Non-fungible tokens (NFTs) have become the biggest new thing in cryptocurrency. And that’s saying a lot in an industry on the cutting edge of technology. A lot of the publicity NFTs have received has come from the large number of NFT art projects launched in 2021 along with a massive price appreciation in CryptoPunks.
This has led to many people both inside and outside the cryptocurrency industry proclaiming that NFTs are a fad and a scam. Admittedly, those NFT critics are not necessarily wrong because a large number of NFT projects are massively overvalued (fad) or complete scams.
Fortunately, the NFT industry goes far beyond low-quality NFT art projects. The technology really does have the potential to completely change the way that so many industries operate. This article will explain why NFTs are more than just a fad – NFTs are here to stay.
Art NFTs Are More Than Just Art
A common misconception that the less informed critics of NFTs have revolves around the fact that NFTs are nothing more than overpriced digital art. A common criticism you hear launched against NFTs usually involves something along the lines of, “I can own that $5 million dollar CryptoPunk by right-clicking and saving to my hard drive.”
The above statement is completely absurd on many different levels despite the core point of the statement being objectively true – it is possible to right click and save NFT art.
However, saving NFT to your hard drive without actually owning the underlying NFT is a worthless endeavor. It’d be the equivalent of creating a print of the Mona Lisa.
This is because NFTs are far more than just art. The art attached to the NFT is one of the many mediums that project developers can use to promote their tokens. These tokens also offer more than just proof of ownership of some expensive digital art.
Ownership of the token is required to join that particular NFT’s community. For instance, you can’t join the Bored Ape Yacht Club unless you own a Bored Ape NFT. The floor price of a Bored Ape currently stands at $290,000 USD. Imagine the type of people you can network with within a community that requires ownership of a $290,000 USD piece of art?
Everyone that spends millions of dollars on NFTs understands all of the above points to some extent. The utility of these art NFTs goes far beyond just a bunch of rich people spending money for the sake of spending money, though plenty of that surely occurs with higher-end NFTs.
Other Types of NFTs Exist
Most NFT critics do not have a very good understanding of NFTs. As mentioned in the previous section, they only associate NFTs with CryptoPunks, Bored Ape Yacht Club, and other very expensive NFT art collections.
They have little to no understanding of the technology. This is a shame because many of the critics would probably become supporters if they ever found out the utility of NFTs.
Some of the interesting use cases for NFTs include the following:
- Attaching music ownership rights to NFTs. This will allow independent musicians to fund albums by auctioning off an NFT that contains the song rights or a cut of the royalties.
- Other benefits may also be attached to the NFT like a songwriting credit, lyrical input, or a backstage pass to a concert.
- Musicians are already doing this. This will become commonplace in the music industry within the next decade.
- Using NFTs for login credentials on a website. If you own an NFT, then that can serve as your login for any Web 3 website. This will greatly increase visitor security along with freeing up webmaster resources (Source: InvestoTrend)
- The chances of this occurring within the next decade are nearly 100%.
- Attaching real estate ownership rights to an NFT. The added benefit of this is that this would mesh perfectly well with DeFi lending protocols.
- Real estate NFTs open the door for DeFi lending protocols to hold real estate NFTs as collateral on loans. Of course, this would all be locked behind a smart contract.
- Admittedly, the chances of this happening within the next decade are low. But we do see a future where some form of real estate NFTs do exist. They might be on a government run blockchain, though.
The above use cases are simply three of the more popular use cases for NFTs that those in the NFT industry like to mention. The reality of the situation is that any proof of ownership that exists in the physical world (ie. contracts, certificates of authentication, car titles, property deeds, etc.) can, and most likely will in the long-term future, be stored on an NFT for convenience.
This is just the reality of the situation. Those that say otherwise likely do not have a full grasp of NFTs, which is fine. They will have to learn how NFTs work at some point, though.
Some NFTs Are Scams
NFT critics are right about one thing – plenty of scams exist in the NFT industry. This is simply the sad reality of the entire cryptocurrency industry because cryptocurrency is semi-anonymous. The industry also attracts a lot of scammers that prey on newcomers that have little to no understanding of the industry.
Our recommendation is to avoid the NFT industry if you have little to no experience in it and do not have any intentions of purchasing a “blue chip” NFT like a CryptoPunk or Bored Ape. The chances you lose your entire investment are simply far too high.
Closing Thoughts
NFTs as an industry are certainly not a fad. But most NFT projects are fads. It’s one of those cases where you should not discount an entire industry because exuberant investors create a massive bubble.
It is actually quite similar to the early days on the internet in that regard. Many people made quick money by duping investors, but those that created actual value became some of the richest people on Earth (Jeff Bezos, Bill Gates, etc.).
