The Problem with NFTs

The #Simpsons Tree-house of Horrors mentioned #NFTs. Many people don't know how they work. Basically you are buying a certificate, though they can have other functionality. I think what a lot of people don't realize is that the way most NFT pictures work is this: You don't get the picture when you buy it! You just get a Certificate of Authenticity (SOA) that says you are the rightful owner of the picture and it includes a link to the picture. (That ownership does not necessarily include intellectual property rights. So it is like a SOA you would get with a real life painting.) People make the mistake of not downloading the picture so they get mad when they check the NFT years latter to find that there is no picture anymore but instead a "File not found" error in it's place. But funny thing is they or anyone else could have downloaded the picture for free before the link became obsolete.

Why do the links become obsolete? Well with regular web links it can be because the company behind the website the link is on no longer exists. With IPFS links if they are not pinned they expire after going 24 hours without being accessed.

Not all NFTs work this way and there are other possible uses for NFTs besides pictures. For example a great use for NFTs is movie tickets. And maybe someday they will be used as deeds to houses and cars.

I think the reason so many people say NFTs are a scam is because so many people don't know they are buying an SOA instead of a picture. And they don't even get the picture AT ALL so they can't even look at the picture they think they bought! Imagine thinking you paid $100 for a picture and you can't even look at it! This is a reality for a lot of people that purchased NFTs. But the sellers don't make this clear. They basically trick you into thinking you are buying a picture when your not. There are virtually no warnings telling people to download and backup there image file. Most people probably think, "That cat picture NFT is in my wallet so obviously the cat picture is in my wallet too." But it most likely is NOT. (Actually your NFT lives on a blockchain and your wallet gives you access to it. But it is highly unlikely that your NFT will get deleted from the blockchain without you explicitly deleting it. Not even sure if you can delete it from the blockchain if you wanted to. That said use a well established blockchain. If it is some small obscure blockchain then I don't know if you can trust it to be dependable. And again the NFT useally does NOT include the image file!)

On top of this many NFTs are built on a Proof of Work blockchain which are very bad for the environment. Fortunately many NFTs have switched to Proof of Steak blockchain which uses only a small fraction of the electricity.

Note: Ethereum has transitioned to proof-of-stake which has cut it's energy usage by 99%. Ethereum is a very good and popular blockchain. Polygon is another good and popular blockchain and is also proof-of-stake.