Are NFT’s over yet?
Writing in 2021, Andrew Park and colleagues describe NFT technology as “still firmly placed within the “Early Adopters” phase of the Diffusion of Innovations process” ([1], p. 11). I’m pretty sure that NFT’s have not progressed since. If anything, this innovation has “diffused” into thinner and thinner hot air.
Park et al. analyze what they perceive to be future used cases for NFT technology with an eye to a two dimensional framework rating “novelty” and “complexity of coordination”. The latter factor refers to the number of parties that have to adopt the technology, and what that would require.
In the table, the least “novel” and simplest case is “single use token”, essentially a digitally signed identification. Digitized land registries require more coordination. More “novel” use cases involve trading physical objects, and range out into the full spectrum of financial assets, AKA DeFi.
This framework is a reminder that NFTs are basically a neat way to keep records. Replacing existing record keeping depends on the ways the records are created and used. Some use cases are relatively simple to do, others require a lot more work.
For example, creating a digital form of property deeds is not especially difficult. But these records need to be trusted and legally enforced. This means that the political system must recognize the digital records and, if necessary, act to enforce their terms. It also means that the digital records need to be created and handled in ways that all parties trust. These elements have little to do with NFT technology and everything to do with the business of government.
The authors think that NFTs were at the “Peak of Inflated Expectations” (using terms from Gartner’s Hype Cycle) in late 2021, and heading into the “Trough of Disillusionment” in 2022. This prediction certainly seems to have been realized.
In this framework, a successful technology will then need to climb the “Slope of Enlightenment”, as people deploy real uses and come to understand the technology. Honestly, I’m seeing only “inflated expectations” and “disillusionment”, with no “enlightenment”.
Of course, Park and colleagues aren’t discouraged. Nakamotoans are never discouraged!
“While it is unclear how long this will take, we predict that the future of NFTs will be very exciting. Eventually.”
([1], p. 13).
Well…“Eventually” is a long time!
- Andrew Park, Jan Kietzmann, Leyland Pitt, and Amir Dabirian, The Evolution of Nonfungible Tokens: Complexity and Novelty of NFT Use-Cases. IT Professional, 24 (1):9-14, 2022. https://ieeexplore.ieee.org/abstract/document/9717330
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