Last Updated on Thursday, November 4, 2021 by ProsCons
Non Fungible Tokens or NFT’s are a set of unique non-interchangeable units of data. They are stored primarily on a digital ledger. Here, Non Fungible literally means that the product is unique. It is one of a kind which cannot be replaced with another one. For the most part, NFT’s use Blockchain technologies. Blockchain technologies creates a verified and authentic proof of ownership for easily reproducible items in NFTs too. As a result, NFT’s can be used on a wide range of products that includes photos, videos, audios. Also, it includes many other types of digital files. This is a quick intro, you may directly jump into the Advantages and Disadvantages of NFT down below.
In the current day and age, digital products and goods are produced and replicated endlessly. Here, NFT’s work as “certificate of ownership” for those kinds of digital products to show their originality. As an example “Mona Lisa”, we can take a picture or purchase a print but there will be only one original. In the similar principle, NFT’s are digital tokens that prove authenticity of the non-tangible goods despite their constant replication and reproduction.
Generally, all things have their upsides and downsides. Similarly, NFT does also have their own fair share of advantages and disadvantages. Therefore, some of the advantages and disadvantages of NFT’s are:
Benefits of Non Fungible Token aka NFT
- Certificate of ownership
Digital goods are easily replicable and copied. They can be produced endlessly and this makes it’s hard to validate their ownerships. Here, NFT’s are the evident proof of ownerships through digital tokens. As they are on a Blockchain network, it can be easily associated to a single account. Furthermore, NFT tokens ensure that the buyers are safe from scam and fake goods too.
NFT’s are created on the Blockchain network meaning. Hence, each one has a unique token associated with it. Here, the uniqueness and rarity of the NFT also showcases its potential and perceived value as well. Similarly, NFT creators can also limit the number of NFT’s inducing scarcity and driving the price upwards. Hence, NFT’s can easily show their authenticity through their quality.
Exchangeability is also one of the most evident advantages of NFT’s. NFT holders can effortlessly trade them on specific markets with a variety of options for trading. Likewise, NFT’s are based on smart contracts. It means that ownership transfers can be done after fulfillment of specific terms and conditions between the buyer and sellers.
- Generates Economic Opportunity
Currently NFT’s are used in a wide range of digital products. Here, many content creators can gain profit through the trade of their digital goods. NFT’s integrate the ownership of the content resulting in the direct fund transfer to the owners. Hence, this can also prevent other platforms from profiting through their hard work as well.
Disadvantages of Non Fungible Token
The ongoing craze over NFT shows that they are being sold for millions of dollars for a piece. People are purchasing them as an investment and hope to profit from them in the future. On the other hand, many experts believe that this phenomenon is an economic bubble which will eventually collapse. Although, some NFT have value and growth potentials, it’s important to know that not all are created equal.
- Lack of control
When it comes to NFT’s, ownership doesn’t equal full control. Here, the NFT’s can still be replicated and shared even if someone else has its ownership. Similarly, the original owner also doesn’t have any control for the duplication and distribution across many platforms. Therefore, this is also one downside of owning NFT’s.
- Possibility of theft
NFT’s are digital products meaning that they are vulnerable to various security breaches and attacks. Here, they are under constant risks form attacks from hackers. Furthermore, many NFT’s exchanges are done on outdated or inefficient security protocols exposing them to various risks as well.