The non-fungible tokens (NFTs) are some of the top revelations in the blockchain world in recent years. Digital arts and collectibles are fetching millions in online auctions. Top teams are also recreating some of the most memorable moments in the form of NFTs then selling them to fans. Even music, films, tweets and other art forms are available as NFTs.
One of the noticeable transactions involving the NFTs was the sale of a JPG file made by Mike Winkelmann for $69 million at an online auction by Christie’s. Various NFTs-focused companies are also coming up in the wake of the boom. For example, a blockchain-based fantasy soccer company raised $3.8billion on its initial funding.
While there have been concerns that the rise in NFTs can be a boom that will later explode, indications are that it is a lasting phenomenon. The rise of NFTs is backed by real-world demand and more use cases will likely be found with time.
However, there are various concerns that threaten to derail the NFT blockchain movement. Here are the three design flaws the industry must resolve before it can become mainstream.
1) The high cost of ownership
NFTs are like any other art, the only difference is that they are digital and are tokenised. Like real-life artworks, NFTs draw value from owning the original artwork. Many people are willing to pay premium fees to acquire unique pieces of art. Therefore, it does not make sense to pay for digital art if you cannot keep the underlying asset it represents.
At the moment it is quite costly to permanently store the asset data. It is even worse when the data involves a video. You have to keep paying the platform to protect your files, otherwise, you risk losing them permanently. Imagine paying millions to purchase an item, only to keep on spending more to secure it. It can become frustrating after some time.
The network can make ownership more affordable by spreading the incentives when an NFT is sold. The nodes securing the platform should get a cut of the profits, more like the rewards in crypto mining.
2) Content protection
The other concern that comes with the NFTs is security. Blockchain itself is highly secure, however, that does not apply to the applications built around it like smart contracts or websites. Currently, the NFT blockchain data is stored in centralised file servers that are susceptible to hacking or illegal file sharing.
Various NFTs marketplaces have already been hacked, losing artwork worth thousands of dollars within a day. Some people have also lost their NFTs which are then resold online. This is possible because blockchain technology only protects against forgery, not theft.
The platform can increase content protection through the implementation of digital rights management.
3) Ownership bound to identity
Another concern that comes with NFT is identity bound ownership. It works such that the art can only be accessed through a private key. When it gets lost or stolen, the damage is permanent. Instead, the platform should allow for identifying ownership such that one can pass the precious item from one generation to the other.
Also, at one point the existing user would still take the art to an auction and make money from it, like the real-life collectibles.
