The Biggest Issue With The NFT Market That No One Is Talking About
Disclaimer: The Industry Talk section features insights by crypto industry players and is not a part of the editorial content of Cryptonews.com.
The last year or so has witnessed the emergence of many novel offerings from within the crypto sector. However, the growth of one asset class in particular, i.e. non-fungible tokens (NFTs) has left investors all over the globe completely spellbound.
To put things into perspective as to how meteoric the rise of NFTs has been, a recently released report by blockchain analytics firm DappRadar noted that between Q2 and Q3 2021 alone, the sales of these unique digital tokens rose by more than 700%. In fact, over the course of August alone, the total trade volume of NFTs rose as high as $5.2 billion followed by $4 billion during the month of September.
The simple reason why NFT’s have been able to accrue so much value in recent months is because these digital offerings can be used used to represent tangible monetary value associated with literally any item under the sun — be it a piece of art, a digital collectible, memes, or even real estate — all while cutting out the need for any transaction middlemen, thus allowing owners to maximize their overall earning potential.
In this regard, the list of celebrities endorsing NFTs has been rising rapidly, with individuals ranging from NBA superstar Steph Curry, to rapper extraordinaire JayZ, to thrash metal pioneer Dave Mustaine (and everyone else in between) vocalizing their mainstream support for these offerings over the past year.
All is not rosy in NFT land
Despite the revolutionary monetary proposition put forth by non-fungible tokens (NFTs), as part of their existing infrastructural setup, the market at large is mostly driven by the whims of a select few platforms such as OpenSea, Rarible, etc.
Even though these marketplaces offer their users the option of accruing ‘creator’s royalty’ as part of all subsequent secondary sales of their work, it bears mentioning that these peripheral income streams are only available to creators when sales occur via the same marketplace in which the original NFT was minted.
Also, because of the fact that the original author of an NFT cannot do anything to stop their buyers from putting up their works across different platforms, their future earning potential is curbed to a large degree. In fact, the digital infrastructure through which royalties are split amongst collaborators is, by and large, manually driven as a result of which it hasn’t been able to reach a level of utilization that most people familiar with blockchain tech have become accustomed to.
Another major problem that currently affects this fast-evolving space is that when an NFT is sold via a private sale event — which is typically done in order to offset high transaction fees related to the listing and selling a digital token — it keeps the original creator from profiting off of their works.
New platforms are helping mitigate these issues
With the above-stated issue of uneven royalty distribution (via secondary platform sales) slowly but surely becoming more and more prominent across the crypto-sphere, a number of platforms have continued to emerge so as to specifically tackle this issue.
For example, CXIP, a minting-as-a-service (MaaS) ecosystem, provides content creators with personalized smart contracts that clearly outline their personal attributions in relation to each of their individually produced NFTs, thereby making sure that any income acquired by them via third party platform sales is always at their disposal.
In addition to this, CXIP’s native smart contracts will provide users with other useful services such as seamless registrations with the U.S. Copyright Office, thereby offering an additional layer of legal protection. Not only that, the platform’s minting process ensures that NFT metadata is permanently stored using an IPFS + Arweave system as well as provides users with unique, unbreakable URLs that are free of content manipulation.
Lastly, the platform’s PA1D™ smart contract module has been devised to allow for unbroken royalties across different marketplaces while providing real-time audits and flagging of any counterfeits so as to track the provenance chain of every NFT published via the system.
The NFT market is primed for big things
There is no denying the fact that investors across the globe are currently pouring their funds into the NFT market. In fact, statistical data shows that this space is projected to grow by a whopping 1000x over the coming decade, therefore, it will be interesting to see how the idea of NFTs replacing traditional stores of value (SOVs) continues to gain mainstream support — especially as we head into an increasingly decentralized future.