- In Q1, there were 73,000 NFT buyers and 33,000 NFT sellers, according to NonFungible, which tracks NFT transactions
- There is no way to determine or show what the real image was that was associated and purchased with the NFT from blockchain data if the data at the end of that hyperlink changes or disappears
- Protection for NFTs are important to the blockchain ecosystem’s continuous growth, enabling a fairer, more transparent, and equal system for art buyers and sellers
The young non fungible token (NFT) market has already achieved a number of eye-catching milestones in 2021, including a 2,100 percent growth in value from Q4 2020, with users spending over $2 billion. While record-breaking sales have dominated the news, the increased demand from new investors is often neglected.
In Q1, there were 73,000 NFT buyers and 33,000 NFT sellers, according to NonFungible, which tracks NFT transactions. These figures are impressive, but they pale in comparison to the worldwide art market, which was valued at $64.7 billion in 2018, with the United States, China, and the United Kingdom accounting for 84 percent of the total.
In an increasingly online and globalised world, where demand for this asset in emerging economies was only going to expand, the traditional art market infrastructure, driven by dealerships and auction houses, already felt obsolete. The COVID-19 outbreak will most likely be remembered as a trigger for destabilising the current art-market architecture.
By looking at the data included in an NFT today, there is no way to tell for sure who the actual human creator was. As a result, the number of forgeries of NFTs and incidents where a fraudster develops an NFT and presents it as work by a well-known artist is on the rise. NFT forgeries are a rapidly rising problem, according to a cursory Google search on the subject.
In certain situations, the con artists steal an image of an actual work of art from the artist, convert it to an NFT, and then sell it as if they were the artist. Meanwhile, the NFT market offers a glimpse into how smart-contract technology might be used to eliminate third parties and intermediaries who would otherwise want a portion.
However, the existing infrastructure has too many weaknesses and too much room for human error to realistically serve as a replacement for current methods of verification, distribution, auction, and ownership certification.
Furthermore, when an NFT has important linked content or data, such as an image, such data is not maintained on a blockchain. Rather, the NFT comprises a link to the data, most commonly via an internet hyperlink. There is no way to determine or show what the real image was that was associated and purchased with the NFT from blockchain data if the data at the end of that hyperlink changes or disappears.
As a result, there is no way to ensure the NFT data’s long-term viability. It’s shocking, but it’s true. This means that the NFT’s actual image or data could be modified or removed, therefore erasing the NFT’s value. There’s also the risk of human mistake, such as mistyping long, difficult addresses or falling victim to man-in-the-middle assaults, which may result in millions of dollars being transferred to the wrong destination or stolen for good.
Forgery prevention and permanence protection for NFTs are important to the blockchain ecosystem’s continuous growth, enabling a fairer, more transparent, and equal system for art buyers and sellers. The future art ecology is evident, and we, as an industry, must begin to construct it.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.