The rise of Non-Fungible Tokens (NFTs) has been a hot topic in recent years, with many artists and musicians embracing this new technology as a way to monetize their work and connect with their fans nearly instantaneously. However, there were also concerns about the potential downsides of NFTs, and some critics believed that their downfall was inevitable from the get-go. We abstained from an opinion because we didn’t have one. We don’t like crypto and NFTs are up the same alley so Blue Rhymez Entertainment didn’t invest in either. Now, however, in 2023, the NFTs took an embarrassing plunge and we’ve compiled 5 major reasons why this happened.
5. Disastrous Environmental Impact.
One of the first concerns about NFTs was their potential impact on the environment. Those who listened received the message! The creation and sale of NFTs require a significant amount of energy, which does have a negative impact on the environment. According to a report by the Cambridge Centre for Alternative Finance, the energy consumption of the Ethereum blockchain, which is used to create and sell many NFTs, is equivalent to the entire energy consumption of the country of Qatar. This has led to criticism from environmentalists and concerns about the sustainability of NFTs. As per artalistic: “The storage methods used to house NFTs based on blockchain technology are responsible for emitting millions of tons of carbon dioxide, which is harmful to an already overheated planet.”
4. Lack Of Regulation And Verification.
The potential for fraud and scams was exaggeratedly high from the start. As NFTs are a relatively new technology, there is an inherent risk that comes with unscrupulous individuals who take advantage of people unfamiliar with the technology. There have been plenty of fake NFTs being sold on online marketplaces or NFTs being sold without the permission of the artist. This has led to legitimate concerns about the reliability and veracity of NFTs, and the potential for artists and buyers to be exploited. You can read all about the most popular types of NFT scams here (phishing, bidding scams, pump-and-dump scams, and counterfeit NFTs).
3. Limited Resale Value.
When you talk about NFTs, the speculative nature of the non-fungible tokens can not be omitted from the conversation. The initial hype around NFTs was largely driven by speculation and hype, rather than any intrinsic value. This has led to the collapse of the NFT market, leaving many artists and buyers with worthless assets. While it is true that some NFTs have sold for millions of dollars, it only happened for the big players and only in the beginning.
The high cost of creating and selling NFTs has led to concerns about their accessibility. While some established artists and musicians have been able to profit from NFTs, it is much more difficult for up-and-coming artists and musicians to participate in the NFT market. The cost of creating and selling NFTs is prohibitive for most indie artists, which has automatically led to a concentration of power and influence among a small group of artists and collectors.
1. Copyright Infringement.
NFTs often contain copyrighted material, such as music or artwork. While it is possible to create an NFT of your original work, many others created NFTs of copyrighted material they did not own.
The problem with NFTs and copyright infringement is that it is challenging to verify the originality of the digital asset. It is possible for someone to create an NFT of someone else’s artwork, leading to serious legal issues. This has already happened in some high-profile cases where artists have claimed that their work was used without their permission to create NFTs. Furthermore, even if the NFT was created from original material, it still infringed in many cases copyright laws if it included elements from other copyrighted works. For example, if an NFT artist used a sample from a copyrighted song, it is considered copyright infringement.
Another issue is that NFTs bypass the traditional methods of licensing and royalties that come with the use of copyrighted material. As in the case above, if an NFT includes copyrighted music, the copyright owner may not receive royalties from the sale of the NFT.
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