Experts debate whether NFTs really need blockchain
At the BlockDown 2021 conference, EllioTrades, a crypto YouTuber and co-creator of the Superfarm NFT project, joined a debate about the value of nonfungible tokens, or NFTs, with Edmund Schuster, associate professor of law at the London School of Economics.
By definition, NFTs are unique pieces of digital content brought and moved online using blockchain tech, the underlying technology of cryptocurrencies like Bitcoin (BTC) and Ether (ETH). As a core feature of NFTs, blockchain ensures digital scarcity and authenticity of digital collectibles, but some experts believe that it is not strictly necessary.
An NFT skeptic, Schuster argued that there is no technical reason why the world needs NFTs, suggesting that non-blockchain digital collectible solutions can achieve “exactly the same” characteristics.
“Unless there’s a clear explanation on why you need this particular technology, I think it’s the hype or excitement connected to the technology itself, not to the actual thing that we’re talking about. It’s hype, in my view, almost by definition,” the professor noted.
Schuster noted the question of trust within gaming collectible ecosystems, arguing that using blockchain alone would not make a collectibles system much different from a centralized database.
“If you need to trust the very party who organizes the game in order to enjoy your token, then it simply doesn’t matter whether you have a blockchain-secured version or a database administered by the same people,” he said.
The NFT bear also argued that the “blockchain element is an unnecessary complication” due to counterparty risks related to the potential devaluation of digital collectibles due to opportunistic behavior by issuing companies. Schuster cited an example of game creators issuing more powerful special weapons to gamers, making older weapons no longer valuable.
According to the debate’s NFT bull, EllioTrades, blockchain technology is critical to ensuring the protection of digital assets. “When you have a digital store of value, a digital asset, and it’s not protected on the blockchain, time has shown that at some point this digital asset will be exposed to thefts. Information cannot be protected without a decentralized network to enforce that protection. That’s why the blockchain is so critical,” EllioTrades noted.
EllioTrades stressed the importance of the decentralization provided by blockchain tech, stating that virtual property in NFTs and in crypto, in general, cannot be confiscated from users.
The NFT bull said that the technology provides token owners with a better quality of life as well as more freedom for interactions, including lending, renting and other complex activities related to decentralized finance.