By Alan G

By Alan G

Dec 29, 2021

NFT's: Game Changers or a Passing Fad?

If you’ve been keeping up with our recent articles about NFT’s (as you should), you’d have noticed that we spoke about what NFT’s were, how they were used, and just how popular they were. We also spoke about how they tie into the future of in-game transactions. Now that you’ve become accustomed with these digital assets and their technicalities, it’s time we ask ourselves the question that has been the topic of debate and conversation all over the internet. Are NFT’s really the future, or is it another tech bubble waiting to burst?

Let’s start by defining what we’re going to consider a “fad” to be. A fad goes by many other names, a passing trend, a craze, a novelty. What they all have in common is their impressive sudden spike in popularity but ultimately, their inevitable fizzling out into irrelevancy. For those of you old enough to have grown up in the 90’s will remember the name “Beanie Babies”. Beanie Babies were these adorable stuffed toys that took North America by storm. They came in different shapes and sizes and boomed in demand as sales started to soar. However, Beanie Beanies developed a very interesting status as a product. It was no longer just a toy. People were buying Beanie Babies because of their high resale value. Essentially, these stuffed toys that children would play with became legitimate commodities that interested the young and the old alike. Today, if you go out on a date with an adult man and find out he has a stuffed toy collection, you’d probably be jumping out the window trying to get out as fast as possible. During the late 90’s however, you would assume that he was a financial genius for those investments. 

So, why exactly did these adorable toys end up crashing and burning? With such a huge rise in demand and toy valuations skyrocketing, financial experts were predicting the bubble to burst. A huge counterfeit market was created where people were creating and selling knock-off Beanie Babies. The presence of fake assets in a legitimate market makes unsuspecting customers spend up to thousands of dollars on items that are actually worthless. I know that you might not be drawing parallels with NFT’s just yet, but the next point will make it much clearer. At its counterfeit peak, one Florida woman made up to $13,000 selling one very valuable Beanie Baby by the hundreds. The problem? They never existed. She never actually had the Beanie Babies and capitalized off of the massive craze and the customer’s willingness to purchase something before having them physically in hand. Now, although the circumstances are very similar when it comes to NFT’s, this topic taps into the main concern most people have. They are not physical assets. With the digital age being in full swing, people still have doubts over the feasibility of spending money on a product that isn’t tangible. There are risks involved – scams! What if my computer crashes, the bubble is going to burst!

Guys, allow me to put your mind at rest and give you my honest opinion based off of what we’ve seen so far. When NFT’s first hit the scene, I was naturally skeptical. The rules were unclear, and because it had started as a very niche market, I was wary of jumping on the bandwagon too early for a concept that had no major traction yet. My first encounter with an NFT was the Bored Ape art collection. I had heard that these colorful apes were selling for thousands of dollars. Pretty cool, I thought. I mean it’s no Van Gogh but I would probably hang it up behind the bar. You can imagine my surprise when I found out that the Bored Apes were entirely digital. I let out a smug laugh and called the buyers complete idiots for spending their own money when they could just use a simple screenshot and make it their wallpaper. Weeks passed and NFT’s were being sold at a faster rate and at even more expensive prices. It wasn’t just apes anymore, it was 8-bit pixelated art in the form of gifs. No matter how you pronounce it (god forbid you meet someone online who pronounces it with a hard G), gifs had entered the NFT frame and people were more responsive than ever. The time was right for me to start deep-diving on the pros and cons of this phenomenon. Once the blockchain technology and ledger methods of purchasing were clarified to me, I started to observe NFT’s in a much more optimistic light.

It’s only natural that most people would tie NFT’s together with cryptocurrency. After all, when crypto made worldwide mainstream news years after it had first emerged, people had the same response: Doubt. Money that isn’t paper money? That exists? Who spiked my coffee?! Well, we were all made to look like fools because cryptocurrency has not only stayed for a decade now but earned its legitimacy to such an extent that El Salvador considers it legal tender. This is the world we live in now, buying a slice of cake by scanning a QR code linked to your digital wallet. Cryptocurrency has proven to be a valid form of currency and not this big Ponzi scheme that blue-tick Twitter “experts” have claimed it to be. However, it is far from perfect. Its biggest downfall is the unregulated market it operates in. Tens of thousands of people have woken up and lost an incredible amount of money overnight due to continuous sharp crashes in valuation. While it offers you digital security and is actually one of the fastest online payment methods to platforms that accept it, this instability in valuation gives cryptocurrency an unfortunate volatile nature. This is where I believe, NFT’s will be different.

As of the time of writing, cryptocurrency is the only way to purchase NFT’s. The most popular is Ethereum. While Ethereum and other cryptocurrencies might be volatile and unsteady in their markets, NFT’s are not actually tied to the pricings of the cryptocurrency. If there is an unfortunate crash of a specific cryptocurrency, the NFT remains unaffected. The artist of the NFT dictates the price themselves according to what they believe it is worth. It is not a form of currency that trades on the market, but rather a digital product whose price varies independently of volatile variables. In the last article, we also spoke about how major gaming studios are getting in on the NFT game, and they’re not just spending thousands of dollars, they’re spending millions. While the Beanie Babies bubble exploded after many individuals overspent and destroyed the market, it wasn’t a trend that motivated major multi-million-dollar companies to invest. NFT’s however, are proving to influence even the biggest of corporations. Whether in the form of a custom game weapon or a digital basketball card of Michael Jordan with his trademark tongue sticking out as he dunks, Ubisoft and the NBA are just two examples of corporations willing to take the jump, believing in their prospect as a future cash cow.

I wouldn’t be doing my job if I only spoke of the positives. Like I said before, I was skeptical at first and it was in-depth research that made me realize the potential that NFTs could have. The fact that it exists and operates on the blockchain is a great sign for digital security doubters, but there could be room for manipulation and fraud in other areas. If you want to purchase an NFT, you can find many websites hosting them online offering different types of digital assets at different prices. However, third party platforms are a link between you and an NFT artist. This middle-man channel is not always the most trustworthy and problems of fraud have arisen in the past. A digital artist known as Derek Laufman had been impersonated on one of these hosting sites and the impersonator even managed to sell an NFT before their fake profile was taken down. Even though an NFT cannot be replicated due its authenticity on the blockchain, there is still a question mark about how and who can make NFT’s. If Laufman was impersonated and had fake NFT’s being sold under his name, then it can happen to just about any digital artist until stricter regulations are implemented.

It’s a curious and exciting development in the world of digital technology that most people are watching from afar. The NFT enthusiasts are in full voice but so are the worried sceptics. As we watch the world of NFT’s develop on a daily basis, it will be very interesting to see what direction these digital assets take. Of course, I have my doubts, but not with its legitimacy. I believe NFT’s can survive safely and securely because digital assets were the next logical step. In my opinion, given the rise of digitalization, it was only a matter of time before we saw products appear with their own market. My only concern however would be the regulation of the platforms that offer NFT purchases. I’d like to see how the relationship between artist and buyer develops and whether third-party platforms will either be made redundant or made immune to any possible fraud. As for whether NFT’s are the future, I very much lean yes. As we learn more about their nature and see them used in concrete ways, amateurs and experts alike will be more receptive to their presence in the digital world.

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