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 going through several hype cycles since Kevin McCoy featured “Quantum” in 2014, NFTs truly captured global attention in 2021. Not only did Paris Hilton, Snoop Dogg and Tony Hawk supports 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 mania, one must first understand what NFTs are and what they are not. Essentially, NFTs are ownership certificates which has all its movements recorded on a blockchain network. This means that the history of a given NFT can be traced all the way back to its origin, allowing for a level of transparency and accountability not possible with traditional physical assets. Since all NFTs are traceable, no two NFTs are alike, and records will exist as long as users keep the blockchain active, the security and transparency of NFTs is second to none.

While there have been many reports of NFT counterfeiting, most of which arise from a lack of distinction between forgeries and frauds. As a person acquiring a counterfeit may be aware of its inauthenticity, it can be said that most counterfeits are frauds, but not all frauds are counterfeits. Someone taking art they don’t own and putting it into an NFT before selling it, while still morally wrong, is not the same as someone replicating the original work.

A scammer making an NFT with art they don’t own is no different from a fake one previously unknown piece by Pollock. Both are morally reprehensible and fraudulent, but technically it is not forgery. This is an important distinction when considering that while NFTs may be associated with assets such as digital art, they are not designed to represent the asset itself.

Some also refer to NFT counterfeiting as the ability of someone to create an exact copy of an NFT, which can’t really be done. Fraudsters are limited to trying to create a new NFT with metadata such as transaction hash, timestamp, originating address and transaction as close to the original. But even if they defied all odds and made the data of their new token look similar enough to the original, it would be enough for most people to compare between an original and a fake.

Widespread misunderstanding of new technology and a failure by marketplace operators effectively monitoring their platforms has in turn resulted in disruptive technology being overshadowed by sensationalism. Fortunately with focus now shifts to AIexploring the blockchain community now freely new real-world applications of tokenization are moving away from art and other collectibles.

This was the main theme of the panel “How Tokenization Is Moving Beyond Art Collectibles to Real Life Applications” 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 Card1Venture managing partner Gary Cardone sat down with Wright to touch on topics such as 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, be sure to watch the video below or on Grit Daily’s official YouTube channel!