Non-fungible tokens (NFTs) are pretty fascinating. These Ethereum-based assets are unique elements on a blockchain that cannot be traded or exchanged.
As a result, NFTs are not cryptocurrencies such as Bitcoin, which is fungible. You need cryptos to buy NFTs, but an NFT is an irreplaceable object.
However, you often manage your NFTs like cryptos with digital wallets.
It could be anything, from a simple Tweet to digital creation, or even tangible items such as a designer’s creation (e.g., clothes, shoes, furniture).
Provided that you have some Ethereum tokens, you can go to NFT marketplaces to buy NFTs.
Ethereum’s blockchain is a massive decentralized database and a token is a unique piece of data permanently attached to the chain.
The very nature of the blockchain implies that anyone can inspect another user’s wallet.
To make NFTs, you have to follow some basic steps:
- find the digital asset you want to make an NFT
- own the intellectual property rights
- select the blockchain (Ethereum would be the easiest)
- create a digital wallet
- go to a marketplace such as Opensea to sell your NFT
At the time of writing, the most enthusiastic backpackers expect crazy good profits, like thirty times as much as the first investment.
NFTs are trendy, and people may experience the FOMO effect (fear of missing out) like NFTs are the next big thing, and they could miss the opportunity to become rich.
Honestly, I can’t tell whether it’s another ultra-sophisticated Ponzi Scheme or an incredible opportunity for humanity. If I were that informed, I would probably not write this post, wondering where this new trend goes.
I only know for sure that I won’t bet everything on NFTs. I still consider NFTs a bit risky. While you don’t usually get much without risking something, this market seems pretty unstable, which can lead to either huge profits or huge losses.
However, that’s absolutely not what bothers me with NFTs. If it’s a game and you decide to play, there’s always a possibility to lose.
I worry about plagiarism and theft.
Opensea is probably the most popular marketplace for NFTs. The platform faced several issues, such as rumors of insider trading that ended up with the resignation of Nate Chastain, the head of product.
The company had to implement new policies to fix this vulnerability.
However, that’s not even the most shocking to me. The platform is attractive mainly because it’s a one-time payment to get started, and then the number of collections you can mint and sell is unlimited.
While it’s a successful formula, there’s a BIG issue:
we’ve recently seen misuse of this feature increase exponentially. Over 80% of the items created with this tool were plagiarized works, fake collections, and spam.
When they realized the threat, they tried to limit this feature to 5 collections per user (without official announcement…), but they had to reverse the decision quickly as legitimate creators were pretty unhappy.
This Opensea scandal shows NFTs could also be a great opportunity for bad actors. NFTs are a new way for artists to earn money and make themselves known, but they might be forgers’ paradise at the same time.
The idea with decentralized networks is to ban any central authority, which is pretty cool but can also lead to legal uncertainty.
Marketplaces are paid with each transaction, so it’s a big business, but it seems easier for bad actors to automate theft, so a significant part of the business might be unethical.