NFT comes in all shapes and sizes, which has brought light to many emerging and struggling artists and given them a platform to express their best selves. While this may sound like a productive opportunity, it still is associated with uncountable risks at the same time, which are directly attacking the art culture and the artists.
So the question remains; is the NFT market jeopardizing the originality and uniqueness of the art culture?
The Copyright Infringement of NFT
The involvement of NFTs in the artist community was a huge hit in the beginning, but as it is bound to happen, the potential pitfalls of the industry are now greatly affecting the artists and their artworks. The platform has undeniably made some artists millionaires overnight, yet it has also opened the doors for fraudsters to generate cash out of the artwork of other genuine artists.
Well, the reason for such open crimes is the arguable copyright system of this platform. Dr. Andres Guadamuz, a copyright law expert, explains NFT as “a cryptographically signed receipt that you own a unique version of a work.” According to this law, the owner of that particular piece only owns that version of the piece, which clearly does not mean that NFT gives you the propriety rights of possession of every version. Meaning, the person has no control over the duplication of the piece he owns, making the marketplace vulnerable to copy frauds and identity thefts.
For the young emerging artists, selling their artwork as NFTs might seem a very quick and convenient way to fork out a handsome amount of cash, but this might not be the case every time. In recent years, artists have reported multiple cases of their art being stolen and sold on the NFT platform without their consent and knowledge.
Such art theft cases have been rising insanely. For instance, Derek Laufman, a famous artist, reported his genuine artwork being minted on Rarible-an an NFT platform. Similarly, a famous author, Simon Stalenhag, discovered his art piece, Marble Cards, being sold on another NFT platform without his knowledge.
Another similar questionable issue is the ownership violation on the NFT platform. Despite the fact, each NFT is unique having a certain value; frauds still cannot be avoided because of the vulnerable nature of the digitized networks.
Cases have been reported where fraudsters steal the copyrights of the artwork owner himself and sell the piece on other platforms with false claims of copyrights. In addition to that, with the anonymity feature of blockchain, one cannot clearly identify the authentic owner of the piece.
One popular ownership violation case is Qinni’s work. A year after the death of this popular artist, Qing Han, 5 accounts were reported for stealing Qing’s name to sell NFT of her artwork on the platform.
The Adverse Impact of NFT and Crypto Art on the Environment
NFT is surely benefitting the population of this world but affecting the world itself quite a lot. Well, these art pieces of crypto art are somewhat responsible for the deteriorating environment of the planet because of which NFTs and Crypto Art are facing a huge backlash in this matter; however, no efforts to resolve this issue have been seen yet.
How is Environment Being Affected by NFTs?
NFTs are part of the Ethereum blockchain, which works on the Proof of Stake (PoS) algorithm. PoS requires massive use of computers to verify the transactions via manifolds of complex calculations for each transaction.
Ethereum uses 48.14 kWh per transaction, which, on its own, requires a larger computational power than any other average task. The extensive use of computational power requires a lot of electricity which, in return, requires a lot of burning of fossil fuels producing a tremendous Carbon Footprint.
The above process shows how energy-intensive is the process of just merely verifying the transactions. NFTs are in use almost everywhere across the globe, meaning hundreds of thousands of transactions are being made with every passing minute. No one can imagine how much of an adverse impact is NFT having on our planet.
Carbon Footprints Estimation
Carbon Footprint is basically the estimation of the emission of greenhouse gases in a production or consumption process. Therefore, the process is useful to determine the extent of the impact of NFTs on the environment.
Multiple steps are involved in the process, out of which, carbon footprints of some steps are unknown, making it difficult to determine the exact carbon footprint of NFT. However, according to Memo Akten, an artist and a programmer, the carbon footprint of an average transaction is around 48 kg.
Moreover, further research shows that only one drop of NFT consumes 300kWh of energy-producing 211 kg of Carbon dioxide, which equals using a computer for nearly 10 months!
What is the Role of Crypto Art in Ruining the Environment?
When a Crypto Art is put up for auction, every bid, sale, purchase, basically the transaction from wallet to wallet, is on blockchain technology. All of this process consumes a lot of energy which, according to research, is nearly equal to 2 hours of flying on a plane.
Well, the relationship between the crypto user and the environment is symbiotic. With each profit the user receives, the environment has to pay a hefty amount for it. Perhaps, this is enough to judge how much of a ruinous effect is Crypto Art and NFT having on our planet. With every penny gained, we’re losing the pristineness of our Earth.
Rising Plagiarism of NFT Art
Digital art is most prone to plagiarism as the users can easily copy your artwork, post it on an NFT platform, take all credit for it, and above all, make money out of it. Plagiarism norms on NFT are increasing day by day, making it harder for artists to protect their unique pieces.
Ardnex Versus Twisted Vacancy
One recent case of Indonesian artist, Ardnex was all over the internet when people caught and called another seller, Twisted Vacancy, for plagiarizing the same idea, style, color scheme, and structure of Ardnex’s artwork. The ideology and uniqueness in Ardnex were showing the effort on it while Twisted Vacancy rejigged the whole concept and sold a very similar piece at a pretty reasonable price.
Similar cases of plagiarism have been reported, but no serious action has yet been taken. The phonies have been exploiting the ingenious artists and knocking down the real purpose of the NFT art community. The tables have pretty much turned, and instead of the artists earning their credit, the fraudsters and phonies are striking it rich.
Why NFT is an Ill-Liquid Market and Highly Risky Investment?
When an economic crisis hits the market, the sellers try to sell the assets immediately before the price falls; however, buyers, on the other hand, do not want to make an immediate purchase and therefore take some time off the marketplace until and unless they find a safe and profitable investment. This imbalance in the market can result in quite a loss; hence one must be aware of the importance of liquidity and the involvement of participants in a market before investing his assets.
Speaking of liquidity, it depends on how speedily and easily an asset can be exchanged for cash. However, in the case of NFTs, the assets are mostly in the form of digital art, which means each asset is one of a kind. So finding a particular piece in the NFT marketplace can be pretty complicated for the buyer because there is no replacement for a piece as each non-fungible token differs from the other. They were thence making it a difficult match for the potential buyers and sellers.
NFT market is a very versatile and diverse place for buyers and sellers. Each NFT is unique and has a unique value, meaning not many substitutes for a particular asset are available in the market. This variety and variation in the marketplace result in a small number of participants bidding on a piece resulting in a lower number of transactions and a drop in the trading volume of the marketplace.
A real investor will always look for low volatility in a market as volatility comes with terrible risks. NFT marketplace is highly volatile, meaning; the bigger investors can have control over the market
Recently in 2020, the value of some famous NFTs rose up to 2000%, which is a massive and extremely risky growth as it can be stooped back whenever the investor, who’s in control of the market, decides to. This does not only affect the asset itself, but the volume of the whole marketplace badly as there is no proper mechanism to control the rise and fall of the price.
NFT is undoubtedly a very profitable investment but can be a high-stakes venture if not proper research is done. However, if you’re willing to stick your neck out, then you must be aware of the dark side of the NFT, for it can result in no dime to your name if you run out of luck.