Hello and welcome to my blog, NFTalks with Luke. I am Luke and I have made this blog as a way to educate people like me, who have heard about but don’t know much about NFTs, and tell them the facts and the risks/dangers surrounding NFTs. Why am I doing this? Well, as I said, I’m here to educate people like me. Before starting this blog, I knew a little information about NFTs, and that people didn’t like them, however I didn’t know why, and I wanted to know more. After doing more and more research, I came to find that, with NFTs, the negatives outweigh the positives. Realising other people may want to learn about NFTs, but may not know where to look, I decided to gather all my beginner knowledge around NFTs here in one place.
What are NFTs
There is a lot of complicated technology and jargon surrounding NFTs, so I will do my best to keep it as simple as possible. at its simplest, an NFT, or Non-Fungible Token, is a unique piece of data stored on a digital list of records called a blockchain. One of the most common forms of NFTs is images, people buying and selling digital art like trading cards is incredibly common in the NFT scene, and like anything that's one of a kind, these NFTs can potentially sell for hundreds of thousands of dollars. NFTs are most commonly found on what’s called the “ethereum blockchain”, which is a form of cryptocurrency, however unlike other cryptocurrencies like bitcoin, Ethereum is programmable, meaning while bitcoin is only a cryptocurrency, Ethereum has other uses, such as the aforementioned digital trading cards.
What are the issues with NFTs?
While NFTs do sound cool, there is a lot of issues with them, firstly, ownership. The name Non-Fungible Token means that each token is unique, not interchangeable, and cannot be substituted. This, in theory, means that, if you own an NFT photo of, for example, a dog that you have bought or traded for, only you own the image. However, this isnt strictly true. To start, when you buy an NFT, you aren’t actually buying the image, you are buying a digital receipt containing a link to the image, so you don’t even own the photo. Secondly, although you own this digital receipt, the image is public, meaning anyone can right click and save, screenshot, or copy and paste the image as much as they want, and you technically cannot stop it.
Another issue with NFTs is, similarly to the real-life art world, the NFT art world is rife with scams. One of the most common individual NFT scams is artificial inflation. This is where someone works to make their NFT seem worth more than what it actually is. This is done by someone, Person A, making their own NFT, putting all their money into etheruem, and buying the NFT from themselves for an extreme price, say $10,000, creating a fake high value for the NFT. Person A then sells the NFT to Person B for $5,000, making Person B think they are getting it for a very good price. Person A has now made $5,000 in profits, and Person B is now $5,000 poorer, and owning something that is essentially worthless until they sell it off to the next sorry trader, with perhaps the worst part of this scam being that now whoever owns the NFT can do the same thing as Person A, perpetually inflating it’s value.
There are, of course, other issues, such as people stealing digital art and turning it into an NFT, giving the original creator nothing, and their environmental impact, however these issues will be discussed more throughout the blog
