By 2021, a number of milestones have already been achieved in the new market for non-fungible tokens (NFT), which is up 2,100% from the fourth quarter of 2020, and consumers spend more than $ 2 billion. Newspaper headlines have been dominated by record sales, yet the growing demand from new investors is being ignored. According to NonFungible, which tracks NFT transactions, there were 73,000 NFT buyers and 33,000 NFT sellers in the first quarter. While these numbers may sound impressive, they are actually relatively small compared to the global art market, which was valued at $ 64.7 billion in 2018, where the United States, China and the United Kingdom accounted for 84% of the global art market.

The traditional infrastructure of the art market, dominated by agents and auction houses, already seemed outdated in the ever-growing world of the Internet and globalization, where the demand for this asset in emerging markets grew. People will probably remember the COVID-19 pandemic as a catalyst to disrupt the existing infrastructure in the art market. Meanwhile, NFT Marketplace provides insight into how smart contract technology can be used to ensure that third parties and intermediaries who would normally need it can be removed from the parts. However, given the current situation, the existing infrastructure has so many errors and so much potential for user errors that it really serves as an alternative to current methods of verifying, distributing, auctioning and certifying ownership.

Related: The hype is over: how NFT and art will benefit from each other in the future

Today, it is impossible to know who the creator actually is by looking at the data in NFT. As a result, there are a growing number of NFT scams and cases where a scammer creates an NFT and shows it to the work of a particular famous artist. A quick Google search on this topic reveals that NFT counterfeiting is a rapidly growing problem. In some cases, scammers photograph a real work of art from an artist, convert it to NFT, and then sell it as if they were the artist themselves.

In addition, when NFT has important related content or data as an image, this data is not stored in the blockchain. Instead, NFT contains a link to the data, often via a hyperlink on the Internet. If the data (such as an image) at the end of this hyperlink changes or disappears, it is impossible to know or prove from the blockchain data which actual image associated with it was acquired using NFT.

Therefore, there is no way to protect the continuity of NFT data. Shocking but real. This means that the actual image or data associated with the NFT can be changed or deleted, thus destroying the NFT value. There is also the potential for user error when people mistakenly type long, complex addresses or are attacked by brokers who can send millions of dollars to the wrong address or steal forever.

In the world of physical art, the artist signs his pieces so that they can be verified for authenticity, and the owner of the piece guarantees their consistency by storing them in a place he trusts. For NFTs to be successful in the long run, blockchain technology must provide similar opportunities and do so in a decentralized and autonomous way.

We do not know the long-term effect of the ongoing COVID-19 pandemic on the art world. People can look back and see that this has been the catalyst for the long-awaited unrest and increased competition from what is still really a cartel with advanced auction houses and merchants with different reputations. Smart contract technology has shown how NFT can do without these intermediaries; However, operational risks and the potential for fraudulent transactions make the current currency model too risky to scale, despite clear demand.

NFT counterfeiting and endurance protection are crucial to the continued growth of NFT use in the blockchain ecosystem, and provide a fairer, more transparent and equitable system for buyers and sellers of works of art. The art ecosystem of the future is clearly visible, and we, the industry, must begin to build it.

Source: CoinTelegraph