Non-fungible tokens or NFTs have become a popular topic of discussion in recent times. These new forms of digital art have caused a sensation in both the technology and art industries, and have changed the way many artists generate revenue from their creations.
However, like any new and revolutionary technology, NFTs have also garnered significant criticisms for their operations.
Additionally, NFTs have also led to a market for stolen artwork, allowing criminals to profit from the works of others.
Consequently, there are many heated debates and discussions about the topic online. This has led some who are not familiar with the technology to question Why Do People Hate NFTs?
Exactly what are non-fungible tokens (NFTs)?
Non-fungible tokens (NFTs) are a digital representation of unique assets that are recorded on a blockchain.
Each NFT is a specific code that certifies the ownership of an asset.
This can be physical items, digital artworks, virtual land, and other less tangible concepts. NFTs are widely used to represent digital artworks and other forms of digital creative pieces.
The NFT code grants the holder of the NFT the rights to ownership of the asset that it represents. For instance, if someone purchases an NFT for a digital image, they would be the legal owner of it, and able to use it as desired.
But, it is worth noting that this ownership is in terms of the NFT code and not the underlying image. So, though you own the NFT, other people can still copy or reproduce the image.
Instead, you possess the code that exists on the blockchain, which represents the image, it can be sold or held as the owner sees fit.
It is also important to note that owning an NFT does not automatically grant copyright or intellectual property ownership.
For example, owning an NFT of Mickey Mouse does not give you the rights to the character or any associated intellectual property.
Unless the NFT purchase includes a legal document that transfers intellectual property rights along with the NFT, the NFT owner only holds the right to the code that represents an image or concept but not the underlying subject matter or IP.
Why Do People Hate NFTs Too Much?
Despite the fact that NFTs have become a phenomena and a trendy investment, they have also generated a lot of criticism and opposition.
There are various reasons why a lot of people have a negative perception of NFTs, including:
A blockchain’s environmental impact is increased by the existence of non-fungible tokens. Blockchains require a large amount of computational power in order to function.
Hardware components or other computer components are used by contributors to provide this. The operation of these devices requires electricity.
Every instance of a new NFT being created or transferred between individuals results in a transaction on the blockchain, which requires electricity for validation by miners.
This results in an increase of electricity usage whenever an action involving NFT occurs on the blockchain.
The increased usage of NFTs on the blockchain is problematic because of the environmental impact it causes.
The blockchain technology is already a significant cause for environmental concern and the explosion in popularity of NFTs has further intensified this issue.
A majority of NFTs are currently on Ethereum blockchain, which is the second-largest blockchain in the world. Studies have found that the Ethereum network alone consumes more than 112 terawatt-hours of electricity annually, which is more than the consumption of countries like the Netherlands.
Additionally, a single transaction on Ethereum network requires as much electricity as that used by an average US household for 9 days.
Despite the fact that the Ethereum network is undergoing a transition to a proof-of-stake consensus, which aims to reduce energy consumption by over 99%, the transition is still in progress and has not yet been fully implemented.
This move was first announced several years ago, but has been delayed multiple times. Due to this, some people remain uncertain about whether it will ever be fully executed.
The NFT sector is largely unregulated as it is a brand new market. Moreover, they are part of the unregulated crypto market. The NFT space is therefore often accused of being a hotbed of fraud and scams.
There are few consequences for perpetrators since there are no regulatory bodies.
Fraudulent schemes such as rug pulls are prevalent in the NFT space, where developers establish and heavily market a project, often with a vague plan and promises of high returns.
These efforts can generate significant interest and investment, but once the creators of the project sell their NFTs and collect the funds, they abandon the project, leaving investors with nothing and no means of recouping their losses.
Without any regulations and the anonymity of the project creators, there is no means of holding them accountable.
Additionally, NFTs have been used for illegal purposes, such as money laundering, because they are anonymous and subjective.
There might be a bubbleBurst in NFTs
There are currently a number of reasons to invest in non-fungible tokens.
Investing in avatars and other digital assets has become a lucrative business for retail investors from all backgrounds.
A growing number of transactions take place every day through NFTs, which have grown at a rapid rate in recent years.
There are some concerns that the market for NFTs (non-fungible tokens) is a speculative bubble that is likely to collapse.
Critics argue that there is no real intrinsic or even superficial value in the technology.
Considering NFTs to be a scheme in which individuals are buying and selling assets that do not hold any real value.
They believe that NFTs are only being used for speculation and profit-making, with no real purpose or use case.
They believe that the bubble is bound to burst and those who invested in NFTs will lose money.
Taking intellectual property is Theft
In this regard, the tokens have fallen short of the purpose of NFTs, which is to protect intellectual property and copyright.
However, NFTs do not actually constitute ownership rights in legal terms, even though holders can obtain rights to a given IP.
An NFT might not hold up in court even if it was provided for an image.
Additionally, due to the ease of creating non-fungible tokens, many individuals have made NFTs from the works of other artists without obtaining permission or informing them.
This means that someone could take an image of an artist’s work, turn it into an NFT and then sell it, profiting from someone else’s work without them knowing.
There have been multiple instances of this taking place, with many artists having their work stolen.
This has sparked concerns within the art community, as NFTs were initially marketed as a reliable way to address copyright concerns.
Why Do People Hate NFTS in the video game industry
The video game community, including both players and industry professionals, have united in their opposition to NFTs (non-fungible tokens).
The reason for this is that NFT technology has brought to light long-standing issues within the industry, such as the attempts of big corporations to boost revenue through in-game purchases.
With the emergence of NFTs, a new model of gaming has emerged known as “play-to-earn,” in which players can earn money by playing games.
Major companies such as Ubisoft are at the forefront of this trend, promoting the use of NFTs in their games as a way for players to monetize their playtime.
However, previous experiences have shown that these actions have resulted in negative consequences.
When in-game items are assigned a real monetary value, people who seek to profit from it will often flock to the game, causing disruptions to the in-game economy and the rise of so-called “farms.”
These farms are large-scale operations where workers are paid to play the game for the purpose of acquiring items that can be sold for real-world money.
One well-known example of this is the widespread World of Warcraft gold farming industry.
Generally, players view NFTs as another way for major game companies to make money off of them.
Similar ideas like downloadable content, in-game purchases, and loot boxes already exist and have received significant pushback from players.
The introduction of NFTs would only exacerbate these issues.
This can negatively impact the overall gaming experience and playability, as seen in the past.
Why Do People Hate NFTs Justified?
If you visit any online discussion forum or message board about NFTs, you will notice that people hold strong opinions on the topic.
Supporters of NFTs and its proponents fiercely argue in favor of it, saying that it has the potential to be a game-changing technology.
They argue that NFTs will alter the way people transact and trade assets, be it art, merchandise, or even virtual land.
According to these enthusiasts, NFTs are the future and they believe that the demand and value of these tokens will continue to grow as time passes.
On the other hand, critics of the technology argue that NFTs do not hold any true worth or practical applications.
They view NFTs as frivolous and illusory assets that are bought and sold among individuals. The critics mainly point out the downsides of NFTs, such as the environmental impact of their creation, the possibility of fraud, and their potential to have negative effects on various industries and markets.
Additionally, they assert that NFTs fall short in achieving their primary goal of ensuring the rights of intellectual property and ownership of assets.
It’s true that both sides have valid points of view.
NFTs are a novel technology that holds a lot of promise.
Even though the current usage of NFTs may not be the most optimal, it’s likely that we will discover more suitable use cases for it in the future.
The unregulated nature of NFTs is simply because it is a relatively new concept, as with any new industry or market it’s yet to be fully supervised.
However, many government bodies have become aware of the industry and it is expected that regulations will be implemented in the near future.
Regarding the environmental impact and potential negative effects of NFTs, it’s important to note that these issues are largely tied to the underlying blockchain technology.
At present, most NFTs are created on the Ethereum network which uses the proof-of-work consensus mechanism which is energy-intensive.
However, Ethereum is currently transitioning to a more energy efficient proof-of-stake mechanism.
This change is expected to lead to a significant reduction in energy consumption, by more than 99%.
Furthermore, as the technology continues to develop, it’s possible that the energy consumption can be reduced even further in future.
Final Thoughts On Why Do People Hate NFTs
Regardless of your personal stance on Non-Fungible Tokens, it is important to consider both the potential benefits and drawbacks of this new technology.
While NFTs have the potential to bring positive changes, there are also concerns about their environmental impact and lack of regulation, which has led to issues like scams and fraud. Therefore, it is important to weigh both sides before forming an opinion.
Although the technology may not be perfect at the moment, it is likely to improve with more time. As governments start to regulate the market, issues of fraud will be reduced.
Additionally, advancements in blockchain technology will decrease the environmental impact of NFTs. As awareness and research on NFTs grows, more practical and beneficial uses for the technology will be discovered.
So, while NFTs in their current state may not be optimal, their underlying technology has the potential to significantly enhance our lives in the future.
Read More: Can NFTs Be Mined?