Web3: Expectation vs Reality and the Next Big Thing
The basic idea of Web3 is simple, but different from the earlier versions of Web1 and Web2 internet.
The growth of NFTs dates back to when an art collector, Pablo Rodrigues-Fraile, resold an art piece by Beeple with a 1,000% profit margin - ever since then, the NFT industry has continued trending. However, although the NFT Marketplace is currently booming and generating impressive profits for dealers, it is not yet free from some fundamental challenges.
1. High and Hidden Fees: NFT trades are associated with high and hidden gas fees of which most first-timers are ignorant. Many NFTs are based on the Ethereum blockchain and ERC-20, ERC-721, ERC-1155 and some other token standards are used for issuing smart contracts. The Ethereum blockchain, in particular, uses the proof of work mechanism to determine their value, which causes high gas fees and this is one of the downsides that is undermining the NFT Marketplace today.
2. Problematic User Experience: NFT users often need to search different crypto platforms, launchpads and undergo lengthy sign-ups as well as verifications. They also need to provide personal details such as their government IDs (KYC), address and telephone number in order to obtain a user account. In fact, this situation is worsened by the fact that some popular NFT platforms do not provide onboarding tutorials for newbies, thus leaving them struggling to work things out themselves. In this case, navigating all platforms without a guiding template can breed an unfriendly experience for prospective users.
3. Defective Copyright Protection: There is a rising argument that NFTs are good for digital artists as it enables creators to fully own and earn from their work. The challenge, however, is that without the creators' consent, images can be duplicated, personalized and spread online easily. In the same vein, the NFT Marketplace lacks the legal framework and precedence to validate or reinforce the true ownership of an NFT and the associated copyright evidence.
4. Lack of Creative Freedom and Expression for Artists: Initially, the NFT Marketplace was intended to allow artists to sell their artwork to their fans directly. However, most NFT Marketplaces have censorship and moderation features that limit artists from expressing their creative freedom.
In conclusion, the NFT Marketplace is a virtual economic space that models the physical world. Generally, in the physical arena, the more Marketplaces within an environment, the higher the tendency for sub-standard products. There is also a similar trend with the current proliferation of NFT Marketplaces, with products that may undermine the value, trust and worth of some NFT ecosystems. However, the way out is that different projects should have significant authentication mechanisms which will easily reveal some fake projects and thereby making the Marketplace seamless for users.