In a few months, NFTs have invaded the digital space and the media, generating numerous controversies. Should we bet on this certification technology accused of promoting scams and money laundering?
NFT. In the sometimes highly coded digital world, it’s the latest fashionable acronym. An acronym that makes you dream or fantasize. A new digital El Dorado for some, a spectacular gogo-catcher for others: what is the technological promise of NFTs? Will NFTs invade our daily lives (real and/or virtual)? What is the reality of the NFT market today? Explanations.
What is an NFT?
NFT is the acronym for Non-Fungible Token in English, either “non-fungible token” in French. or Nifties for intimates (not to be confused with NFC, a wireless proximity communication standard used on bank cards in particular) is a technology which makes it possible (in theory) to assign a cash value to a good (physical or digital) by attaching a similar certificate of authenticity based mainly on the Ethereum blockchain, which operates on the Ether cryptocurrency. NFT tokens associated with a physical good or a digital work are deemed to be non-fungible, that is to say non-interchangeable, secure, tamper-proof and easily transferable to a third party. Their value – and by extension that of the property with which they are associated – is fluctuating (sometimes), volatile (often). It is mostly partially based on rarity.
In a digital world where nothing looks more like a creation than its copy, the possession of NFT tokens is abusively brandished by the person who acquires them as the ultimate title of ownership of the property to which they relate. Abusively, because as we will see, the fact of acquiring the NFT of a work does not in any way mean that one owns this work, but just the right to transfer, to assign, that is to say to sell to a third party (by collecting at best a nice added value) an NFT, a token, a token and therefore a simple piece of code stored in a blockchain.
What are NFT’s sales records?
For several months now, we have witnessed the appearance of new practices and a craze that is difficult not to qualify as speculative around NFTs. A dangerous phenomenon that attracts neophyte investors to a nascent and poorly regulated market who see in it the promise, most often perfectly illusory, of very easily earning a lot of money. Problem, the vast majority of individuals who invest today in NFTs, do so without really knowing what it is all about and without being aware of the risks they are taking.
In their defense, it must be recognized that certain NFT transactions can only arouse envy and make you dizzy. The “first tweet in history” sold for $2.9 millionthe “first SMS in history” sold to €107,000Gustav Klimt’s The Kiss scattered like a puzzle and marketed in the form of 10,000 NFT tokens by the Belvedere Museum in Vienna (Austria) for the modest sum of 1850 euros each, several hundred virtual sneakers sold in a few minutes for $3.1 millionby RTFKT, (company recently acquired by Nike), the Visa group which disburses $150,000 to buy a CryptoPunk considered to be the project that inspired the CryptoArt movement, of (very) famous football players (like Neymar Jr, Presnel Kimpembe, Marco Verratti or Leandro Paredes) who spend several hundred thousand dollars on NFTs… of monkeys, the very tendency Bored Ape YC (Bored Ape Yacht Club). The list is long, very long and it is not about to stop. With its share of illusions and disillusions…
What are NFTs used for?
Where do NFTs come from? It all officially starts in 2017 with the appearance CryptoKitties, an online game that allows players to buy, sell, collect and breed virtual kittens. This game then uses the ethereum blockchain, and virtual kittens are traded in exchange for Ether the native cryptocurrency of the Ethereum blockchain. Success is not long in coming, but this digital blown does not take long to deflate. Now, NFTs are on the rise and seem to have new uses every day. In the physical world, and more particularly in theluxury industry, this technology is beginning to be used to combat counterfeiting. This is the approach followed by a brand like Breitling. In the automobile industry, the manufacturer Alfa Romeo recently announced that its vehicles will soon incorporate NFTs to certify maintenance tracking.
But it is obviously in the digital sector that the enthusiasm around NFTs finds the most echoes. Beyond a speculative aspect – and therefore devoid of any long-term vision – which consists of buying and reselling NFTs acquired on specialized marketplaces such as OpenSeathe big names in tech are now looking very seriously at the issue. Like YouTubewhich sees in NFTs a means, according to its CEO Susan Wojcicki, “to strengthen and improve experiences between creators and fans”that is to say, to develop communities and monetize content.
Ultimately, one of the main outlets for NFTs is, without a doubt, in metaverses, these shared and persistent virtual universes in which we seem so eager to lead Mark Zuckerberg and his band Meta (formerly Facebook). Why ? Because in the land of virtual goods, NFTs appear to be THE dream authentication solution, the one that will make it possible to determine with certainty (or so we believe) who owns what (from virtual clothing, but branded to equally virtual land and real estate). If, despite the specular investments announced at the end of 2021, “Horizon Worlds”, of Meta is still struggling to convince, there are already several metaverses like DecentralandFortnite, Minecraft but above all The Sandbox which are attracting more and more brands and where real estate speculation is raging.
On The Sandbox, we invest in the “Pierre”by buying virtual plots to better resell them later in Ethereum, because this type of transaction is now reserved for holders of a “wallet”, a cryptocurrency wallet. Speculation being once again fueled here by rarity. Of the 166,000 “lands” originally composing this virtual universe, there would only remain a few tens of thousands of them available for purchase, to be acquired precisely in the form of NFTs. A good deal for The Sandbox which takes 5% on each transaction. Some of the brands that have recently given in to the sirens of The Sandbox include, Adidas, Guccibut also Warner Music, which aims to create a musical theme park there, Ubisoft and its “Raving Rabbids”, Axa, or retail groups such as Casino or Carrefour. In February 2022, Carrefour has acquired virtual land on The Sandbox for the equivalent of 300,000 euros. For the group, the NFTs “are not a subject reserved for luxury (but) could reinvent the relationship between brands and distributors”.
What is the value of NFTs?
However, it is difficult to say at this stage what will be the real return on investment of transactions carried out in NFT on metaverses that are still emerging and which are still far from reaching the general public. Because as pointed out, in ForbesSébastien Borget, co-founder of The SandBox, “Not all NFTs are worthwhile. If there’s no audience, there’s no value, and the hype around the metaverse has meant that some communities have built themselves on more solid foundations than others. An NFT remains a digital content and it has no more value in itself than the community has granted it”. Clearly, an NFT depends above all on the way it is used and the experience that comes with it. The rarity not being here therefore not the only value.
Words that lead to raising a central issue when addressing the subject of NFTs: trust. Can NFTs be trusted? Can you invest with confidence in NFTs? Can we trust the value associated with NFTs available for purchase on specialized marketplaces? Are NFTs synonymous with authenticity? To these questions, the answer here is much more nuanced. Because if NFTs are regularly advertised as being “inviolable and immutable digital title deeds”it is necessary to question their origin, who produces them, who resells them, who speculates on their value, if indeed the NFT offered for sale is worth anything, beyond the collective belief that it is attached.
How are NFTs controlled?
But this is where the shoe pinches. Because the NFT sector is still an extremely poorly regulated market, where all deviations are in order. Thus, one of the main NFT marketplaces, OpenSea, recently revealed that 80% of NFTs created for free on its platform were fake, i.e. NFTs resulting from intellectual property theft, copyright infringement. This scam consists in stealing digital content that we have, by nature, not created, to associate an NFT with it which will be resold and on which in the best case the fraudsters will receive juicy commissions for each transaction.
NFTs, like what was and still is in part the world of cryptocurrencies, also today constitute an ideal playground for unscrupulous users or mafia organizations who are past masters in money laundering. money, a practice that in the world of NFTs finds its embodiment in the “wash trading” a technique which consists in artificially inflating the price of an NFT, to attract the attention of gogos who will not fail to redeem it only to realize, in fine, that their fortune, although virtual, is in fact only based on sand.
We would love to say thanks to the author of this short article for this outstanding web content
NFT: principle, promises and risks
Explore our social media accounts and other pages related to themhttps://metfabtech.com/related-pages/