According to Charlie Lee, the brains behind Litecoin, NFT prices are likely to crash as they are not a real representation of real art, and they lack the scarcity.
Non-fungible tokens cause a lot of buzz in the crypto scene attracting many investors in the space, especially creatives. Contrary to expectation, Charlie Lee thinks that the whole outrage on NFT is just hype. In his opinion, they cannot be likened to real art as they do not have a cost of creation. From his Twitter, NFT does not create a real scarcity, but instead, an artificial shortage as the cost of building an NFT is almost zero. There will be many NFT’s in the market with time, making the market to be flooded with supply, making the supply higher than demand. This will make its value drop and hence causing the prices to crash.
Is NFT really art?
In the real world, artists put so much effort into making their artwork, which can be likened to proof-of-work. This is a kind of way of creating scarcity for artists, which increases the artwork’s value.
As much as digital art and NFT have been criticized, art will still remain valuable, and the artist determines its value. What sets apart two art pieces is their creators, and many art lovers pay attention to the artist more than the art work. The best part about NFTs is that the piece of art can be cryptographically signed, which gives artists the chance to include metadata, file links, and any other elements.
For NFTs, the scarcity concept does not work as expected as it is an expression of consensus. That explains why there are NFTs that have been able to fetch a lot of money. For example, crypto punk alien NFT was able to sell for 605ETH, and Hashmasks was able to sell for more than $10 million.
Contrary to what many believe, NFTs are not limited to art but also the wide collectible scene.