Can NFTs Pave Way For New Careers?
Forget Elon Musk’s Twitter’ jokes’ that are dangling the prices of about every cryptocurrency in the industry. NFTs are the hottest thing in the crypto space right now. Perhaps the Tesla founder could soon shift focus and reap big from his frequent Twitter theatrics. Jack Dorsey just made millions from a tweet the other day after creating an NFT from his first-ever tweet.
NFTs are in no way a new concept to which the crypto community is rising. The first NFT project was launched in 2017, with only a few investors enjoying its experience, just like the memorable CryptoKitties. Fast forward to 2021, and the industry is in a gold rush that has seen an NFT sell at a remarkable $69 million on Christie’s auction.
Taking a closer look at NFTs, they are not simply some rebranded altcoins. NFTs are unique by themselves and come with unique use cases.
Blockchain technology came into existence to support fungible crypto assets like Bitcoin and other altcoins. However, the technology has evolved over the years and can now support an exceptional crypto asset class, the non-fungible digital assets. Currently, most NFTs are based on the Ethereum blockchain.
Ethereum-721 tokens protocols allow NFTs minters to capture relevant details about their artworks and store them as tokens on the Ethereum blockchain. When a buyer pays for an NFT, they get the token’s rights, and only then can they transfer it to their digital wallets. The token proves that they have the intellectual property rights and, at the same time, prove that the NFT is the original copy.
As NFTs are created on the blockchain and become assets with intellectual property rights, it raises legal implications about the property. A new class of lawyers with an in-depth understanding of blockchain technology and the cryptography behind NFTs can help to prove their authenticity where such and ownership concerns arise.
Lately, there have been concerns over NFTs’ carbon footprints. Most non-fungible tokens are based on the Ethereum blockchain and are thus said to be energy-intensive. For instance, a single NFT transaction on the Ethereum blockchain consumes an amount of energy equivalent to that consumed by two American households in a day. NFTs are thus thought to have significant ecological impacts.
Furthermore, there have been concerns about the security of blockchain projects. Many cryptocurrency platforms have in the past been hacked, leading to the loss of millions worth of cryptocurrencies. The NFT industry is based on blockchain technology, and therefore, raises security concerns as well.
Nifty Gateway became the latest victim of NFT security threats when hackers controlled owners’ accounts and made away with thousands of dollars. Currently, the industry lacks proper protocols for owner verification, which means artists’ works can be minted by scammers and successfully create an NFT.
Blockchain analysts can help analyze and issue reports to clear the air about the sustainability of blockchain technology and blockchain-based NFT projects. Ethereum blockchain, for instance, is evolving to move from the energy-intensive design. With the launch of Ethereum 2.0, the network is transitioning from the proof of work consensus algorithm to proof of stake.
The move is meant to make the Ethereum ecosystem more eco-friendly, which could change the perception of NFTs. Also, Ethereum is not the only technology supporting NFTs. Other emerging blockchains such as Cardano have also set out to provide an NFT platform dubbed Cardano Kidz to minimize carbon footprints.
Unlike. K ill cryptocurrencies, where the forces of demand determine the price, there are no parameters for determining the value of an NFT. Each NFT is unique and has a different value from others, and is always speculative. Besides, an NFT’s value cannot be determined by demand and supply since there can only be one NFT. Its value is barely determined by what someone else is willing to pay for it.
At this rate, it would be difficult to determine the amount lost if an NFT marketplace gets hacked. Also, investors may never be sure they will own an NFT as no one can be certain about becoming the highest bidder in the marketplace.
NFT auditors with specialized knowledge about blockchain technology and NFT project protocols can help in defining the price of a particular NFT. The auditors can also help set the parameters used to determine the value of an NFT in the future rather than relying on auction prices. Investors can then assess the marketplace and be confident they can acquire an NFT.
From the current NFT craze, it is evident that celebrity-minted NFTs are the industry leaders. The situation could create an unequal ground in the NFT industry, and the artworks of many artists may not be that lucrative. The industry is also in its infancy and is entirely decentralized.
Instead of being loopholes, the circumstances pave the way for the emergence of professionals who can help bring a deeper understanding of the industry to the crypto community. Blockchain lawyers can be monumental in developing regulations, while NFT auditors set the ground for NFT price determination.