NFTs are a form of digital property, meaning they can be bought and sold without physical transfer. They represent ownership of an item or service in the real world such as a song, film, game character, etc. NFTs also have some other very interesting features that make them stand out from traditional forms of digital content:
They are created using smart contracts on the Ethereum blockchain so they cannot ever be lost and can’t be duplicated;
Non-fungible tokens themselves can inherit properties from their parents – which means you could create something like a spawnable version of Mona Lisa with certain properties inherited from the “parent” painting; And finally, while it’s not yet possible for NFTs to exist outside of games and platforms, they could in future; this would mean that you could buy an NFT representing your favorite game character and then sell it on to someone else – or even give them as a gift.
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The Biggest Flaws
Now while these things may sound impressive the truth is there are some fundamental flaws in their design that make them great for games but not much use for anything else. The main problem is that NFTs are tied to a specific platform or game – so if the developers drop support or go bust then your property may become useless overnight. In this way they’re basically digital Beanie Babies as people can’t resell them as easily as other digital goods and will only be valuable as long as the platform they’re tied to is popular – which can be a risky proposition.
Other problems include the fact that you cannot own NFTs outside of a specific platform or game and also it’s not possible for NFTs to live outside of a certain digital space. This means that if someone releases an open-source version of a certain game it’s not possible for Non-fungible tokens to leave since they’re bound to the game engine – and while some people may like this others may prefer an open-source version of their favorite game. This also means that new games on the platform may become more popular than the original so all your hard-earned work might be worth nothing.
Another big problem with NFTs is that they are not divisible which means you can either have one NFT or multiple smaller versions of the same thing – so if you wanted to own 1.5% of a certain item then it’s not possible to do this with NFTs. This may sound like an arbitrary point but in the real world people frequently buy portions of things such as stocks and bonds, real estate, or even companies – so this is an important point to take into account.
Finally, there’s the issue of what happens when a better version of the same thing comes along which makes your original NFT worthless. For example, right now NFTs can exist in MetaMask and they look something like this:
Until now the only way to use Non-fungible tokens has been via MetaMask but if, say, Chrome One introduces their own version of this platform then there is no guarantee that your NFT will still be compatible with it. This means you may have bought something valuable and one day found yourself holding nothing since all your NFTs aren’t supported anymore. This may not be a problem for games where all NFTs look the same but it could be a big one for other things such as stocks and whatever else exists outside of gaming.
So summing up what we’ve discussed so far
Non-fungible tokens are tied to a specific platform or game which means they’re useless if the developers decide to drop support or go bust; They can’t be owned outside of a specific platform or game and they exist within a digital space so NFTs would not transfer between different games – unless someone else manages to enable this functionality; there is no way for NFTs to live outside of a certain platform which means you couldn’t use them on other platforms without first transferring them to an existing platform; NFTs are not divisible which means they’re only useful in whole numbers – so if you want a portion of something then it’s impossible to do this.
Another issue with NFTs is that there are already better versions available for the same thing – take, for example, the above NFT which is tied to a specific platform. Right now this version works but if someone else comes along and makes a better one then your old NFTs will be worthless since they’re only compatible with this one platform.
In his free time, he likes to teach people about financial tips and tricks and help them improve their lives. This is one of his main motivations behind the blog!
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