NFTs took the internet by storm in the first half of 2021, but they already seem to be out of the public’s conscience. Will they persist in the crypto sphere, or will they go the way of thousands of other meme trends?
What is an NFT?
NFT stands for Non-Fungible Token. Simply put, when you buy an NFT, you pay cryptocurrency, or by extension, money to own the original piece of art, meme, or song that you want. If you want to say that you own the original Doge picture, you buy its NFT.
When we say something is Non-Fungible, we mean that it is an item that cannot be precisely divided and interchanged for the same value. So, for example, A Dollar is Fungible since it has a set and redeemable value. A Pokemon or Yu-Gi-Oh card, on the other hand, is a Non-Fungible Token.
If any digital media becomes an NFT, it is “minted” again, this time on a blockchain, a digital ledger known to be indestructible, incorruptible, and impossible to falsify. Thus, once you own an NFT, it is yours to keep forever, and no one can wrest it from you.
Why would anyone wanna by anything of this sort? Well, why does anyone invest in art, for example? After all, art can be copied just as easily as an NFT can. You can print out a picture of the Mona Lisa from your home printer right now. But do you own it? No, and you never will. The real Mona Lisa is and will always be displayed in the Louvre, and similarly, the guy who paid 300 ETH for Nyan Cat gets to claim he owns the meme.
Is that any good, though? The value of art lies in bragging rights, but art is seen as a generally far more respectable investment. Whether that is due to how things used to be in the past or just because art comprises actual physical objects (most of the time) doesn’t change the fact that the NFTs are essentially not display-worthy.
You could go on claiming that you own the original “Charlie Bit My Finger” video from Youtube, but does anyone care? Bragging rights only work when there is someone to brag to. Almost everyone whom you tell about your crypto adventures will either scoff at you or be horrified at the amount of money you chose to spend over an image on the internet.
Chalk this to people not being informed enough about the relatively new phenomenon, but it stands to the truth that if most of the world doesn’t care about NFTs, their value isn’t going up any time soon. It is possible that it doesn’t have a resurgence later on in its lifespan, like cryptocurrency, but don’t hold your breath.
Don’t get me wrong, I agree that Songs, Memes and other NFTs are works of art and that art gets more valuable with time. Whether or not NFTs do so depends on whether people keep buying them till they are scarce or someone being attached to a particular NFT to spend their money on it. It takes time to determine if your investment paid off, and many things can change during that time.
Then there is the matter NFTs causing irreparable harm to the environment.
“Bear in mind that regardless of the type of blockchain, electricity consumption is not the only contributor to its carbon and environmental footprint. As the number of cryptocurrency miners and stakers increase, more computer hardware is used, which comes with its own manufacturing and extractive impact. So, the total carbon footprint of NFTs is bound to be higher than what has already been estimated.” – Earth.org
The world is experiencing weather the likes of we have never seen before, with temperatures rising all over the globe due to global warming and resource wastage. Something like Non-Fungible Tokens contributes to the destruction of the environment, and that sort of thing just isn’t doing very well with the masses right now. Understandable, of course.
In conclusion, if you have a sentimental connection to a particular NFT, or if you predict someone else to buy it off you in the future, then it is sort of okay to own an NFT. That sort of thing is usually almost impossible to predict, and it is estimated that as many as 90% of all NFTs will be worthless in 10 years. Invest Wisely!