Before getting into the debate of whether or not NFTs are worthless, let’s start by defining what they are. NFTs or non-fungible tokens are digitally protected pieces of data stored on the blockchain, like art, music, memes, sports memorabilia, digital flowers, games, and more. These tokens are considered to be non-replaceable due to their unique nature. Despite this, there is a debate on the true value of NFTs.
Most NFTs are worthless. Only 25% of NFTs sell for more than $15, and of that 25%, only 1% sell for more than $1,500. This does not include the number of NFTs that sit on the blockchain unsold.
There are a few factors that contribute to the value status of NFTs, and it’s important to note that some of those variables may change as the technology behind NFTs improves. Still, there has been success with certain NFTs as it stands today.
Also, don’t get me wrong, I’m “PRO” NFT as I have a small collection of them, and I intend to keep buying them from artists that I enjoy. Plus, I’ve minted my own NFT artwork on both Foundation and Rarible (2 NFT Platforms). And as you see here on this website, I write about them nonstop.
But let’s take a look at why they may be considered worthless or at least how the skeptics look at them.
Why are NFTs Worthless?
Though there is criticism over where NFTs are currently, in terms of their worth, it’s important to note that there is optimism over how NFTs could evolve in the future, and I talk about 10 ways they may change the future here. Keep in mind that this kind of content is relatively new and still very much in its infancy stages of existence.
This article is primarily tackling the idea of digital art as NFTs. The other forms of NFTs like music, games, and event tickets are a whole other discussion I will write about in the near future.
Here are a few issues or concerns that come with NFTs and the technology as it stands today. These conflicts affect both the artist or creator and the buyer of NFTs.
- Profit Vs. Loss
- Issue of Scarcity
- Lack of Security
Delving deeper into each of these topics will paint a better picture of why so many have come to a consensus that though NFTs have grown in popularity in recent years, it is not enough to give them worth.
Profit Vs. Loss
How we typically define value for content or items is by supply and demand. If there is too great of a supply and the market is oversaturated, it can lose its value, and if there is not enough of a demand, it can also lose its value. The creation of NFTs has grown exponentially in the last few years, and though there is quite a community being built of those engaging with NFTs, still a vast majority of these tokens go unsold.
Many creators who are taking time, energy, and even money to create (mint) NFTs are watching them sit on the blockchain. Trust me, minting NFTs is not cheap, as I discuss in the article “How Much Does It Cost to Create an NFT? A Simple Answer.” Those that are receiving greater profits than the cost of a typical Taco Bell dinner, for one, are considered outliers. NFTs today are not benefiting most creators if the goal is to turn a profit.
It’s a little complicated to say that NFTs are even benefitting buyers for more reasons than one. The 1% of tokens that are being sold for higher than $1,500 are subject to skepticism. This is due to ‘anonymous’ buyers who turn out to be the creators buying their own work to drive up demand. Imagine buying an NFT from a creator whose whole appeal was dredged up with fake sales, witnessing them being exposed, and then being left with an NFT you may not be able to resell.
Issue of Scarcity
Riding on the coattails of supply and demand is the concept of scarcity. Sometimes what makes something valuable isn’t just its uniqueness but for its rarity. There may be a sea of digital copies of The Last Supper, but there is only one original, and it’s something that is tangible. You can hold it in her hands, see the strokes of the brush, smell the lacquer of the paint.
NFTs are entirely digital, and when you purchase one, what you receive as the owner is not a tangible piece but a link to the token. Anyone can still copy the image itself. What sets one digital rendering of the same content apart from another? What makes it rare? An individual who has a copy of an NFT may not have their name attached to it in a crypto wallet and secured to the blockchain, but that is the only thin thread that separates them from the individual who paid to own it.
There is very little that can be boasted of having ownership of an NFT. It’s essentially an imaginary title when said ownership is unenforceable. I mean, there are plenty of websites where you can show off your NFT collections, and you can even have your NFTs displayed in jewelry or display them on a high res monitor in your house. But anyone can download a copy of the digital image and do whatever they desire with it.
I go way deeper into the idea of coping digital art and creations in this popular post:
Lack of Security
Possessing a tangible item gives you a sense of security because it is in your hands. You know where it is, and you have more control in keeping it safe. Think about the safeguards of artwork hanging in museums. The glass encasing, the attendants in every room, or the guards posted at the entrance. Unfortunately, the same can not be said for NFTs.
Since the ownership of NFTs is really nothing more than a link to an address on the blockchain, if something were to happen to the database in which that NFT is being housed, your ownership and monetary investment in that NFT would disappear along with it (even Ethereum was hacked back in 2016 which forced it to divide into two separate cryptocurrencies.) This means there is a lack of assurance in your digital investment. Cybersecurity is an ever-evolving industry because hackers are consistently overriding protections and safeguards set in place to protect data and information like NFTs.
Even most recently, insurance companies are trying to get into the NFT game by insuring certain purchases. I have no idea how that will work, but it is interesting nonetheless.
Plus, forgetting your wallet password could be devastating, and there are plenty of people in this world who have done just that!
Conclusion
Despite the many obstacles voiced over the worth of NFTs, their critics also voice an uncanny optimism for the future of these tokens in the same breath. Understanding that there is room for improvement and acknowledging that some of the pitfalls could get ironed out in the process.
Where the value of NFTs will be in the future is anyone’s guess. Still, it is certainly worth keeping an eye on this growing industry and continuing to do research to protect any potential investments made into the blockchain.
Many predictions have been made on how the industry will continue to grow, but only time will tell if that growth will result in substantial profits. If you are looking at some potential reasons for a crash, you have to read this.
New to NFTs? Need more helpful info? Check out these heavily used articles:
- How To Sell NFTs Without Gas Fees (or less) | Complete Guide
- How to Check the Ownership of an NFT (7 Methods)
- Minting Vs Buying an NFT: Are They The Same Thing?