It is no secret that the current NFT market is unsustainable and has no room to grow. Ethereum smart contracts, the cornerstone of NFTs, are incapable of handling the demand.
The cost of a single transaction on the Ethereum blockchain makes minting and trading inefficient and tremendously expensive. Transaction times are slow, while congestion of the network limits the number of market participants. The energy consumption required for minting and transferring a single NFT is suspected to have a negative impact on the environment, clouding the promise of a new, blockchain-powered art market.
What is actually sold? A hash value, metadata, or a work of art itself. Copyright and other associated rights were never a design feature of NFTs. An emerging number of cases started challenging the concept, making it harder for the market to adopt a new tech stack as a full-time solution for a longstanding problem.
When we look at the art market as a whole, there is one crucial aspect to consider. Most of the art in the world is hidden behind closed doors. In the Art & Finance Report 2019 by Deloitte and ArtTactic, it is estimated that the wealth associated with art and collectibles is worth over US$1.5 trillion, but most of that art is stored away in freeports.
While blue-chip art is inaccessible to small collectors, there is also a significant barrier to entry for new collectors within the blockchain space due to the inoperability of current platforms. The DeFi movement crafted a new playground for innovative projects but still fails to include the NFT concept into its ecosystem due to the tokens’ non-fungible characteristics.
A lot of stakeholders are waiting for a proper solution to transform the market.