According to an updated post by Coindesk.com on Dec.24, NFTs are little bits of code that expand the basic innovation of hard-capped supply, self-custody and censorship-resistance to all digital assets, not just to money. This is essential. NFTs enable any unique asset or item to be tracked and traded with all the same freedoms as its fungible token counterpart. While this asset class is still nascent, the potential is utterly astounding.
Take the $100 billion video game items industry. In the past three years, we’ve seen nine figures in venture capital invested in blockchain companies competing for its disruption. Other NFT verticals are quickly emerging. In 2020, there was an explosion of digital art and tokenized custody startups: everything from sneakers to Cézanne to Saint Laurent are now being wrapped up, sold and traded as unique and individual NFTs.
The power of NFT ownership isn’t limited to gaming or art. Any illiquid or unique asset globally could advantage from this technological standard.
NFTs are a quickly emerging asset class with an Achilles heel: scalability. Like most other cryptographic tools, NFTs biggest weakness comes from the code’s deployment in the real world. Limited transaction throughput, high transaction fees and slow transaction time are all muting this immutable technology’s revolution.
Various blockchains are doggedly fighting to solve this issue and establish themselves as the home of unique digital assets. But the wrong choice will hand the reins of this future to a centralized and insecure solution, destroying the possibility of a truly community owned future.