The technological advancements in the immersive blockchain ecosystem enabled developers to create fungible and non-fungible tokens. These digital currencies, standing on the backbone of cryptocurrencies, fuel the tokenomics of blockchain-based applications and smart contracts.
Applications built on blockchain technology such as play-to-earn (P2E) games and gigantic metaverses with decentralized finance (Defi) ecosystem which offers complete digital ownership of the assets to the owners, all rely on non-fungible tokens (NFTs) which are crucial to the ecosystem of these applications. Each NFT is unique and cannot be replicated but it can be traded on the marketplace for a profit.
Moreover, while this sophisticated digital concept of currency is something that we still need to wrap our heads around, the world is already moving towards adapting blockchain-based augmented reality in our daily lives. From Metaverses to P2E titles, millions of users have dipped their toes into the immersive blockchain world. While there are plenty of indications to suggest that NFTs are the way forward, the NFT technology is unlikely to become mainstream due to a few major factors.
Reasons why NFTs Won’t Be Mainstreamed
We’ve listed a few reasons why NFTs are unlikely to make it into mainstream applications in today’s roundup.
Most NFT-based applications are regulated through Decentralized Autonomous Organizations (DAOs). These DAOs offer a democratized mode of management and comprise of community members who hold a certain amount of governance tokens. All the in-app decisions and policy making is done through a democratic style of voting where members of these DAOs get a say in the final product.
From expanding the liquidity pools to adding new elements to the applications, DAOs will be responsible for shaping the updates of these applications. Now on the other hand, in the current times, major tech giants such as Google or Apple have boards of directors responsible for making independent policies aimed at benefiting the company.
The concept of sharing authority access with the users is something that these tech giants would never opt to do. The centralized means of management ensures that the administration holds the authority to influence policies and make changes to applications as they see fit. The biggest obstacle to mainstreaming NFTs would be this centralized management system, where board members will be able to administer applications and access personal information.
If a user can’t control the use of their NFT despite having complete digital ownership, these things would go extinct in a very short span of time. Also, authority-sharing is something that these tech giants would never be able to do and without their contribution to this new digital scheme, it is certain that the concept of NFTs will fail to appeal to a broader audience.
NFTs are built on the backbone of cryptocurrencies and since these currencies have a volatile nature, the value of these NFTs could tank in a matter of hours. The unsustainable crypto market that fuels NFTs is often in crisis with major cryptocurrencies like Bitcoin and Ethereum taking a downward dive due to various financial crises going on in the stock market.
Some NFTs that were once priced at over a million dollars are now listed for mere thousands due to the uncertainty in the crypto market. Furthermore, the immaturity of the blockchain which poses security threats further contributes to the downfall of NFTs. Each asset owned by a person is stored on a digital ledger and in case something was to happen to the system, the owned assets would disappear and be lost forever.
Similarly, the constant depreciation in the value of these NFTs also makes them unpopular to people who already are too fearful to invest in digital assets. And since the concept of cryptocurrencies is to reward early investors at the expense of new users which creates an unsustainable environment and shows Ponzi-like symptoms, the notion of NFTs isn’t likely to be mainstreamed.
The biggest problem with the blockchain and the NFT market is that it is not regulated by authorities. While these NFTs have a unique address and are under complete digital ownership of the users, owners wouldn’t have any place to turn to if these NFTs were to be stolen. Since cryptocurrencies aren’t faultless and immature, there have been a few incidents of stolen property that raised some eyebrows since the blockchain technology was supposed to be un-hackable.
The main goal of blockchain technology is the financialization of every digital asset on the market. And in the midst of it, if there isn’t an organization to regulate the transactions taking place, scammers and hackers would rob people of their hard-earned money for their own personal gains.
Without a proper tracing system, despite the fact that NFTs are immutable, a person would feel helpless. Additionally, with all the misconceptions, a casual person without a tech-geek mindset would have a hard time modifying NFTs to fit into their lives.
By leveraging the developing Web 3 technology, technologists have revolutionized the world with NFTs. However, they’re quite an uncommon invention and for people who aren’t nerds, wrapping their heads around the concept of non-fungible tokens (NFTs) is a tough ask. In developing countries, the concept of the smartphone is still developing, and if someone were to explain the function of this NFT invention to them, it would take them decades to comprehend it.
Aside from understanding the basic functionality of NFTs, there’s a great deal of knowledge required to mint, trade, and profit from these inventions. And with the platform gas fees, marketing, and everything in between, the concept of NFTs would just be too expensive for most people of the spectrum.
Despite all the hype about the Bored Ape NFT project or P2E games, the concept of NFTs in the mainstream market isn’t likely to catch on. And since cryptocurrencies are immature at the moment and are plagued by a plethora of challenges, it will take a seriously long time for people to create a positive sentiment towards the notion of NFTs.
NFTs are not without their faults, but as long as proficient and improved functionality mechanics are not put in place, they will never reach mainstream adoption.