What’s wrong with NFTs?
The NFT market is far from being saturated one year after becoming more mainstream, but it’s in a state in which many newcomers are in a vulnerable spot.
Many people have joined the trend, looking for a quick buck. They bought some tokens without much thinking, ending up without cash and with worthless „art”. You need to be careful in emerging spaces, especially as the lack of regulation means freedom, but it also leaves careless investors at risk. This relates to the whole crypto space, though, and NFTs are just the latest thing there.
Most NFTs are based on Ethereum blockchain. It’s 6 years old already, and it’s known for lagging behind newer blockchains in terms of speed and scalability. CryptoKitties were known for numerous network congestions, and now there are thousands of other projects that keep jamming Ethereum. That will change eventually with a planned update, but it keeps being postponed.
Another problem with Ethereum is the gas fees which are the transaction fees and during most busy times, they can go up to even $300. Even at the time of writing, they are at $100 and this means, that if you want to mint a new NFT or sell it to someone, it would cost you $100 to have it processed by miners. Now, do that with an NFT that costs $9.
The last point which I’ll mention here is centralization. It might seem an issue mostly for the people that are die-hard crypto fans, but in fact – the whole advantage of blockchain is decentralization. Decentralization gives you control over your NFTs – you hold the keys to your own wallet that can store the NFTs.
However, NBA Top Shot was such a success because of the so easy onboarding. You can buy the cards with crypto, but you can also do that with a credit card. Although the NFTs are held on a Flow blockchain, the fact is that users never get their keys to their wallets. That means – if they lose their password, they can regain the account access or that they don’t have to set up any wallets and be that tech-savvy to do that, but at the same time – if NBA Top Shots decides to close the platform, they have it all – money and tokens. That’s the level of trust in a party that blockchain solves exactly through decentralization – no one can shut down something that’s propagated in numerous copies organically.
Although these issues might have a play, the market is so hot on the NFTs, that they don’t really matter at this stage. More and more projects hop on the trend and launch their non-fungible tokens successfully. But how do they do that?