Amid rapid technological transformations, non-fungible tokens (NFTs) have emerged as one of the most prominent phenomena in the digital world. This technology has attracted the interest of artists, investors, and even major companies. But with all this hype, a legitimate question arises: Do NFTs represent a promising future for the digital economy? Or are they merely a modern means of fraud, hiding behind a facade of advanced technology?
What are NFTs and how do they work?
Non-fungible tokens are unique digital units recorded on blockchain networks, often on the #Ethereum network, to prove ownership of a specific digital asset — whether it's a piece of art, a video, an audio file, or even an item within a video game.
Each NFT represents a unique digital certificate of ownership that cannot be replicated or exchanged. These tokens are sold through specialized platforms like OpenSea and Rarible, and some sales have reached astronomical figures, such as the sale of a digital artwork by artist Beeple for $69.3 million at Christie's auction house in 2021, a historical precedent.
Numbers revealing market size
According to a report by NonFungible.com in collaboration with L'Atelier BNP Paribas, the value of the NFT market reached about $17.6 billion in 2021, compared to only $82 million in 2020.
These numbers sharply declined in 2022 and 2023, with Reuters estimating that NFT trading volume has dropped by over 80% due to market saturation and the downturn in cryptocurrency.
Despite this decline, Bloomberg expressed in an analytical report its belief that NFTs will remain part of the infrastructure of Web 3.0, especially in gaming and digital contracts.
Promising future prospects
1. Empowering artists and creators: The NFT technology allows artists to sell their works directly to the public, without the need for an intermediary or publisher. The tokens can also be programmed to automatically take a percentage from each resale.
2. Documenting digital ownership: NFTs can be used to document certificates, medical records, electronic tickets, and even real estate contracts.
3. Supporting the creative economy: UNESCO published a research paper in 2022 indicating the potential use of NFTs to protect the rights of digital creators in developing countries.
4. Experiences of major companies: Companies like Nike, Adidas, and Gucci have launched their own NFT projects, reflecting the interest of major institutions in this field.
But... is it a bubble or a scam tool?
Despite the great potential, the dark side cannot be ignored:
Market manipulation: A study by Chainalysis revealed that about 80% of the activity in some NFT markets may be linked to what is known as "wash trading," where a person sells the asset to themselves to inflate its value.
Art theft: The Electronic Frontier Foundation (EFF) confirmed that many works have been converted to NFTs without the permission of their owners, in a blatant violation of copyright.
Cyber fraud: The OpenSea platform reported security breaches that led to the theft of hundreds of tokens, prompting it to temporarily suspend some transactions in 2022.
Lack of legal regulation: According to a report from the Organization for Economic Co-operation and Development (OECD), the lack of clear legal frameworks regarding NFTs opens the door to their exploitation in money laundering and fraud.
Diverse international opinions
The International Monetary Fund (IMF) has not issued a clear position on NFTs, but it has indicated the need to regulate digital assets in general due to their risks to financial stability.
The European Commission called in 2023 for the integration of NFTs within the "MiCA" framework for digital regulation in Europe, to ensure consumer protection.
The World Bank Group has expressed interest in using blockchain for governance and transparency, while being cautious about some "speculative" applications such as NFTs.
Opportunity and risk are two sides of the same coin:
There is no doubt that NFT technology has the potential to change the way digital assets are documented and traded. But at the same time, it remains fraught with legal and ethical risks. Between the enthusiasts who see it as a digital revolution and the skeptics who consider it just a bubble or a modern trick, the user bears the responsibility of understanding and critical thinking.
NFTs are not scams by nature, but they can be used for scams. They are not a "guaranteed future," but they are also not a "passing fad." They are simply a powerful tool that requires prudent regulation, community awareness, and a clear strategic vision.
