A Software engineer warned that NFTs are built on shaky ground despite as we can see in recent times, the interest in the NFTS is surging so let’s read more in our latest cryptocurrency news.
Non-fungible tokens are digital assets that represent a range of unique real-world intangible things and the interest for NFT digital artwork has skyrocketed in recent months thanks to high-profile sales. The main selling point of NFTs is their scarcity and one implied benefit is that they exist forever on the blockchain but the research conducted by Jonty Wareing shows that this is not the case.
The Software engineer warned that NFTs are actually built on some shaky ground. He examined the blockchain data of two-well known NFTs and discovered that they consist of either a URL address or IPFS hash which means that the existence of these NFTs depends on the marketplace seller that stays in business:
“Short version: The NFT token you bought either points to a URL on the internet, or an IPFS hash. In most circumstances it references an IPFS gateway on the internet run by the startup you bought the NFT from. Oh, and that URL is not the media. That URL is a JSON metadata file.”
In the first instance, Wareing referred to a piece called CROSSROAD by Beeple via the Nifty Gateway marketplace and it was a first for Nifty but things started changing after the US election since after that, CROSSROADS sold for $6.6 million. Wareing noted that the NFT token for CROSSROADS is a JSON file that is hosted on the Nifty Servers and stated that if the platform stops trading, Crossroads will cease to exist:
“THAT file refers to the actual media you just “bought”. Which in this case is hosted via a @cloudinary CDN, served by Nifty’s servers again. So if Nifty goes bust, your token is now worthless. It refers to nothing. This can’t be changed.”
The examination of Beeple’s FIRST 500 DAYS is an IFPS hash to this refers to a JSON metadata file that references an IFPS gateway from Makersplace. Both art pieces will cease to exist if the marketplaces are gone. However, there remains a nagging doubt that both Nifty Gateway and Makerspace will go out of business someday. Wareing called this situation a “house of cards” and predicted that every NFT will be broken in the next ten years:
“In short: Right now NFT’s are built on an absolute house of cards constructed by the people selling them. It is likely that _every_ NFT sold so far will be broken within a decade. Will that make them worthless? Hard to say.”
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