With crypto kitties being able to raise $ 12.5 million in venture capital, it attracted many ‘copycats’ sites that came up, to also cash in on this great opportunity of non- fungible digital assets. This has proved to be a big business right now.
Though innovative, these ‘decentralized’ projects have a weakness, without a website, the digital assets are worthless. This is evident in the collapse of crypto celebs and similar platforms shows.
Short live ERC271 value
ERC271 has been termed “the next boom” for Ethereum after ERC20 tokens, which fueled the ICO short-lived popularity. ERC27 is the non-fungible token (NFT) standard that is currently used to drive most digital collectible projects in the news. Having sole ownership of a digital asset and more so retaining it in a wallet you hold the keys for, is so exciting. Though all you really own is just the number assigned to your address by smart contract. The value of NFT relies on the centralized server that keeps the image.
Assuming blockchain is a volleyball field and website is the ball, if you take away the ball, then there is no game. Same case to what happened to crypto celebrities, an Ethereum trading card game, that relied on the “greater fool theory” to enable them to bring up the price of the celebs whose pictures were assigned to every ERC271. Sorry to say, but it died shortly after its birth.
The same demise caught up with Crypto All Starts, which used the same idea on Twitter cryptocurrency. All these premature deaths bring to light the major weakness of NFTs. If Crypto Kitties worked the same way as buying Ethereum from a broker, all the cute little cats would effectively cease to exist. As in the prior case, if the broker goes out of business, your ETH will still be worth something.
The value is from people, not blockchain
Cryptocurrency has attained value, not because they are on the blockchain, but because people have given it the required value through accepting is as a medium of exchange. People are willing to play some ETH for cute or rare collectibles, but if the image is taken away i.e the part that adds value, then it remains to be just a unique token that no one is interested in.
The use cases of non-fungible tokens are still being felt out, with it being a promising field. For instance, Ethmoji, have allowed people to create their own avatar out of composite parts, and they get paid by smart contract for each used piece. There is also the Decentraland that Venture capitalist Barry Silbert has termed ‘the killer app for VR’.
Though there is no proof that Crypto Kitties or Decentraland will be going anywhere, their centralized design makes their ecosystem reliant upon a single point of failure. If it goes down, then even the rarest NFTs becomes zero.