Imagine, You are going abroad to study. Instead of the passport, its NFT (Passport NFT) is shown at the airport counter, which has all your details. Even in foreign universities, educational certificate converted into NFT is shown, which means no hassle of carrying passport and degree with you, no fear of losing them. Every NFT (Non-Fungible Token – NFT) is different in itself. Therefore there is no fear of being replaced by someone else. In the coming days, some such use of NFT, or even more, is possible.
Use will increase in entertainment world
The use of NFT is increasing in online games. In the coming days, NFT is going to be used on a large scale in the entertainment world. This may appear first in streaming and subscription. Making and distributing films in the traditional way costs a lot. This is a problem for new creators, which NFT can solve. The producer can raise funds by selling his project through NFT and after the film is made, he can sell it to the audience in the form of tokens. This has been used in some animation films in Hollywood. Hollywood actress Lindsay Lohan, while launching her NFT in March 2021, had said, ‘It is possible that we may see movies in the form of tokens, payment to artists may also be in NFTs.’
Will be able to sell paintings directly to buyers
The painter will not have to depend on any gallery or auction house to sell his paintings. He can sell his paintings as NFTs directly to buyers. If the buyer sells it to a third person, the painter also gets royalty on it, that is, he will get royalty as many times as the painting is sold on that platform in the future. This does not happen in the traditional sale of artwork.
Risk of future price decline
If NFT has these benefits, the risks are also no less. Most NFTs are being purchased as investments, in the hope that their value will increase in the future. Like a share. The value of any NFT depends on its digital scarcity. Its price will increase only if there is demand in future. If there is no demand for an NFT, then like a share, its price may also decrease.
The argument made in favor of NFT is that an expensive artwork or real estate property can be divided into pieces and sold. That means there will not be just one buyer for a painting, rather there will be many buyers and each one will have a part of that painting. The question is what would someone do with a piece of painting. Will he realize he has the painting?
Fear of smart contract being hacked
NFT is based on blockchain technology. In blockchain, information is not collected in one place, rather it is in many places in the form of a chain. Therefore it is difficult to tamper with them. In this respect, NFT is said to be safe. But there have been many incidents of hacking of crypto currencies based on this blockchain. Currency is withdrawn from there by hacking the exchange or account. When hacking of crypto currency is possible then why not of NFT.
It has also been seen that if an artist has created an NFT and kept it in his wallet, then on the blockchain it appears to have been created by someone else. There are very few platforms that verify an asset before allowing it for sale. Hacker M. Parsoni has exposed its flaws. In April 2021, he downloaded the file of Beeple’s ‘Everydays’ from the auction website Christie’s website, minted it from Beeple’s wallet and listed it for sale on an NFT platform.
Your NFT is gone if the platform closes
What if the platform in whose wallet you have purchased NFT gets closed? It is possible that all your tokens become worthless and may never be received. NFTs have to be stored somewhere. Usually these are stored on centralized cloud servers like Amazon. If that server is hacked then your NFT can also be stolen.
You get the link, not the artwork.
Experts believe that there are flaws in the technology used in NFT. A big issue is that of storing digital artwork. NFT has two parts – first smart contract and second digital artwork. The contract is stored on the blockchain, but due to it being expensive to store the artwork on the blockchain, only the link or URL of the artwork is given in the contract. In other words, NFT is just a receipt. Accessing an artwork solely through a URL can be risky.
Every platform is different, this gives scope for fraud
Small investors rarely get a chance in the NFT auction. Blockchain data company Chainalysis recently said in a report that big investors with state-of-the-art equipment take the biggest profits from NFT collections. Thousands of people bid to buy an NFT of a famous artwork. Big investors use bots (robots) so that they can get some token. This makes it difficult for new investors to buy tokens.
No single standard has been created yet regarding NFT. Every platform works in its own way, which increases the scope for fraud. So a lot is uncertain. Right now there is no legal framework to control this. Some people are against it because they feel that it is foolish to invest lakhs and crores of rupees for something that cannot be kept with them. You can buy an oil painting as an NFT, but you can’t hang it on the wall of your drawing room.
Sunil Singhsenior journalist
The author has 30 years of journalism experience. Has been associated with institutions like Dainik Bhaskar, Amar Ujala, Dainik Jagran. Writes on business and political topics.
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