The craze for NFTs may be ebbing

NFTs are not cryptocurrencies. You can exchange one bitcoin for another without losing or gaining any value. A concept called fungibility. On the other hand, NFTs are not interchangeable with one another. Every NFT is meant to have a unique value and cannot be exchanged for another. Hence the name ‘non-fungible’ tokens.

NFTs are tied to a blockchain (public ledger) using a unique ID that links the original assets to the location it is hosted, like a website.

The word ‘unique’ pops up time after time when talking about NFTs. But technically, any NFTs can be copied by simply right-clicking and downloading them. Unlike an oil painting, a copy of an NFT art piece is bite-to-bite the same, with no physical distinction at all. Many people believe downloading a copy of an NFT is as good as the NFT itself, and it is kind of true.

When you own an NFT, you only own a link to the asset that is saved on a blockchain. Another problem with NFTs is that your link is tied to an external source like a website, which the owners can take down, leaving you with a unique ID that links you to a now-dead site.

There is a perception that anyone and everyone is getting into NFTs. And if you don’t join them, you might miss your chance to participate in this lucrative venture. However, this could not be further from reality.

According to the Financial Times, around 80 percent of the total value associated with NFTs is held by only 9 percent of the community. This means that roughly 360,000 individuals own all the available NFTs in the market.

When compared with other virtual items, the number of NFT holders is surprisingly low. For instance, a blog post by the New World Notes states that, in the popular virtual world game 'Second Life', over 500,000 people own virtual items. Second Life is a very niche game that never gained mainstream popularity, yet the number of virtual assets owned still outweighs NFT ownership numbers to date.

The first and biggest problem NFTs currently face is their impact on the environment. The climate crisis is slowly spiralling to a disastrous state. And NFT trading is adding to fossil fuel activities.

This is because the minting, buying, and selling of NFTs involve cryptocurrencies. And the process of mining cryptocurrencies, which verifies crypto transactions and adds blocks to the blockchain, uses hardware that consumes large amounts of energy.

Therefore, as more people get into NFT trading, there will be more cryptocurrency transactions, which in turn consume more energy. The NFT rush has led to people looking for short-term profits, and any concerns about environmental impact are an afterthought. This has also led to scrutiny from governments and lawmakers who want to curb the environmental cost caused by NFTs.

When NFTs first came around in 2014, they were meant to empower artists. In an op-ed on the Atlantic, the creator of NFT technology, Anil Dash, wrote, "Technology

But this has not come to fruition. Instead, artists are being taken advantage of and their works are being stolen. Anyone can take an artist's picture from the internet and tokenise it without permission or credit. Artists are now speaking out and setting their Twitter accounts to private to curb these blatant thefts of intellectual property.

It’s not just artists. Scams, in general, are plentiful in the NFT space. Thanks to its surge in popularity, there is a constant influx of novel investors trying to ride the NFT wave. Bad actors quickly take advantage of these newcomers, using rug-pulls, phishing, fake airdrops, and numerous other methods to dupe people into handing out their money.

One community that has been at the forefront of adopting new technology but has had nothing but vitriol for NFTs, is gamers. The gaming space has been plagued with micro-transactions that try to squeeze out more money from games even after they have spent the initial price for the game. Micro-transactions now have been controversial for a decade, with some European countries even banning them.

The arrival of NFTs triggered the same feeling for many gamers as they were offered the ability to buy/sell weapons and skins in-game in the form of NFTs, which they already had rebuked. Many developers started introducing NFT incorporation in their games, which were only met by harsh criticism and backlash.