All digital creations are NFTS. We just don't know yet.

If you follow the messages about non -fungible tokens (NFT), you may have noticed that the market has recently come to terms with the hard reality that NFTs may not be as good for artists as the creative community first thought.

How Kevin Collier from NBC News only found a few weeks ago, Discover that the quick growth in the NFT area of ​​the rampant piracy and the fraud in the creative sector opened the door.

On most NFT platforms, including OpenSea, the far largest NFT marketplace, users can create an account and start selling all digital images you want to upload.

This not only means that there is no guarantee that you buy a copyright claim with an NFT purchase, it follows that there is no guarantee that you buy an authentic, approved NFT at all.

A good example of this is that even Melania Trump's collection, the crème de la crème of the NFT editions, which was launched on the Solana platform at the end of December, is already unofficially duplicated on OpenSea, a competing platform.

If you are not a demanding digital collector who is familiar with digital signatures, you will probably not be able to recognize the difference between a real melania and a fake. This is all the more true when Solana, the preferred NFT blockchain platform of the Trumps, is out, as was the case at the weekend when it suffered a setback of instability and is inaccessible for a long time due to transaction congestion.

garbage in, garbage out

The relationship between NFTS and copyright has always been dark and unclear. Nevertheless, at the height of the mania, there was the assumption that someone in the process of an NFT transaction was attributed to a kind of value. However, this begins to dissolve because it is becoming increasingly obvious that blockchains does not solve the garbage in Garbage Out (Gigo) problem.

The gigo weak point means that it is still incredibly difficult to fake or chop a token as soon as it has been created, but there is no guarantee that the token itself was legitimately created. (A bit like the self-report of a QR code that is connected to a self-carried out lateral flow test. You still have to trust that the author or test participant really reports the right result.)

Irony for a supposedly highly innovative market like the NFT is that centralized platforms such as YouTube have solved this gigo problem a long time ago by actively monitoring content on copyright abuse at the place of origin.

according to the collier, while NFT platforms (especially those with identifiable administrative structures) are increasingly responding to takedown requests from artists that report copyright infringement, the load of monitoring of counterfeits still lies with the authors and not with the platforms.

This shows two important aspects of the market. Firstly, that it is incredibly sensitive to being involved in a top -class copyright dispute, and secondly, that the advantages of his decentralized state to give the authors more power have been massively exaggerated.

The centralization problem

Awareness of these two points gives way to another important knowledge: that the presence of a blockchain hardly makes a material difference.

When the Solana Blockchain network became inaccessible during the highlight of the crypto routine at the weekend, we wondered loudly what could happen to NFTS if the value of the blockchain on which they are located goes to zero. Or if the miners who normally support the network control the exit?

Do such NFTs become internet spirits? Are you resigned to the Wayback machine for all eternity? Who continues to finance your review and your hosting?

According to the Twitter feedback (somewhat distorted towards crypto interests), the answer is no, none of this would necessarily be problematic. The chain would probably continue to be validated by the original unit, which means that the only negative consequence would be more centralized control of the system. In the worst case, NFTs could be transferred to more functional blockchains.

However, it also means that NFT platforms, such as banks, are very susceptible to runs.

to use the banking jargon (Jargon Alert), NFT platforms are mostly low-capital intermediaries of the open source or original zero-kupon systems that are financed exclusively on the capital markets and their performance on continuing positive mark-to-market reviews depends very illiquid.

If your Mark-to-Market rating falls to zero and the market for new emissions closes, you also have no incentive to keep the assets verified at your own expense.

Reducing market financing paired with a buyer strike in which customers boycott pages in order to secure lower prices in the long term, a platform would be struggled for survival. In fact, there is the only way for a platform to withstand the run risk, to promise to use your own capital for the support of the blockchain and assets if everything else fails.

But that raises another question. Why would investors tend to burn capital in an NFT platform on a dying blockchain in order to support capital weak, non-power-generating assets than they would do with an in need?

cash flows are important

So where does we understand the long -term potential and the value of NFTS?

We believe that it fits our broader thesis that NFTS should be considered better than a kind of advertising market in which the ratings are more sunken than a sustainable long -term value.

While a traditional advertising market is transforming creative content into a cash flow-positive asset, NFTS use outrageous pre-cash flows to draw attention to images or messages for which the donors want to advertise. The art is the advertising. And over time, as with art philanthropy in general, only the images or assets that meet the cultural agendas of the hyper -financed classes will continue to do well.

But that is far from being a cultural revolution. If at all, it makes artists create content that accommodate the existing taste and agenda of multimilliaries such as Elon Musk or Jeff Bezos.

In times like this, a really distributed and diverse market needs for creators-and what platforms like YouTube and NFT platforms do not have-cash flows. With cash flows, really investable assets and associated markets can be created for such assets, and a much wider pool of innovative art can come onto the table.

In view of the fact that both systems are probably just as centralized as the other, the question arises, why shouldn't YouTube take up the NFT craze in order to create a secondary marketplace for the cash flow-generating content that is already on its system? It probably has something to do with scaling and liquidity.

Nonetheless, platforms, the reputation of which is already aimed at hosting content, but by the checking of their authenticity and copyright requirements, it is very likely to be successful in converting the non -fungal tokens they issued into assets than those that do not do so.

unless the real sense of NFTs of course never consisted of creating a market for legitimate artistic content, but rather in spreading or spreading pictures and messages that never stand out on conventional content platforms (or would even be accepted as advertising). .