What’s the Latest with NFTs? Understanding the Cryptocurrency Collectible Craze
Explaining what NFTs are — “NFT” is short for “non-fungible tokens” — in the first place isn’t necessarily that complicated so much as it can be tricky to understand why they specifically were ever considered something of value. Speaking broadly, the idea is essentially using the blockchain as a verification system to allow the sale of digital goods as limited edition collectibles. As crypto and the blockchain, in general, were blowing up a few years ago, so did NFTs to an absurd degree. All of this despite it being clear to those outside the bubble that this was not a sustainable movement.
A big reason for that? NFTs are basically metadata and little more. In practice, many were effectively links to image files, image files that could go away if the NFT marketplace hosting them did. Just look at how Chainstack, a blockchain hosting provider, describes how a band could release a new album and bonus content as a limited edition NFT. “[H]ere’s what you’ll need for an adequate music NFT release: Cover[,] Audio file[,] Video link (optional)[,] Lyrics (optional)[ and a] Web2 reseller link (optional).” Other than being tied to the blockchain to create artificial scarcity, how is any of that different from the digital album releases that bands have been doing for decades?
Overall, you have an incredibly confusing product that isn’t going to appeal to the masses. Despite this, NFTs were the subject of wall-to-wall positive media coverage, framing it as the center of “Web3” in the same way that social media and user-generated content were “Web 2.0.”
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