The NFT market is worth more than $40 billion

The value of the NFT market has exceeded $40 billion. Other calculations put the market capitalization of NFTs at $22 billion. Despite these differences the NFT market is expected to grow substantially, exceeding $80 billion by 2025 and overtaking the global traditional art market.

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January 22, 2022 11:28 pm

Here comes the right-clicker to rain on the NFT parade…

The growth of non-fungible tokens has been a blessing for some artists. It’s a notoriously difficult industry to earn a full-time income from. Having another means to profit from your creative work is a good thing. My problem with NFTs is the inclusivity. We’re not there yet in terms of infrastructure and understanding. Instead of an inclusive market where many people have a chance to participate, we have a $40 billion market where rich investors get richer and some lucky few make a life-changing sale. A large block of society is left out because they don’t understand the technology. Some unfortunates have lost their life savings in this 21st century equivalent of Tulip Mania.

If you’re interested in buying NFTs or even minting your own, you need to keep some funds in a hot wallet. There have been numerous notorious cases of hot wallets being hacked with the victim not being able to do a damn thing about it even if they have the thief’s wallet address. Missing funds are rarely restored. So what can you do to avoid this?

Keep your funds in a hardware wallet (cold storage). Sounds reasonable. But to be even safer we’re encouraged to store them in an air-gapped computer, one that hasn’t been connected to the internet. I know what you’re thinking. You gotta be joking. Regretfully, no. Talk to Joe Schmo about all this and he’ll get lost in the crypto speak that makes Egyptian hieroglyphs sound like your A,B,Cs.

Ok, let’s assume I’ve figured out Ethereum storage. I keep some in my hardware wallet and a smaller sum in MetaMask. Now it’s time to get rich, baby! Let’s mint an NFT and sell it on OpenSea. OpenSea’s “gas-free” marketplace sounds great. But I have to initialize my wallet first. Let’s see how much this costs. WTF? Initializing my wallet can cost anywhere from $50 to $500! Does this sound like something a regular person is willing to do? And MetaMask or OpenSea has no control over the fees and depends on Ethereum network congestion.

Even more of a deterrent is the fact that you can approve a transaction that doesn’t go through but you still pay the gas fee! To execute transactions on the Ethereum network, you need gas or computational power. Even if the transaction fails, computational power has been used up and you need to pay for it. It’s not uncommon to hear newbie NFT sellers pay $300 for OpenSea’s initialization fee and the transaction doesn’t go through. As they have to pay the gas fee regardless, they lose the $300, they aren’t set up on OpenSea and they get notifications telling them they now have insufficient funds in their wallets. Just as OpenSea says: When you pay for gas fees, the payment only guarantees your transaction to be processed. It does not guarantee that the transaction will succeed.

Now tell me, is this inclusive? Are NFTs really something to shout about? If you’re a millionaire then you’d have no problem losing a couple hundred dollars for a gas fee. Regular people don’t want to risk $300 with the chance the transaction doesn’t go through. What feels safer? A traditional bank account or a hot wallet? Right now I’d say the traditional bank account. The intention behind decentralized finance and NFTs are noble. I applaud where we need to get to but we aren’t even close yet. The media doesn’t help. Instead of publicizing the risks, we hear about some Indonesian kid who took selfies for 2 years and now has a net worth of over $1 million. We hear about Beeple’s $69 million sale. What about the average guy who wants to get in on the hype and lost his weekly paycheck because of a failed transaction? Not newsworthy enough I guess. I like NFTs. I’m obsessed with news about them. But I’m unconvinced about widespread benefit for now. Not enough security, infrastructure and understanding. A possible dot com bubble burst 20 years on. Yep, I’m a right-clicker who wants to be turned.

Rayan Tanwar
January 24, 2022 3:32 pm

I like the idea of NFTs. At its core is the hope for artists to be fairly compensated for their work. But when a market emerges out of nowhere, reaches $40 billion and is expected to double in value in the next 3 years, the innocence of NFTs fades away. The concept of fair compensation for creative work is eroding away. NFTs are now being preyed on as a quick cash grab. I speak to a friend very often about crytpo, mainly about how rich we’d be if we invested in Bitcoin in early 2019. We’ve stayed away from NFTs until recently. Last week he sent me a message that was a complete 180 from his usual NFT bashing. Now he’s all in… “Hey man, I’m gonna get into this NFT business. People are paying stupid money for this stuff.

And that’s my point. People want in for the “stupid money“. Some artists are suffering from the NFT bubble with rogue profiteers screen-grabbing their art and selling them as NFTs for a quick buck. And I’ve come to believe that you can sell pretty much anything on the internet. Belle Delphine can sell out stock of her own bathwater at $30 a jar. A bag of air from a Kanye West concert was bid on for $60,000 in 2015. I genuinely thought that was a joke when I first heard it. If people are willing to buy jugs of bathwater or a bag of air, they will buy an NFT without checking if it is from the originator of the creative work. It’s not the first time a technology spirals out of control and is used for a different purpose to what was originally intended.

We’re in the boom phase. Everyone wants a bit of the action. Celebrities, start-ups, sportspeople, investors and the everyday 9-to-5 worker wants to sell that one NFT that will turn them into an overnight millionaire, or an even richer millionaire. But eventually the bubble will burst. And then what happens? Money will flow out of the NFT market and people will invest in the next bubble. Artists will still be there making creative works. The digital avenue that held so much promise will be useless. No one will want to buy NFTs and they’ll be relics; a reminder of a speculative past that drove people to buy and sell digital proofs of ownership in aggregate of $80 billion and beyond. Investors and their money will move on. Artists will still be around, wondering what happened to this technology that was supposed to bring fair compensation to their world.

Last edited 8 months ago by Rayan Tanwar
Niharika Khatri
January 25, 2022 11:05 am

Are NFTs our Easter Island?

In the Pacific Ocean 3,540 km west of Chile is the remote Polynesian island, Easter Island. It is known for its moai, mysterious monolithic statues, of which the largest is El Gigante, a 72 foot tall statue weighing around 170 tons. When the Dutch explorer Jacob Roggeveen landed on Easter Island in 1722, he described of it a wasteland without a single tree in sight. Timber and rope from trees would have been essential for the islanders to erect their large statues. What happened to the complex, thriving population that once lived on Easter Island?

Research has indicated Easter Island was once divided into 12 territories in a competitive island society. Each territory tried to outshine the others by building bigger and more impressive statues. However a consequence of this competition was extreme deforestation, loss of water transport and loss of food sources. The population experienced starvation and was decimated. A haunting thought is thinking what must have been going through the minds of Easter Island society when they were cutting down their final standing trees. They must have known society was headed toward destruction. But they did it anyway.

At first thought, the Easter Island society that did this sounds ignorant. Competing with each other for prestige? But if we look at our society today, we do the same. Countries compete to have the tallest buildings in the world from the Shanghai Tower to the Burj Khalifa. People buy the most ostentatiously priced cars and show these off on Instagram. Hotels compete to have the most lavish facilities. And now, NFTs.

But how could they cut down trees when their destruction was in plain sight? Our destruction is in plain sight today! We are consistently told that we are heading into an abyss but we fail to meet our greenhouse gas reduction promises. Decarbonization is urgent. Every year we fail, the more difficult it will be until the impact on lives and food sources will be insurmountable.

But here we are. Bitcoin operations are said to be generating 20 million metric tons of carbon dioxide a year. A single Ethereum transaction has a carbon footprint of 117.78 kg, equivalent to 261,041 VISA transactions. If our civilization collapses and a new life form inhabits our planet millions of years later, what will they think? They ruined their civilization because of prestige and creating art. They knew they were destroying their civilization but they did it anyway. Not so different from Easter Island after all.

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Nasro Djebbar
January 26, 2022 11:18 am

NFT growth has been swift. Droves are converting from sceptics to evangelists overnight. As some others have pointed out, the allure of bagging a jackpot NFT probably has something to do with it. Countering the NFT growth trend is a highly vocal detractor community that scoffs at the idea of creating scarcity when there was none before and decries the environmental impact of NFTs. I’m somewhere in the middle. Like most people my age (I’m a millennial), we care about the environment. But as someone who’s been involved in the tech world one way or another for the past 10 years, I know technology can adapt and evolve quickly.

OpenSea is the dominant platform for the moment. A lot of people who don’t really understand NFTs are throwing caution to the wind and signing up, not knowing anything about Ethereum, Polygon, semi-fungible tokens and the a glossary of other terms that necessitates a crypto dictionary. Side note: Has anyone created a crypto dictionary? If not, I came up with the idea here!

The flow of investors into the NFT market, notwithstanding the opacity surrounding it, is no surprise. All we have to do is look at the stock market for an equivalent example. People watch Wolf of Wall Street once and believe stocks are their way to quick riches. Unsurprisingly many get burned in the process, losing money that they never should have invested in the first place. But as the market grows, regulation and information diffusion combine to make things a bit more transparent. Remember when trading stocks was only for people who had access to an expensive broker?

We’re at the moment in NFT history where people are actually falling for crypto pump-and-dump schemes. But regulation is catching up and scammers are being prosecuted, leading to more people becoming aware. Big shout out to YouTubers who are shedding light on these shady practices. As more platforms enter the NFT market and OpenSea’s dominant position is diluted, we’ll get the same effect. Yes, crypto bots and scammers will continue to prey on the naive but many more people will understand what they’re up to and ignore them.

There are rumors that Meta is working on creating an NFT marketplace on Facebook and Instagram, similar to when it launched Facebook Marketplace to compete with eBay and Amazon. Twitter launched a feature to showcase your NFTs as a hex-shaped profile picture; something Elon Musk isn’t too happy about 🤣 TikTok is looking at ways for people to own moments that broke the internet.

As someone in the middle of the road with the whole NFT hype, I see technology evolving to make it more environmentally friendly. Whether the hype and growth can persist depends on information diffusion and regulation. If NFTs are seen as the Wild Wild West of the investing world, it will attract some but will deter the majority.

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