Ever since non-fungible tokens became a thing in 2014, a lot of information and misinformation has been seen. The recent hype around the DeFi feature means there is an amplified opportunity for the problems facing the technology, and with ethereum price prediction 2025 being one of the most talked-about topics in the crypto space, it is important to look at how NFTs will fare in the coming years.
There is hardly any day that goes by without you having any information on NFTs, especially if you read cryptocurrency or DeFi news. The norm is to start the article with a “the NFT is a” type of opening, but you are in the right place if you want to get the hard truth about NFTs, not just a soft pat on the back. What are they? How can they be useful? And what major threats are facing them? Let’s dive in.
Misconceptions about NFTs
Before explaining what NFTs are, let us see what NFTs are not. As you would expect, there is much information online about what NFTs are, and this stems from the face-off between NFT proponents and NFT critics. These are a few things you have most likely read about NFTs.
- NFTs are another organized scam project.
- Energy-wise, NFTs are not favorable.
- Authenticity and one-of-a-kind are just another myth.
Well, are NFT scams? No. far from it. Perhaps we have been so used to the concept of having our day-to-day things copied, plagiarized, or duplicated, or maybe there have been a lot of losses because of the illiquidity of certain NFT projects. These might have influenced various opinions on NFTs, but NFTs are far from being scams.
Also, looking at the media through which traditional scams are propagated, we cannot call NFTs a scam. Traditional Scammers use emails, the internet, and credit cards for their scamming activities, yet we have never called these features scams. There might have been a few uses of NFTs as a medium for scams, but the technology itself is not.
On authenticity, only someone that does not know how blockchain technology works will call the concept of authenticity a fad. Some projects might not turn out to be long-lasting, but that does not discredit the whole concept and name them fads.
Moreover, some blockchains have issues with energy consumption. Still, the biggest NFT-based protocol, ethereum, is moving to the proof-of-stake consensus, and this will do so much to reduce energy consumption. Apart from Ethereum, other NFT protocols operate on fewer energy-consuming systems.
What exactly are NFTs?
You can view NFTs as assets. But unlike real estate or physical businesses, NFTs are digital assets. They are valuable because they open up a transparent model that reduces dependence on third-party personnel in incentivizing the arts and the artists.
You can also see NFTs as proof of something. A claim, a record, or a receipt. More than the hype in selling digital arts, this use as a receipt is probably where NFTs will get most of their value. If you consider they are not changeable and duplication is not possible, these claims of receipt NFTs make more sense.
The value of NFTs
As earlier explained, NFTs will be untouchable when they are used as receipts or deeds to ownership of a physical item. Yes. Cute digital pictures of monkeys will not be the future of NFTs, and neither will the ugly-looking ones.
It is okay to dispute it, but one thing we need to understand is that despite the bandwagon claims that these would change the face of NFTs, the real essence of having NFTs suggests otherwise.
Some relevant use cases of NFTs include; gate passes to events, certificates for education, title deeds of houses, and digital images to boost tourism. One major truth NFT enthusiasts don’t want to agree with until they become NFT holders is that the market is not as liquid as it is being portrayed. You can buy Ethereum on a centralized exchange and sell it minutes later, or even for a lesser time. NFTs are different. The current models show great liquidity in very few projects (it seems the Pareto principle has found its way into NFTs), and the overwhelming population of NFT holders have digital arts they cannot sell.
Let’s see an example. Would you buy art with unique data strings and different rarity or a limited-time digital pass to a Rihanna concert? Seems easy, right? How about another one. Would you rather buy a digital picture collage of 1000 pictures or a deed which gives you access to own a house physically?
Let’s expound on this. The beauty of NFTs is that they are pegged to an actual product. Instead of paying for an NFT of a football season ticket, what if the NFT shows an agreement of you owning a season ticket, which can be transferred to another person based on how you deem fit. And yes, the payment is organized via cryptocurrencies and with immutable proof of it on a distributed ledger. Through the NFT’s smart contract, the owner can receive payments to let people sit in the seat. It will be more like franchising the seats in the stadium every year. The team and the players can get royalty cuts from the lease of the seats.
That’s the point. Using NFTs in this way allows NFTs to have a real-life use case in our world, rather than have people buy them with the hopes of price appreciation only. One beautiful thing about the ethereum 2.0 beacon chain is that all NFT projects currently on ETH 1 will be copied, so we can start now instead of waiting for the ethereum upgrade to launch.
