Months ago, the mainstream media wrote articles about how crypto was dead and that there would never be another bull run. Wild predictions of Bitcoin going to zero sought to instill fear in people so they would turn away from the markets and invest in more traditional assets.
Yet, despite the doomsday prophecies, Bitcoin has surged to new heights, defying expectations even before the halving takes place. The media has quickly forgotten its failed predictions and instead turned its attention to the NFT market, echoing similar skepticism.
Several articles have claimed NFTs were just a fad and take delight in drawing attention to how much value they’ve lost. However, their predictions will again be proven wrong as the world gradually moves towards tokenizing real-world assets (RWAs).
A common misconception that perpetuates the negative stereotyping of NFTs is to refer to them as JPEGs or pictures of cute animals. This view is based on a fundamental misunderstanding of the technology. A JPEG is an image file, whereas an NFT is a cryptographically secure token.
The association of an image file to an NFT is a perfect use-case demonstration of the technology, which proves it’s ideally suited to RWAs. NFTs are unique, non-fungible tokens. They are not interchangeable in the same way that real-world assets are unique and non-interchangeable.
In the case of NFTs like the Bored Ape Yacht Club collection, each NFT is a blockchain token associated with an image from the collection. While the image can be downloaded and saved multiple times, and each version is interchangeable, the owner can only move the actual on-chain token.
To understand how important this is to the future of asset ownership, you have to change the JPEG to another type of asset, such as a car or real estate. Once the asset is tied to an NFT, the NFT becomes proof of ownership.
At present, we have an archaic system for proof of ownership that relies on trusted intermediaries such as government agencies. If you own a car, for instance, the proof of ownership isn’t the registration document; it’s the entry on the government database that records you as the owner.
While the document can be forged, the entry on the government database would remain unchanged. The resources and logistics required to maintain the integrity and security of the government database are considerable and centralized.
This gives the government all of the power and control over asset ownership. If they decide, for instance, that they want to take your car away, they could alter the database, and you would be powerless to stop them.
Sometimes, situations like this are intentional, and sometimes, they’re due to system failures. The main point is that wherever we rely upon a trusted third party, that trust can be abused.
If that information were stored on-chain instead of a centralized, government-controlled database, it could be easily accessed to prove ownership. Moreover, the power to keep or transfer the entry would rest in the hands of the token holder. It is secured cryptographically, and consensus across the network agrees on the token’s rightful owner.
Blockchain technology simplifies proof of ownership and democratizes and decentralizes the process. While it may still be many years before governments adopt it en masse, it’s clear that the future of asset ownership has to be on-chain.
There’s a tendency in Web3 for short-term thinking, usually because when the market moves, it does so violently and quickly. However, the future of modern society is inseparably linked to blockchain technology. No matter what the mainstream media may say, NFTs are here to stay, and the real growth in the market has yet to begin.
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<p>The post A New Era of Ownership first appeared on Plato AiStream V2.1.</p>