The incident of Taiwanese music star Jay Chou "stolen" NFT on April Fools' day has raised an alarm about NFT investment.
Recently, Jay Chou announced on his Instagram that he lost an NFT of the "Bored Ape Yacht Club (BAYC)" collection worth more than 130 Ethereum, or 424,541 USD, due to clicking on a fraudulent website. . This is not the first time that bad reputation surrounding the NFT investment market has been raised. So what is the nature of NFT? And does investing in NFT bring any benefits or harm?
The original idea of NFT was to apply technology to make it easier for artists to exercise control over their works. From there they can more easily conduct transactions or protect their works from infringement of intellectual property rights in the digital space.
If you liked a work, would you be willing to pay just because its name was on a spreadsheet? Leaving aside the technical aspects of the NFT, putting works of art on the blockchain is like listing them in an auction catalog. That helps the work to be authenticated and recognized. By default, copies of digital images or videos are perfect copies – indistinguishable from the original in its bits and bytes. Being able to separate an artist's original work from its copies was truly a breakthrough.
However, the fatal weakness of the NFT is that it does not actually store a digital work on the blockchain. Instead, it just stores a link to the web address of the work. This means that when a person buys an NFT, they are not actually buying the work, but just buying a link to the work. And worse still, these links will most likely go down after a few years. Until then, who can verify if the original work is linked to the broken link?
Almost all of today's popular NFT platforms have some of these weaknesses. They still have to rely on a certain company to maintain the work to authenticate the work you own. Also, rely on the old pre-blockchain internet, where a work of art would suddenly disappear if someone forgot to renew the domain name. Software engineer Jonty Wareing recently wrote on Twitter, “Right now NFTs are like a castle of cards built by people who keep buying and selling them.”
But the situation is getting worse and worse. Over the past decade, blockchain has become an ideal haven for those looking to store their assets. For global capitalists, the NFT is just an alternative to depositing their money in some real estate they will never visit. Their funds will be safe as long as people continue to buy bitcoin, Dogecoin, Ethereum and the like faster than the overall increase in supply.
The biggest difficulty that blockchains face at the moment, is that they are almost useless for ordinary consumer needs. Because no ordinary person will choose to use blockchain technology when traditional technologies still work completely stably. In addition, if you look more deeply, you will find that cryptocurrencies are only valid on the cryptocurrency trading applications themselves. There, currencies exist only to be traded and become derivatives of their own.
You absolutely cannot buy real estate or yachts with cryptocurrency. So the only option for spending crypto is to enter the art market, where no one is required to have the taste or ability to appreciate art. However, things have gradually become a mess when people are only interested in short-term benefits and do not care about long-term responsibilities. There are people who are creating NFTs for artists' works without even asking permission or even letting them know. The NFT craze drove prices for photos or memes up to thousands, even millions of dollars. Now, do you still want to participate in this NFT financial storm?