Tuesday, May 24

Technology. Why NFTs Are Growing in Debate

In the beginning was Bitcoin. Speculators saw that this was good, so they decided to go further by creating NFTs. Schematically, this is how one could sum up in two sentences the birth of non-fungible tokens, which in just a few months have become the new fad of major digital and entertainment companies. At least from the point of view of its detractors, who only see the phenomenon as a scam carefully wrapped in blockchain. Its defenders, on the other hand, are full of praise for a technology that they believe will become essential with the advent of the metaverse.

You don’t understand anything about it? We explain everything about NFTs, a technology pushed by a growing number of large groups, but which is arousing more and more reluctance, especially among video game enthusiasts.

An NFT, what is it?

It is a kind of title to a digital object (image, video, music, message or any other virtual object), which has the originality of being stored on the blockchain, the decentralized register on which s support all cryptocurrencies.

NFT is the abbreviation of non-fungible token, in good French token non-fongible – legal term meaning that they are unique objects, impossible to exchange for other similar objects since none exist. This is typically the case, for example, with works of art.

The artistic sector was also among the first to seize NFTs. Digital artists and some companies have started selling their creations in the form of NFTs, for prices that have sometimes reached astronomical sums. So the Cryptopunks, a collection of 10,000 algorithm-created thumbnails, generated between March and November 2021 for more than three billion dollars in transactions. Last June, the cryptopunk n°7253, an alien decked out in a mask and a beanie, even broke all records by trading nearly 12 million dollars at Sotheby’s. That’s more than 20,000 dollars per pixel, given the resolution of the image…

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Record broken for this cryptopunk rarer than the others, which a collector took away last June for nearly 12 million dollars:

Historically, the first NFTs were the CryptoKitties, a collectible virtual kitten game launched in November 2017. But with NFTs, you can buy anything and everything: a work by the British superstar of contemporary art Damien Hirst (who asked buyers after two months to choose between the physical version of the work and its virtual version), vignettes representing pebbles, from famous internet memes, excerpts from NBA games, the musical works of a New York petomane, or even the original source code of the world wide web

The craze for NFTs is such that the British dictionary Collins has even elected the acronym as the “word of the year” 2021.

What’s the point ?

The question deserves to be asked, because nothing prevents making a screenshot of a cryptopunk to use it as a profile on Facebook, or to publish on his blog the first tweet of Jack Dorsey (co-founder of the famous microblogging site, which in March 2021 sold the NFT of his first message for the modest sum of 2.9 million dollars).

In reality, NFTs do not prevent copying, but they are a kind of certificate of authenticity. Having a reproduction of Picasso in your living room is not the same as owning the original hanging above the sofa! In a way, they create scarcity in a (digital) world where abundance is the rule, nothing being easier than duplicating content.

Digital artists immediately understood this. With NFTs, they could finally sell works that had previously been of no interest to collectors as it was impossible to tell the original from the copy. Who would pay for a Picasso, of which it is strictly possible to know if it is authentic?

But if NFTs are increasingly criticized, it is not only because of the mad speculation that is causing cryptoart prices to soar.

Play to earn, play to win

The formula is a foil for many players … at least in rich countries. This formula is play to earn – in other words, play to win. A concept that consists of giving players the possibility of increasing the value of the digital assets they hold within the game, and reselling them for cryptocurrencies (and therefore potentially dollars, euros or any traditional currency ).

One of the models of the genre is the game Axie Infinity, launched in 2017 by a Vietnamese startup. Its principle, inherited from Pokémons, is classic: raise, train and make creatures fight each other. What is less is the integration at all levels of the blockchain and NFTs: it is thus possible to convert the resources obtained by winning fights into cryptocurrency. In other words, to earn money by playing, and that’s what we do during the pandemic of thousands of Filipinos, after realizing that it was more profitable to play than to work – and even more to be unemployed. But unfortunately for them, the taxman would now be eyeing on those undeclared earnings…

Are NFTs environmentally friendly?

One of the first criticisms concerns their energy cost. Backed by the blockchain, in particular that of Ethereum, which in its current form is not the greenest of cryptocurrencies, NFTs absorb enormous amounts of energy with each transaction. Last year, visual artist Joanie Lemercier calculated that the sale, in the form of NFT, of six of her works had consumed more electricity in ten seconds than her entire studio over the previous two years.

The French artist, who works on light projections in space, has since become one of NFT’s most vocal critics. “This new model seemed to have the potential to become a sustainable distribution mode for artists. At least until you understand the environmental impact of blockchain in its current form: it’s a disaster,” he wrote on the page he devotes to the problem on his website (to be read in English).

The question of the energy cost of the blockchain, a large consumer of electricity, is not new: it is regularly denounced by environmental protectors and even, more and more, by certain public bodies. At the beginning of December, we devoted a file to the question. Just recently, the vice-president of the European Securities and Markets Authority (Esma) came out in favor of banning the cryptocurrency mining by proof of work (by far the most energy-intensive, used in particular for the creation of bitcoins and ethers).

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A self-described visual artist and climate activist, Joanie Lemercier has become one of the fiercest critics of the environmental impact of NFTs:

Who really wants NFTs?

But in recent months, it is especially on the ethical ground that the controversy has moved, while the announcements of NFT are multiplying in the video game sector. The idea? Charging players to get unique virtual in-game items. After all, it’s been possible for years, through microtransactions, to buy your character a new hat, a state-of-the-art space fighter or a golden popper in fine gold. So why not with NFTs?

But the pill, no doubt because it suggests a future where the wealthiest players will be over-equipped compared to the others, or the possibility of being able to resell objects acquired in-game for cryptocurrencies (a model known as play to earn, see opposite), does not pass to the players.

Ubisoft has had bitter experience of this. The NFT system launched in December by the French video game giant has provoked massive rejection from Internet users… and even virulent criticism internally, if we are to believe the Numerama specialized site. Moreover, the French publisher would not have managed for sale only about fifteen NFT for his game Ghost Recon Breakpoint, representing less than 2000 euros. Other studios have experienced similar setbacks. GSC Game World, which announced in December the introduction of NFT in its game Stalker 2, backtracked in less than 48 hours in front of the outraged reaction of Internet users. “The interests of our fans and players are the team’s top priority,” the Ukrainian studio flatly apologized in a tweet.

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Less than 48 hours were enough for the Ukrainian studio GSC Game World to reconsider its decision to introduce NFTs in its next game:

If the majority of players seem hostile to NFTs, the subject is not unanimous among companies in the sector either. The giant Valve thus announced in October that it wanted to ban from its Steam platform all games that would authorize the exchange of cryptocurrencies or NFTs. A position diametrically opposed to that of its competitor Epic Games, which is much more open on the issue.

And the metaverse in all this? The concept imagined by Mark Zuckerberg, a virtual world whose outlines are not yet fully understood, could well become the paradise of NFTs. Will you have to put your hand in the wallet to find your loved ones online in a replica of the Palace of Versailles, rather than in one of the anonymous salons accessible to ordinary mortals? The bets are open. In any case, Meta announced this week its intention to open an asset marketplace for NFTs for users of its Facebook and Instagram social networks.

Reference-www.leprogres.fr

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