On January 29th, 1886, a German inventor and engineer named Karl Benz applied for a patent for a vehicle powered by gas. Benz would use this patent to build the first-ever automobile. A couple of years later, he refined his design with the Model 3, which was shown at the Paris Expo.
Benz worked at a successful bicycle repair shop that allowed him to indulge in his passion, designing a horseless carriage. Benz began to sell his Motorwagen, as it was called, making it the first commercially available automobile in the world. This invention would change transportation forever. It’s probably unlikely that when Karl Benz first explained his invention to the newspaper reports, he fully understood the implications of what he had created.
While the automobile has provided us with a fantastic mode of transportation, allowing us to cover vast distances in a relatively short time, it does not come without its problems. Cars, trucks and vehicles are a significant source of pollution, expelling substantial amounts of nitrogen oxides, carbon monoxide and other pollution into the air. In fact, on an annual basis, transportation contributes more than half of the carbon monoxide and nitrogen oxides and almost a quarter of the hydrocarbons emitted into our air. Technology is amazing, but it’s not without its downsides.
Cryptocurrencies and the many other innovations made possible by blockchain, like non-fungible tokens (NFTs), have astounding implications, but just like the invention of the automobile, they are not without their dark underbelly.
So what are some of the disadvantages of NFTs?
NFTs are supposed to be a secure way of trading creative assets, but they can be stolen. When one thinks of an art thief, you might conjure up a sophisticated fictional character like Thomas Crown, played by Pierce Brosnan, but that’s not the case with digital art thieves. A more likely candidate is a young hacker living in a dark basement from some place you can’t pronounce its name.
Hackers have been known to break into NFT accounts and rob the owner of thousands of dollars. The problem is that, unlike Thomas Crown, these hackers are incredibly difficult to track and arrest.
In one instance, a digital marketing strategist named Michael Miraflor had tens of thousands of NFTs emptied from his account. Miraflor noticed something was wrong when he got an email from his NFT marketplace that he had made a sale when, in fact, he hadn’t touched his account in months. When he logged in, sure enough, he found his account drained.
Not one to let the hackers get away with it, Miraflor did his own digital sleuthing in hopes that he would be able to recover his money. Miraflor froze his credit cards, changed his passwords and filed a police report. While Miraflor managed to find the account with his stolen NFTs, there was nothing the police or the NFT marketplace could do about it.
Another problem with NFTs is that anybody can take a JPEG — say of the Mona Lisa — create an NFT and sell on an NFT marketplace. Now, how truly original is this Mona Lisa? Most people would agree: not very. Leonardo Da Vinci has been dead for a couple of centuries now and probably wouldn’t mind his work being tokenized — he might even appreciate it. But for living working artists, it’s easy for just about anyone to take their work and profit off it –regardless of who owns the copyright. In fact, there is even a Twitter account that will tokenize any tweet, irrespective of whether you wrote it or not. All you have to do is use their hashtag.
NFTs are a brilliant innovation that gives artists and creators the ability to sell their work online opening up an new revenue streams. However, with the current state of how NFTs are created, images, videos and words are tokenized and spread online with no credit — and potentially no money — given to their original creator.
The main blockchain used for the creation, sale, and exchange of NFTs is Ethereum. While Ethereum is preparing for an upgrade that will change how it operates, it still uses ‘Proof of Work’ consensus algorithm to protect the network which expends a substantial amount of energy.
Due to many misleading articles, some may point at NFTs and people who buy and sell NFTs as contributors to increasing the environmental impact of the Ethereum network, which is not accurate.
The Ethereum network expends the same energy and therefore has the same environmental impact whether they are NFT transactions or not.
So should you go ahead and create NFTs of your work?
NFTs have brought a crucial issue to light: the digital landscape has devalued artists’ work, making it easy to steal, rip off, and use without permission, and artists deserved to be paid fairly for their creative output.
The NFT market is very young, and it has to go through some growing pains. There are no easy answers on how to address the challenges of producing and using NFTs, partly due to the emerging nature of this innovation.
However, given the financial strains many artists face trying to get their work recognized, it’s no wonder that the prospect of an additional revenue stream is very appealing.
While many want to be wise to wait and see how NFTs play out, it might prove very hard as the market intensifies and more news comes out about how much money is being made every day by artists and creators.
If you can stomach the ups and downs of the NFT market, and you are, then it might be for you. However, if you want to take your time to learn and experiment, then you will be ready to jump in with both feet when the opportunity presents itself.