The pros and cons of NFTs
So, non-fungible tokens are clearly popular right now. But what are the positives and negatives of NFTs? We’ve outlined some potential pros and cons below:
Pros of NFTs
Some of the advantages of NFTs that are often stated include:
They give artists ownership over digital assets. When content creators create a digital asset, an NFT gives them the chance to not only show authenticity but to then profit from their work. With things like memes that are widely circulated, this could mean a significant income stream for the creator.
They’re unique and collectable. Many people enjoy the excitement that comes with collecting something that’s unique or rare. NFTs provide an extra layer of legitimacy to collectable content, particularly in the form of digital assets.
They’re immutable. Because non-fungible tokens are blockchain-based, they can never be altered, erased, or replaced. Again, when proving the origin or authenticity of digital content, this is a valuable quality.
They can include smart contracts. Smart contracts are another feature of blockchain technology that are quite intriguing. Essentially, they can store instructions that are executed when certain conditions are met. As such, an NFT with a smart contract could give artists a percentage of the profit when the NFT is sold in future.
Cons of NFTs
Of course, as with every new technology, there are some potential downsides. The disadvantages of NFTs include:
It’s a speculative market. The big question remains as to whether there’s any true value in NFTs. Are they a long-term investment? Or simply a passing fad? It’s hard to tell. Currently, the only value is based on the emotive quality of NFTs.
Digital assets can be copied. Just because someone owns the NFT of a digital asset doesn’t mean that copies of it don’t exist. Art can be copied and pasted, GIFs reposted thousands of times, and videos posted on various websites. Just because you own the NFT doesn’t mean you control the asset — you simply have a token of authenticity.
Environmental costs. A lot has been said about the environmental impacts of blockchain-based cryptocurrencies such as Ether and Bitcoin. It takes a lot of computing power to enter records onto a blockchain. There is a big question as to whether assets based on blockchain are sustainable.
They can be stolen. Although the technology behind NFTs is relatively secure, many of the exchanges and platforms aren’t. As such, there have been several reports of stolen NFTs after cyber security breaches.
Are non-fungible tokens the future?
Hopefully, you now have an understanding of what NFTs are and how they work. We’ve seen that there are several potential applications for non-fungible tokens in the real world, but are they a technology of the future?
It’s hard to say whether NFTs will be widely used over the years to come. Clearly, there is a huge interest in them at the moment, as well as several potential benefits. However, the technology is in its relative infancy, and there are numerous challenges to overcome.
If you’re interested in learning more about NFTs, blockchain technology, and cyber security, we have a wide range of courses available. Many of these emerging industries are looking for skilled individuals, so understanding the key principles could benefit your career. Whether they’re the future or not, NFTs are a fascinating part of popular culture.