Meaning of NFTs: advantages and drawbacks
Meaning of NFTs: advantages and drawbacks
In short, NFT is a digital asset which characters unique and valuable base on its rarity. There will be more information on our previous blogs. NFT can be seen as a key component of the Metaverse and Web 3.0. By now, NFT revolutionized the way digital assets are marketed and monetized. Talk about the meaning of NFT, it is both advantages and drawbacks.
Advantages
The development of NFT firstly affects the art market and gives favor to creators and artists to their works. The trading market is bustling with the appearance of many famous artists such as Grimes - girlfriend of billionaire Elon Musk, Snoop Dogg, Shawn Mendes, etc. Furthermore, FEWoCIOUS, Mad Dog Jones, and Beeple are new trending faces through inspiriting artworks, which had been sold as NFT with a huge value. NFT empowers ownership lines, solves copyright issues, and gives artists royalties income from their creations. From there, inclusive growth is the potential rise for higher living standards globally. Proof that NFTs are expanding into many other industries such as virtual fashion, real-world assets, virtual exhibitions, etc.
Then, play-to-earn becomes a trend, putting the gameplay to new levels. Because of the unique nature, the skins, characters, weapons, etc. in the game cannot be interfered with or create a copy of the same to increase profits, which creates fairness. Play to Earn can fulfill gamers' dream of becoming professional gamers. Above all, gaming is no longer just elegant and entertainment, but it is also a career that can earn to living. There are some highlight game projects you can search for here. Therefore, NFT exhibits authenticity and its value. When in-game products are in the form of NFT, they have transferability. Game platforms allow gamers to keep NFT in their wallets and trade.
You can access our previous article for deeper insight on how NFT works and how to earn from NFT:
NFT is not just a PNG or a GIF but can do more in the near future, especially when investors started to realize the potential and invest in Metaverse and Web3.0. For example, Facebook's change of the parent company's name to Meta shows Mark Zuckerberg's ambition.
Drawbacks
In cryptocurrency mining, Proof-of-Work (PoW) is used to validate transactions and mine new tokens. The action demands large computing resources and energy consumption. NFTs are active based on the Ethereum blockchain and the more blockchains are used, the more energy is required. Therefore, NFTs significantly impact the environment, especially when they can pass the threshold of assimilative capacity and can not reverse. Take a count, each transaction on Ethereum platform takes 48.14 kilowatt-hours of energy and there are from [15,000 to 50,000](https://earthweb.com/nft-statistics/#:~:text=little bit realistic.-,1000s of NFT Sales are Made Every Day,50%2C000 NFT sales a week.) NFT transactions per week. NFT will get much more developed in the future, and the number will increase.
Proof-of-Stake (PoS) is a model that is more energy-efficient than PoW as it does not require miners to maintain mining equipment. Blockchain platforms have started to adopt the PoS model. Proof that Ethereum is also on the way to transitioning to the Ethereum 2.0 model. We believe that investors and users will have appropriate policies for the sustainable development of blockchain, particularly NFTs.
Copyright issues are also becoming increasingly controversial from creating NFT a way easy information through background platform. Authors are seriously affected when their artworks are turned into NFT and sold on online platforms without permission. Because of a new phenomenon, buyers and creators will face many challenges and risks in determining copyright without legal protection. In fact, anyone can mint and flip their NFTs on the market, and owning a work is mainly based on trust.
Example of an artist living in Texas who had her work stolen and sold as NFT on OpenSea.io
The problems coming from blockchain and NFT mining are now not only a problem for investors and traders but also need the government to close the loopholes. There will be more controversy in the future. However, we believe in the valuable potential of NFT in the future. For traders, research and evaluation are necessary before making any decisions.
DISCLAIMER: This is NOT FINANCIAL ADVICE; we only evaluate NFT projects based on the data given by the community and based on our perspective to help collectors and snipers find the best suitable projects to jump in. Remember to do your own research!