Within a few months, NFTs have invaded the digital space and the media, sparking a lot of controversy. Should we bet on this certification technology, which is accused of fraud and money laundering?
NFT. In the sometimes heavily coded digital world, this is the latest buzzword. An acronym that makes you dream or fantasize. A new digital Eldorado for some and an exciting trap for others: what are the technological prospects for NFTs? Will NFTs invade our daily lives (real and/or virtual)? What is the reality of the NFT market today? Explanations.
What is NFT?
NFT is an acronym for Non-Fungible Token in English or “non-fungible token” in French. or Nifties for loved ones (not to be confused with NFC, a wireless contactless communication standard used in particular on bank cards) is a technology that allows (theoretically) assigning a monetary value to a product (physical or digital) by attaching a similar certificate of authenticity based on mainly on the Ethereum blockchain, which runs on the Ether cryptocurrency. NFTs associated with a physical good or digital work are considered non-fungible, meaning they are non-fungible, secure, tamper-proof, and easily transferable to a third party. Their value—and, more broadly, the value of the property they are associated with—fluctuates (sometimes), changes (often). This is mostly based in part on rarity.
In a digital world where nothing is more like a creation than a replica, ownership of NFT tokens is insultingly exposed by the person who acquires them as final ownership of the property to which they refer. It is insulting, because, as we shall see, the fact that the NFT has acquired a work in no way means that this work belongs to someone, but only the right to transfer, assign, that is, sell to a third party (gathering at best a pleasant added value) NFT, a token, a token, and therefore a simple piece of code stored on the blockchain.
What are the NFT sales records?
For several months now, we have seen the emergence of new practices and a craze that is hard not to qualify as speculative around the NFT. A dangerous phenomenon that attracts neophyte investors to a nascent and poorly regulated market, who see it as a promise, most often completely illusory, it is very easy to make big money. The problem is that the vast majority of people who invest in NFTs today do so without really knowing what it is and without realizing the risks they are taking.
In their defense, it must be acknowledged that certain NFT transactions can only inspire envy and make you dizzy. “First Tweet in History” sold for $2.9 million, “First SMS in History” sold for €107,000, Gustav Klimt’s “The Kiss” sold like a jigsaw puzzle and sold as 10,000 NFT tokens by the Belvedere Museum in Vienna (Austria) ). for the modest amount of €1,850 each, several hundred virtual sneakers sold in minutes for $3.1 million RTFKT (a company recently acquired by Nike), the Visa group that pays $150,000 to buy CryptoPunk, considered the project that inspired the movement CryptoArt, (very) famous football players (like Neymar Jr., Presnel Kimpembe, Marco Verratti or Leandro Paredes) who spend several hundred thousand dollars on NFTs… monkeys, the very trendy Bored Ape YC (Bored Monkey Yacht Club). The list is long, very long, and it’s not going to stop. With its share of illusions and disappointments…
What are NFTs used for?
Where do NFTs come from? It all officially started in 2017 with the introduction of CryptoKitties, an online game that allows players to buy, sell, collect and breed virtual kittens. This game then uses the Ethereum blockchain, with virtual kittens traded in exchange for Ethereum, the native cryptocurrency of the Ethereum blockchain. Success was not long in coming, but this digital soufflé was not long in coming either. Now NFTs are on the rise and seem to find new uses every day. In the physical world, and more specifically in the luxury industry, this technology is beginning to be used to combat counterfeiting. This is the approach taken by a brand like Breitling. In the automotive industry, manufacturer Alfa Romeo recently announced that its vehicles will soon integrate NFT for maintenance monitoring certification.
But it is clear that it is in the digital sector that the enthusiasm for NFTs resonates the most. Aside from the speculative aspect – and therefore lacking any long-term vision – which consists of buying and reselling NFTs acquired from specialized markets like OpenSea, the big names in technology are now taking this matter very seriously. Like YouTube, which sees NFT as a medium, according to its CEO Susan Wojcicki, “to strengthen and improve the interaction between creators and fans”that is, to develop communities and monetize content.
Ultimately, one of the main outlets for the NFT is without a doubt the metaverses, those shared and permanent virtual universes that Mark Zuckerberg and his Meta (formerly Facebook) group seem so eager to lead us into. Why ? Because in the land of virtual goods, NFTs seem to be the BEST authentication solution of the dream, one that allows you to determine with certainty (at least we think so) who owns what (from virtual clothes, but with branding, to equally virtual land and real land). property). If, despite the speculative investments announced at the end of 2021,Horizon Worlds”from Meta is still trying to convince, there are already several metaverses like Decentraland, Fortnite, Minecraft, but especially The Sandbox, which attract more and more brands and where real estate speculation rages.
At The Sandbox we invest in “rock”buying virtual plots, so that later they can be better resold in Ethereum, because this type of transaction is now reserved for holders “wallet”, cryptocurrency wallet. Speculation is once again fueled by rarity. Out of 166,000 “lands” originally composing this virtual universe, there were only a few tens of thousands available for purchase, which could be purchased precisely in the form of NFTs. Good deal for The Sandbox that takes 5% on every transaction. Among the brands that have recently succumbed to the sirens of The Sandbox, we can mention Adidas, Gucci, as well as Warner Music, which aims to create a music theme park there, Ubisoft and its “Rabid rabbits”, Axa or retail groups such as Casino or Carrefour. In February 2022, Carrefour purchased virtual land at The Sandbox for €300,000. For NFT group “not a luxury item (but) could reinvent the relationship between brands and distributors”.
What is the value of NFTs?
However, at this stage, it is difficult to say what the real payback of transactions carried out in NFTs will be on the metaverses that are still emerging and which are still far from reaching the general public. Because, as Sebastien Borje, co-founder of The SandBox, noted in Forbes, “Not all NFTs have value. If there is no audience, there is no value, and the hype around the metaverse has led some communities to build on a stronger foundation than others. NFT remains digital content, and in itself it has no more value than others. community provided it”. It is clear that NFT depends primarily on how it is used and the experience that comes with it. A rarity that is not here, so not the only value.
Words that lead to the central issue when considering the topic of NFT: trust. Can NFTs be trusted? Can you invest in NFTs with confidence? Can we trust the value associated with NFTs available for purchase on specialized marketplaces? Are NFTs synonymous with authenticity? The answers to these questions are much more nuanced here. Because if NFTs are regularly advertised as “inviolable and immutable digital documents of ownership”one has to wonder about their origins, who makes them, who resells them, who speculates on their value, whether the NFTs offered for sale are really worth anything beyond the collective belief that they are attached.
How are NFTs controlled?
But here the shoes are tight. Because the NFT sector is still an extremely poorly regulated market, where all deviations are in the order of things. So, one of the main NFT trading platforms, OpenSea, recently discovered that 80% of the NFTs created for free on its platform were fake, that is, NFTs from intellectual property theft, copyright infringement. This scam is about stealing digital content that we didn’t inherently create to link NFT to it, which will be resold and on which, at best, the scammers will earn juicy commissions per transaction.
NFTs, like what was and still is partly the world of cryptocurrencies, are also today an ideal platform for unscrupulous users or mafia organizations that in the past are masters of money laundering, a practice that in the world of NFT finds its embodiment in “laundering trade” a method that consists of artificially inflating the price of the NFT to attract the attention of gogos, who will not fail to buy it back only to realize in the end that their fortune, although virtual, is in fact based only on sand.