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Why Do People Hate NFTs? Is It Justified or a Lack of Understanding?
There are two sides to every argument, and today we’re exploring the reasons why people hate NFTs. Yes, it’s a different take and one on the opposite end of where we stand, but maybe people have a point? We like to be fair and will try to remain as neutral as possible. So, why do people hate NFTs? Let’s find out.
What are NFTs?
You can’t hate something that you don’t understand. Well, you can, but not if you want to make an educated and informed decision – which is what we aim to do. NFT stands for non-fungible token. It is something that cannot be copied and faked with its ownership written directly into the blockchain it is built on via smart contracts.
Non-fungible tokens can be almost anything from digital images (crypto art), collectibles, gaming tokens, and even virtual land.
Why are NFTs Bad?
They don’t sound that bad, right? There is proof of ownership, which can really protect the intellectual property rights of artists that they don’t usually have on the internet. While this is all true, there are risks to NFTs. Let’s check out some of the most concerning ones.
The Environmental Problem
Again, there are two sides to every argument and climate change is definitely a topic of contention. However, there is no arguing that NFT projects do no favors for the environment (although they can be used to plant trees and for conservation via their utility). Bottom line is, they aren’t environmentally friendly and can have quite a large carbon footprint.
What impacts this is the blockchain the NFT projects are built on. There are many options such as Cardano, Solana, and Algorand, but the majority are still currently on Ethereum. This is a problem because Ethereum initially used a proof-of-work consensus, which required a lot of energy. They could use as much electricity as the country of New Zealand!
Many other chains (and Ethereum has moved towards it) use proof-of-stake. The proof-of-stake consensus is more environmental and uses much less energy. So, in the future, the environmental impact of NFTs will greatly decrease.
Many NFTs are not Tangible
We addressed one problem, but what about the next one? It’s a very legitimate concern as some people believe that NFTs have no real value. They aren’t rooted in reality (most of them) and are digital assets. We can completely sympathize with those who share this thought, but the entire concept of value is completely based on human assignment – for anything.
Would Chanel be able to raise their prices every year with people still willing to pay thousands of dollars for their bags if no one felt they were worth it?
Little Regulation
One thing we will say that can be improved on in the NFT space is the regulation. NFTs are largely unregulated and this poses a lot of risk for investors. However, investing in NFTs is very similar to investing in financial markets – there’s always a risk (and investors know this).
The unregulated nature of NFTs means a higher chance of scams and rug pulls. Due to the lack of regulation of non-fungible tokens, there is even a potential for money laundering. So, we get why artists hate NFTs. The art market is said to be at risk due to NFT transactions without a governing body. However, we always try to be fair, so we’ll also say that NFTs can help artists monetize their work and get their names out there.
The Whales Have Too Much Control
Blockchain technology, crypto and NFTs claim to be decentralized, but this isn’t always true. There has to be some centralization for anyone to be held accountable and govern the space. Unfortunately, the whales usually have the power. No, we don’t mean the marine mammal, but the NFT investors with the most cash.
In many cases, these are the people that can influence and have the most say in the matter of value and profit. Whales can say the word, support a project, put their weight behind building its popularity, and then sell the tokens at the right time. All these actions can heavily influence the market and the other investors have to ride the wave.
Capitalization Over Culture
Another reason why people hate NFTs (many artists specifically) is the toll NFTs are taking on our culture by the precedence they set. They put a price on culture, such as art pieces, and they even contribute to the market of stolen artwork. Those who steal original pieces can turn them into NFTs and earn money off of other people’s work.
It’s All Still Speculative
One of the biggest reasons why people hate NFTs is that the market is so unstable. Unlike the stock market, which in most cases bounces back, NFT creators, supporters and investors aren’t sure if NFTs will make the climb back up from the bear market. A year or two ago, a lot of people were minting NFTs and made even more money from these projects than they would make at their regular jobs.
We would get news about the “next big NFT drop” and so many people would quickly jump on the bandwagon looking to make money from the next Bored Ape Yacht Club. However, sometimes it cost these people greatly and the extra unlucky ones lost their life savings. The value of NFTs is highly speculative and is really based on nothing more than demand and hype.
It can also be argued that most people should understand that investments are never a sure promise. Although we can still say that investing in large companies on a stable market may be a better bet as of now.
The Intellectual Property Rights Problem
This point builds on the regulation issue we talked about before. Blockchains are a new technology, so we understand that there are a few kinks to work out such as the environmental impact (energy usage). The NFT world opens doors for violation of intellectual property rights, but this can be rectified once the space becomes more regulated.
Although the ownership of NFTs cannot be faked, and you can see who bought and sold what NFT, not many people outside of the NFT world will bother or know how to do it. There is nothing you can do if someone screenshots an NFT you own to keep it and even display it in some cases if they do not claim to own it or use it for commercial purposes.
Creators and Supporters May Not Make Money
To be completely honest, not everyone creating and purchasing NFTs will make a profit. On the creation side of things, it is totally possible for a person to spend more dollars creating and listing the project than the return they get.
As for the supporters, even if the project isn’t a scam, there is no telling if your tokens can be sold at a higher cost in the future. You have to use a lot of critical thinking and speculation to separate scams from legitimate projects and to hope that the NFTs can sell for a good price on the secondary market.
Fear of Missing Out
The last major reason why people hate NFTs is good old FOMO (Fear of Missing Out). We will be completely neutral and still say that if you get into NFTs without much research, but everything you have on a project in the hopes that it is the next BAYC and then happen to lose it all, then it’s really not the project or the creator’s fault.
Don’t be afraid of missing out and then lose all your hard-earned money. Do what you feel is right.
Is the Hate for NFTs Warranted?
Do NFTs really deserve the mudslinging? We will say that the technology is impressive, and the NFT world is still largely unexplored, so we don’t personally feel that it deserves all the hate it gets, but we do understand the trepidation.
The concept of NFTs is quite remarkable, and it’s no wonder a lot of people have high hopes for the technology, but it can come with tremendous risks such as scams. Let’s all just dial it back a bit and keep our eyes on the NFT space and see it mature a bit more before passing permanent judgment.
FAQ
• Why are NFTs hated in gaming?
NFTs are hated in gaming because the tokens are so embedded in the games you sometimes need the tokens (which are things like rare items) to advance and win more easily. It’s not so much the NFTs the gamers hate, but more so the money-making process behind them.
Conclusion
Why do people hate NFTs? Well, we’ve presented you with some pretty valid reasons, all of which we can understand. We just want to remind everyone that this is a very new space. While we get the hate, it’s a good idea to wait a bit and see what comes of the dedicated artists, the regulation, and real value they can bring to the world before making a judgement call.
