LIVE๐ Elon Musk's Take on NFTs: A Decentralized Future?
In a recent interaction on his platform, X (formerly Twitter), Elon Musk revisited his opinion on Non-Fungible Tokens (NFTs), the tradeable digital assets linked to a blockchain's unique token.
๐ญ Musk's Critique: JPEGs on the Blockchain
Responding to a comment questioning the relevance of NFTs, Musk reiterated his perspective shared on The Joe Rogan Experience podcast on October 31. He emphasized the importance of encoding JPEGs in the blockchain to address the vulnerability of losing the associated image if the hosting company goes out of business.
๐๏ธ Quoting Musk:
"You should at least encode the JPEG in the blockchain. If the company housing the image goes out of business, you donโt have the image anymore."
๐ Understanding Musk's Criticism:
Musk's criticism stems from a deep understanding of how the NFT market functions. Typically, a centralized database hosts images (JPEGs) linked to a non-fungible token hash ID on a blockchain. Investors trade and hold the hash IDs, not the actual media.
๐ ๏ธ Solving the Issue: Inscribing Media into the Blockchain
Acknowledging the existing flaw, Musk suggests solutions are emerging. Some blockchain projects directly inscribe media, such as JPEGs, videos, and music, into the blockchain itself, eliminating the reliance on centralized databases.
๐ A Practical Example: Leonidas NFT
An intriguing case is presented by Leonidas (@LeonidasNFT), who inscribed Elon Musk's interview clip as an Ordinals Inscription. This NFT is now on Bitcoin's blockchain, allowing investors to own and trade it without dependency on a centralized database.
๐ The Future of NFTs: Beyond Centralization
Despite current challenges, NFT enthusiasts anticipate continued evolution. The inscription of media directly into blockchains offers a decentralized future, allowing for ownership and trading without intermediaries.
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