The NFT Craze did NFTs a Disservice: Now is the Time to Fix It

NFTs are now a technology that most people know exists but fail to understand. Despite having gone through several hype cycles since Kevin McCoy minted “Quantum” in 2014, NFTs really caught global attention in 2021. Not only did Paris Hilton, Snoop Dogg, and Tony Hawk endorse the technology that year but individual NFTs also sold for millions of dollars. Unfortunately, despite putting NFTs in the spotlight, the craze showed the world a distorted version of what they could be.

To truly understand the negative impact of the craze, one must first understand what NFTs are and what they are not. In essence, NFTs are certificates of ownership that have all of their movements registered on a blockchain network. This means that the history of any given NFT can be traced all the way back to its origin, allowing for a level of transparency and accountability that is not possible with traditional physical assets. As all NFTs are trackable, no two NFTs are equal, and records will exist as long as users keep the blockchain active, the security and transparency of NFTs are unparalleled.

While there have been a lot of reports of NFT counterfeiting, most of them arise from a lack of distinction between counterfeits and scams. As a person acquiring a counterfeit might be aware of its inauthenticity, one could say that most counterfeits are scams but not all scams are counterfeit. The act of someone taking art they don’t own and minting it into an NFT before selling it is not, while still morally wrong, the same as someone replicating the original work.

A scammer minting an NFT of art they don’t own is no different from one faking a previously unknown piece by Pollock. Both are morally reproachable and fraudulent but technically, it is not counterfeit. This is an important distinction when considering that, while NFTs might link be linked to assets like digital artwork, they are not designed to represent the asset itself.

Some people also refer to NFT counterfeiting as someone’s ability to create an exact copy of an NFT, which can’t really be done. Scammers are limited to trying to mint a new NFT with metadata like transaction hash, timestamp, origin address, and transaction as close as the original. However, even if they defied all the odds and got their new token’s data to be similar enough to the original, comparing the time of minting would be enough for most people to distinguish between an original and a fake.

Widespread misunderstanding of new technology and a failure by marketplace operators to effectively monitor their platforms has resulted once again in disruptive technology being overshadowed by sensationalism. Fortunately, with the focus now shifting to AI, the blockchain community is now freely exploring new real-life applications of tokenization, moving away from art and other collectibles. 

This was the main topic of the “How Tokenization Is Moving Beyond Art Collectibles to Real Life Applications” panel moderated by Cointelegraph Reporter Turner Wright as part of this year’s edition of Grit Daily House at Consensus. Nodle Founder Garret Kinsman, Cryptology CMO Dagmara Handzlik, and Card1Ventures Managing Partner Gary Cardone sat with Wright to touch on topics like regulation, adoption challenges, and commodity tokenization.

To learn more about what this panel of experts had to say about the past, present, and future of NFTs, make sure to watch the video below or on Grit Daily’s official YouTube channel!