NFT and cryptocurrencies are a well known part of life now but they enable dangerous organisations.
What is NFT?
NFT stands for non-fungible token, which simply means non-exchangeable token which is stored on the blockchain.
The blockchain is a system that records information in a way that’s impossible to hack, change, or cheat meaning that NFTs are unique in a way and cannot be replicated.
This powers cryptocurrencies from Bitcoin to NFTs this system is what makes the latter non-fungible. Every NFT is essentially an element of the blockchain, a unique token that just can’t be replicated in the same way.
Yes, we have virtually thousands of different digital assets that we refer to as NFTs, but technically they are not what NFTs are.
A tweet is not a NFT and a NFT isnt always a tweet it when it is a specific combination of digits on the blockchain it then can be viewed as an NFT
Purchasing a tweet ‘NFT’ often will not give you ownership of the tweet sometimes the link to the tweet will be given as the NFT and the ownership will be murky. Sometimes it will give you a gigital copy but it will need to state this. However it is common it will have certain licensing, the limited rights to original art are transferred with an NFT.
What makes NFTs desirable
Collectors of unique art as these cannot be duplicated and are unique on the blockchain there is a level of appeal to individuals to have these rare difficult to aquire products. Artificial scarcity is another aspect that makes NFTs more desirable.
Since each NFT is a unique string of digits, associated with a more or less unique image, it creates the feeling of it being one of a kind; desirable for collectors.
There is a exclusive club for the ten thousand owners of specific NFTs the Bored Ape Yacht Club. The entrance fee for this club and the price for a single NFT is 0.08 ETH or about $140 currently.
While this allows NFT sellers to gain massive profits, it also means that if the public loses interest in NFTs that would be the end of them.
Adding scarcity and making it hard to duplicate or have something similar is what makes NFTs sky rocket however these only work if there is a inherent level of interest in the NFT if this falls off the value dimished greatly.
NFTs used to launder money
Money laundering in the In the second half of 2021 alone, cryptocurrencies tied to money laundering worth over 2.5 million dollars were used to buy NFTs. Besides that, a quarter of a million dollars used to purchase NFTs belonged to the wallets of people under international sanctions. Due to this currency in general being decentralised it is not heavily regulated making it quite hard to legitimise.
Bad for the environment
Ethereum is the cyrptocurrency most frequently used with NFT and tied to them. Processing power is needed to mine a piece of the currency and mint the NFT. As Etheruem uses a proofing system to show validity power is used for this process.
Cryptominers are burning through tons of electricity and processing hardware every day. Some sources average out that a single NFT is taking about 48 kWh to mint, while the average household in the US consumes about 30 kWh per day. They have also been tied to the increased costing of graphics cards and general computer parts as these are key parts to production.
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