a friend, for example, is irreversible, meaning that if you accidentally send it to the wrong address, there is no way to retrieve it. This lack of consumer protection has made many people hesitant to fully embrace NFT technology.
However, there is hope on the horizon. As the popularity of NFTs continues to grow, developers and innovators are working to address these challenges and make the technology more accessible and user-friendly. One area of focus is improving the infrastructure that supports NFT transactions.
Currently, blockchain platforms like Ethereum rely on decentralized networks of computers to process transactions. While this decentralized approach protects the blockchain from censorship and control, it also comes with high transaction costs. In the early days of NFTs, the Ethereum network represented a significant portion of the world’s daily energy usage due to its computationally costly transaction processing system.
Although the Ethereum network has made strides in reducing its environmental footprint through the adoption of a new transaction processing architecture called proof-of-stake (POS), transaction costs remain a concern. Sending an NFT to a friend could cost as much as a dollar or more, which may seem cheap compared to traditional postage costs but is exorbitant for digital assets.
Furthermore, transaction costs can increase significantly during peak times of network activity, making trading and other transactions impractical. The infrastructure supporting blockchain transactions was not initially equipped to handle the high density of trading that could occur at virtual gaming conventions or other large-scale events.
Fortunately, progress is being made to address these issues. Blockchain infrastructure is being improved to increase throughput, allowing for more transactions to be processed quickly and efficiently. Additionally, solutions are being developed to encode multiple transactions into a single settlement transaction, reducing the overall cost of executing transactions.
These advancements in infrastructure design and computational power have the potential to significantly reduce the transaction costs associated with NFTs, making them more accessible to a wider range of users. As the technology continues to evolve, it is expected that the marginal cost of executing transactions will continue to decrease, similar to the way cloud computing infrastructure led to low-cost processing and storage.
In addition to infrastructure improvements, there is also a focus on enhancing consumer access and protection. Currently, interacting with NFT technology requires a certain level of technical knowledge and can be prone to errors. Digital wallets, which are used to store and manage NFTs, often require users to interact directly with the blockchain and take personal responsibility for the security of their assets.
To make NFT technology more user-friendly, intuitive interfaces are being developed to separate user activity from the underlying technology. This means that consumers will no longer need to navigate complex source code or have a deep understanding of blockchain technology to participate in NFT transactions.
Furthermore, efforts are being made to provide additional consumer protections. The instantaneity and finality of crypto transactions, while advantageous in some ways, also mean that there are fewer safeguards in place compared to traditional online consumer services. Developers are working to implement mechanisms that offer greater security and recourse for users, such as the ability to reverse transactions in certain circumstances.
Overall, while there are still challenges to overcome, the opportunities presented by NFTs are being actively pursued. The advancements in infrastructure and user experience are paving the way for a more accessible and user-friendly NFT ecosystem. As these improvements continue to be made, it is expected that the full social potential of NFT technology will be realized, opening up new possibilities for buying, selling, and creating digital assets.