One major challenge is that the blockchain has, at present, approximately zero uses for the typical consumer. Theoretical uses abound, but no ordinary person is choosing a blockchain-based technology over its traditional counterpart.
This means that when someone buys an NFT, they’re not buying the actual digital artwork; they’re buying a link to it. And worse, they’re buying a link that, in many cases, lives on the website of a new start-up that’s likely to fail within a few years. Decades from now, how will anyone verify whether the linked artwork is the original? All common NFT platforms today share some of these weaknesses. They still depend on one company staying in business to verify your art. They still depend on the old-fashioned pre-blockchain internet, where an artwork would suddenly vanish if someone forgot to renew a domain name. Right now NFTs are built on an absolute house of cards constructed by the people selling them.
Over the past decade, the blockchain has become a refuge for people who need another place to rest their assets. For global tycoons, it’s just an alternative to parking their money in some real estate they would never visit. They can leave money in blockchain-based cryptocurrencies instead, which appreciate in value as long as people buy up bitcoin, Dogecoin, Ethereum, and the like faster than the overall supply increases.
After a decade of whiplash-inducing changes in valuation, billions of dollars are now invested in cryptocurrencies, and the people who have made those bets can’t cash in their chips anywhere. They can’t buy real estate with cryptocurrency. They can’t buy yachts with it. So the only rich-person hobby they can partake in with their cryptowealth is buying art. And in this art market, no one is obligated to have any taste or judgment about art itself. If NFT prices suddenly plunge, these investors will try buying polo horses or Davos tickets with cryptocurrencies instead. Think of a kid who’s spent the day playing Skee-Ball and now has a whole lot of tickets to spend. Every toy looks enticing. NFTs have become just such a plaything.
There’s only one exception to the lack of interest in blockchain apps today: apps for trading cryptocurrencies themselves. What results is an almost hermetically sealed economy, whose currencies exist only to be traded and become derivatives of themselves.
People usually choose short-term profit over long-term responsibility.