As the NFT market mainly develops on Ethereum, minting a single token can cost up to USD 100. Users take too long to find the work that they want due to the many existing crypto artworks.
The market for non-fungible tokens (NFT) and the constantly evolving ecosystem have reached a great boom. However, there are still several challenges to make its massive use and legal adoption a reality. A study by researcher Kent Barton addresses the main challenges that this market faces worldwide.
Due to economic inequality in the world, its high cost prevents many artists from participating in the industry. The most used NFT market is mainly developed on Ethereum, so its fees to mint a single token are up to USD 100.
NFT markets like OpenSea pay the user for the cost of minting their non-fungible tokens. However, it poses a costly challenge in the long term, which sometimes leads these platforms to charge a fee at the time of sale.
Various proposals have emerged to address high transaction fees requires with greater scalability. They include layer 1 (L1) and layer 2 (L2) solutions on Ethereum, new blockchains, or sidechains, and rollups.
The NFT Market Has Raised Millions of US Dollars but Still Has Some Flaws
Besides the high cost for creating and transferring them, non-fungible tokens currently have three other flaws, according to Barton. It takes users too long to find what they want and there is no link to the legal world of copyright ownership. He also stated that it is also impossible to share NFT property with other people or entities.
The researcher said that it takes too long to find something due to the many crypto artworks and NFT markets that have emerged. That situation confuses artists and causes other problems, such as duplicated works on different platforms. The essence of the creation of these types of tokens is to ensure or control their scarcity, that is, they must be unique or limited.
Regarding legality, the current NFTs do not ensure copyright ownership, unless it is part of a prior agreement. For example, someone bought “Charlie bit my finger”, a video with millions of views, as an NFT for USD 700,000. According to the previous agreement, the owner of the NFT has no use rights to the original but only to the non-fungible token.
Barton also noted that the most widely used standards do not allow shared ownership, which closes many opportunities for musicians. The study indicates that sponsors and other investors could help give greater publicity to tokenized works.
Despite Barton’s observations about the flaws of NFTs, the trading figures show a high interest in tokenized digital art. For example, the NFT market reached a peak of USD 100 million in a single day last May.
Another example is the Cryptopunks marketplace, which has sold a total of 186 thousand ETH, equivalent to USD 531 million. Besides, it has sold two of the most expensive NFTs, each of which exceeded USD 7 million, according to data from DappRadar.
By Alexander Salazar