, but if you read the first post, you know how God guided me on the actual value of cryptocurrencies – they are worthless substitutes for the real thing.
Now I want to talk about NFT’s since they are being marketed as another completely secure and unbreakable technology, just like cryptocurrencies are hyped, since they are based on the same blockchain technology.
NFT’s are linked to assets, mostly of the digital kind, like video, image files, and other computer assets, such as video game add-ons, to show ownership, just like a paper title or deed shows ownership of an automobile or house. More things are being offered for sale in connection with NFT’s to make them more legitimate or valuable. Physical assets, like traditionally sold at high value auctions, such as for rare works of art, are also now being sold with NFT’s.
But what kind of value do NFT’s really add to an asset? They are basically digital certificates of ownership, so the value they add to an asset is the same as having a paper certificate of ownership or authenticity. NFT’s are hyped as making something authentic or of a limited edition, so they are also similar to special stickers that companies put on a product to ensure they are buying an authentic product and not a stolen copy or fake. You might have seen holographic stickers on some products to prove authenticity.
However, like stickers and paper certificates and titles, NFT’s can be “faked” or hacked, and they are not permanently attached to an asset, so they don’t really offer any more security for something. A digital asset with an NFT is simply a computer file with no actual connection to the NFT, which is also just another computer file, just like a paper certificate is separate from the asset it authenticates, so if the file is put in a public place, for example, if an image that is connected to an NFT is posted on the Internet for anyone to see, there is no protection for the image. Anyone can save the image file and use it. The NFT only shows who owns the original image file.
Because NFT’s store their information in a blockchain database in the same way as cryptocurrencies do, they claim the information cannot be modified or changed without it being noticeable. But as I said before with cryptocurrencies in the first post, any computer system can be compromised and hacked if you know enough about the system. I gave references of cryptocurrencies being hacked before and have recently seen more instances in the news, such as actor comedian Bill Murray had $200,000 in cryptocurrency stolen from his fundraiser
[2.1].
Obviously, the blockchain technology that cryptocurrencies and NFT’s are based on are not tamperproof or unbreakable, yet the organizations and people promoting them keep making those claims. They’re hyped up to make consumers more likely to buy into the products.
Another problem with them is because they traditionally use enormous amounts of computing power to continuously authenticate the blockchains (to validate if new additions to the databases can be made), they are not “green” technologies because they use up so much electricity to run them.
A change in how blockchains are maintained might fix the energy problem with the technology, but from a computer engineer’s viewpoint, I still cannot see the value in the technology. They can still be broken into and hacked, just like any other computer system, so God’s assessment of the technology being a useless substitute for the real thing remains valid. I would not invest in NFT assets or give them any more value than other methods of authentication.
References
[2.1] Cheyenne DeVan. "Bill Murray raised nearly $200,000 worth of crypto for charity—a hacker stole it almost immediately". CNBC. 2022 Sep. 9. Retrieved 2022 Sep. 12.
<https://www.cnbc.com/2022/09/09/bill-murray-loses-nearly-200k-worth-of-crypto-to-hacker.html>