Will cryptokitties prove to have been the start of a revolution in how people live their lives online?
Today the total value of NFTs issued on the Ethereum blockchain is $14.3bn, according to DappRadar, a research company, up from around $340m last year. According to a poll conducted in March by Harris, a market-research firm, 11% of American adults say they have purchased an NFT (only a percentage point less than those investing in commodities). Analysts at Jefferies, an investment bank, expect the value of NFTs to double next year, and to approach $80bn by 2025. Moreover, the tokens’ use is expanding beyond cats and collectables. In time, they could prove useful for all sorts of activities in both the digital and the real worlds.
Like any new technology, NFTs have flaws. Technical limits when they were first created meant that they contain a link to the image, rather than the image itself. That can be a weakness: unscrupulous sellers have broken or changed links after a transaction. Blockchain technologies consume electricity wantonly. And the identity of a buyer of an NFT, and the provenance of their funds, cannot always be known. Yet some solutions are in the works. A decentralised storage system tries to fix the problem of broken links. Some applications try to touch the blockchain as little as possible, generating fewer emissions.
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