I Presented by: Juan Francisco Matus Fernández Course: English Composition 1 (EC1) Date: 01/24/2022 NFTs: Fools Property or the Next Revolutionary Step in the Evolution of Humanity - Index: I. What is an NFT? ......................................................................................................................................... II II II. Why are people into NFTs? ...................................................................................................................... III III. What are the positives of NFTs? ............................................................................................................. IV 1- Decentralized from the government: .................................................................................................. IV 2- Security: ............................................................................................................................................... IV 3- Create and resell: ................................................................................................................................. IV 1- Uncertain value:................................................................................................................................... IV 2- Environmental damage:........................................................................................................................ V 3- Physical arts can’t be digitized or made into NFTs ............................................................................... V 4- Money Laundering: ............................................................................................................................... V V. Conclusion:................................................................................................................................................ V References: ................................................................................................................................................... V I. What is an NFT? An NFT (or Non-Fungible Token) is a relatively new and complicated concept to explain; nonetheless, to not elaborate into the realm of complexity, I will simplify the terms for you: the initials NF (or Non-Fungible): refer to a series of digital forms of art, pictures, videos, clips, songs, and recollection of items that are non-replaceable or uniquely owned by one person. III Now the letter T (or Tokens): Its meaning stands for digitalized transactions on different types of currencies (Blockchain), the currencies you can utilize standard U.S dollars, gold, or cryptocurrencies such as Bitcoin and Ethereum to buy these non-fungible pieces of art. I want to thank the YouTuber Johnny, H (2021) for the YouTube video explaining the whole topic. Example #1: Non-Replaceable/Non-Fungible Fungible/Replaceable Example #2: Non-Replaceable/Non-Fungible Fungible/Replaceable (Online NFT) II. Why are people into NFTs? To answer this, we have to go back in time to the old ages; back then, we had to exchange or trade goods to ensure survival, but as humanity advanced over time, so did our ambitions and needs, we started to see the method of exchange as a tedious and unnecessary method, so we added gold. Then, later on, we added value to the dollar and started purchasing things with that, and then we’re changing/moving a little into Bitcoin and NFTs (in 2022). So as humans, psychologically, we add value to IV things that attract emotions and subjectively give us an easier way to use something we like things that are easier to travel and do activities. Thanks again to Johnny, H (2021) for explaining this. III. What are the positives of NFTs? 1- Decentralized from the government: This is a significant benefit because the people control the NFT and cryptocurrency market, there is no inflation, no need to worry if the bank grabs a portion of your money when going bankrupt (Advantages of NFTs, 2021) 2- Security: “Blockchains are decentralized in nature, which means that the data they hold is hosted in different nodes around the globe. There is always an identical record of the database at each of the nodes (Advantages of NFTs, 2021) Even when the network is down, there will always be a record of it somewhere. It’s a source that won’t give you any encryption problems or issues with people trying to steal your data because everything is programmed to stay the same unless the account owner decides to buy or sell NFTs. 3- Create and resell: You can create NFTs for either sale or maintenance as property and copyright (you can sue or demand a legal fee if someone else is publishing your NFTs without any legal or documentation consent); you can also resell and reinvest money back into NFTs for a more significant profit margin. IV. Disadvantages: 1- Uncertain value: The value and financial gains from these assets of NFTs are uncertain at the moment because it’s too early to tell if someone is making a significant sum of profit from buying and reselling these NFTs. The only people making any significant are those designing their own NFTs or high-ranking people; for example, Jack Dorsey’s (Twitter CEO) first tweet sold for almost 3 million dollars. “Dorsey ended up selling his NFT for $2.9 million, and he donated the proceeds to Give Directly's Africa Response fund for COVID-19 relief Amanda, S. (2021). V 2- Environmental damage: “The trade-off is that this model consumes lots of energy. The major marketplaces for NFT art, Makers Place, Nifty Gateway, and Super Rare, conduct their sales through Ethereum, which maintains a secure record of cryptocurrency and NFT transactions through a mining process. The system is similar to the one that verifies Bitcoin, involving a network of computers that use advanced cryptography to decide whether transactions are valid—and in doing so uses energy on the scale of a small country (Gregory, B. 2021)”. The environmental issue is one of the biggest problems that this new idea and “assets” face because servers people use nowadays to mine for bitcoin utilize a significant amount of energy. In 2021, a study showed that some people who mined and are still mining bitcoin could reach insane energy consumption levels. 3- Physical arts can’t be digitized or made into NFTs The reason is that there is a clear difference in how physical skills are compared to the tokens or digital skills; you feel this attraction and quiet pleasantness in terms of style. It has the same nostalgic feel in contrast to NFTs, but it’s an aesthetic change we all have to face eventually once we move to a more technologically advanced world. 4- Money Laundering: This technology can raise alarm bells from a money laundering and financial crime perspective. First, NFTs are most often purchased with cryptocurrencies on online marketplaces. And can be used to bypass many laws and mandatory regulations. “Cryptocurrencies are routinely exploited for malicious means, such as obfuscating the source of criminal proceeds and, despite transactions being traceable, more sophisticated criminal actors use a variety of techniques to disrupt investigations by law enforcement” Owen, A. (2021) V. Conclusion: My thoughts on this topic are that I realized how important this next step could be for us; if we fail, it could return us a couple of hundreds of years due to climate change and the environmental harm this could cause, but I’m optimistic about the future. I hope we can continue to build society even further with a more diverse path to take now than ever, and this has a huge potential to either flop drop or rise. References: Advantages of NFTs. (2021, May 19th). Retrieved from Fintelics: https://fintelics.medium.com/theadvantages-of-nfts-fe0969b062b1 ARTOSISCURSE. (2021, November 17th). Peta Pixel. Retrieved from How to Create and Sell NFTs for Free: https://petapixel.com/2021/11/24/how-to-create-and-sell-nfts-for-free/ Clark, M. (2021, August 18th). NFTs explained. Retrieved from The Verge: https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq VI Dondo, K. (2021, December 3rd). Weekend Essay: Are NFTs the new frontier for investments? Retrieved from The Weeknd Essay: https://www.moneymarketing.co.uk/opinion/nfts-the-new-frontierforinvestments/#:~:text=Well%20a%20non%2Dfungible%20token,a%20cryptocurrency%20such%2 0as%20Ethereum.&text=NFTs%20are%20generally%20one%20of%20a%20kind%20and%20have %20a%20limited%20run. Gina, F. (2021, April 6th). NFTs: The Pros and Cons. Retrieved from Arts Hub: https://www.artshub.com.au/news/opinions-analysis/nfts-the-pros-and-cons-262268-2370580/ Gregory, B. (2021, March 7th). NFTs Are Hot. So Is Their Effect on the Earth’s Climate. Retrieved from Wired: https://www.wired.com/story/nfts-hot-effect-earth-climate/ Harris, J. (2021, April 27th). NFTs Explained. Retrieved from Youtube: https://youtu.be/Oz9zw7-_vhM Hayes, A. Mansa, J. Kvilhaug, S. (2022, January 17th). Investopedia. Retrieved from Blockchain Explained: https://www.investopedia.com/terms/b/blockchain.asp Joshua, R. (2021, September 14). Money Crashers. Retrieved from https://www.moneycrashers.com/non-fungible-tokens-nfts/ Owen, A. (2021, December 2th). NFTs: A New Frontier for Money Laundering? Retrieved from Rusi: https://rusi.org/explore-our-research/publications/commentary/nfts-new-frontier-moneylaundering Silberling, A. (2021, August 5th). Tech Crunch. Retrieved from Cent, the platform that Jack Dorsey used to sell his first tweet as an NFT, raises $3M: https://techcrunch.com/2021/08/05/cent-theplatform-that-jack-dorsey-used-to-sell-his-first-tweet-as-an-nft-raises3m/#:~:text='%20%E2%80%9D,fund%20for%20COVID%2D19%20relief.
