing in NFTs is a waste of time.
NFT In A Nutshell
While the term NFTs has no specific definition, Investopedia describes it as “cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other.” According to experts, NFTs are different from cryptocurrencies because they cannot be traded or bartered at equivalency. While cryptocurrencies and other fungible tokens are identical to each other and can be used as a form of equivalent exchange, non-fungible tokens cannot. So basically, they are a unique unit of data running on blockchain technology that allows digital items such as videos, songs, or images to become logged and validated on cryptocurrency blockchains.
As digital assets that act in place of real-world assets, NFTs are sold and purchased on NFT platforms, usually with cryptocurrencies such as Ethereum and Bitcoin, and they are normally encrypted with the same technology as cryptos. NFTs are becoming an everyday thing now because more people are beginning to use them as a way to purchase and sell digital artwork in a way that makes them scarce. This makes it different from the usual sales of digital objects which are usually much in supply. While other digital items make buyers own a copy of the item, NFTs allow buyers own the original item. With this, buyers own “digital bragging rights” over the digital item.
Why You Should Avoid NFT
As a unit of data stored in blockchain technology, NFTs can grant users access to exclusive digital content. However, the hype around this technology seems temporary and most projects associated with them are considered fraudulent. Moreover, some investors and experts have raised doubts concerning the legitimacy and control of non-fungible tokens. Here are some key reasons why you should avoid NFT.
1. Exact Value of NFT is Difficult to Predict
NFT can be interesting and confusing at the same time. Both experts and newbies find it difficult to predict its exact value. Buying a digital asset comes with purchasing its history. However, despite owning the original token, people can still find copies of the digital asset online. An asset that is not under the buyer’s control is difficult to attach value to. NFTs seem to just have buyers who are holding a digital object that has no exact value.
2. Environmental Concerns
NFT experts and investors are more concerned about the environment of NFTs lately. This is because any form of data entered into the Ethereum blockchain takes significant computing and energy. This makes the widespread adoption of NFTs to be environmentally unfriendly. Therefore, investing in the adoption of NFTs and other digital assets might just be equal to promoting an unsustainable environment.
3. Copyright Issues
The fact that NFT is a digital entity doesn’t mean it can be controlled. The buyer only has a token of authenticity. Copies of whatever digital asset has been sold can be found, uploaded, or downloaded anywhere online. It is associated with copyright issues and can be copied and pasted several times anywhere online. Therefore, buying NFTs means exposing oneself to piracy and other ownership or copyright issues.
4. Security and Privacy
Despite the security of blockchain technology, NFTs are still susceptible to cyberattacks. Several exchanges on NFT platforms have vulnerabilities that hackers can exploit. Hackers can steal NFTs the same way crypto is being stolen from digital wallets. Different cases of cyber breaches have been reported in the news concerning stolen NFTs. Therefore, it’s risky to invest in what people can steal quite easily. It doesn’t speak well of a technology that is forecast to be the future of art collection.
5. Uncertainty
People who have invested in NFTs believe that what they hold are digital investments. Several individuals and businesses have bought and sold digital artworks for millions of dollars, with the mindset that they are investing. Of course, many NFTs have been sold and have increased in value. However, it is preposterous to invest in something whose future is uncertain. With the unsustainability of this technology, a potential collapse in the future is very plausible.
The Future of Assets
The future of assets is unpredictable due to the continuous evolution of technology. People are indeed going from buying real-world assets to buying digital assets, but what is the guarantee that digital or virtual assets have come to stay? Digital assets are taking the world by storm and, in the process, changing how things are being done on the global economical, financial, and investment scenes. However, it is important to remember that the digital or virtual world is a replication of the physical world, and everything done in the virtual world comes back to the real world before it comes into reality. Nonetheless, the future of assets being digital might end up being a reality.
The Asian-Pacific region is predicted to be home to the biggest base of digital assets investors globally. This is because of the region’s fintech strength, favorable policies, and deep pockets of liquidity. Assets investors who believe in the future of assets are digital are now moving into this region. This movement is very likely to lead to an exponential expansion in the global digital economy. Moreso, the widespread acceptance and adoption of digital assets will result in swift and seamless issuance of both old and new securities. Additionally, businesses will adopt the use of digital assets to offer a visual representation of their products and services, as well as to influence buying or consumer behavior.
To Wrap Things Up
This article was not written to completely stop you from investing in the sales and purchase of NFTs, but it was written to let you see the other side of this enticing technology. With NFT still in its early stage of development, it would be risky to invest in it even though the future of assets is digital. Yes, taking risks is good, but are you taking risks because you know what you’re doing or because you want to follow the crowd to make money from a confusing investment scheme that promises to make people overnight millionaires? If your main goal of investing in NFTs is to build wealth, then you should sit back and consider the best way to make that happen.
