John Egan, CEO of L’Atelier BNP Paribas, has said that Ethereum (ETH) is currently likely to be a “significantly safer” investment than non-fungible tokens (NFTs). He indicated that this is mainly because Ethereum provides the underlying infrastructure to NFTs. He said the following in an interview with Bloomberg:
“Ethereum is clearly the big winner when it comes to NFTs. So starting with Ethereum and adjacent infrastructure to Ethereum is probably a significantly safer investment right now. ”
Buying NFTs, on the other hand, is like gambling in a casino at this stage, according to Egan:
“You know you’re going to spend money, but maybe you’re doing it for fun, for the experience. If you win, you are lucky. ”
BNP subsidiary L’Atelier identifies trends in digital and virtual domains through research and analysis. Egan said NFTs are “highly an emerging asset” and are risky in this regard. However, Egan expects NFTs to be the “basic economic infrastructure within the virtual economy” in the next decade when it emerges.
Egan, therefore, compared the current NFT hype to the initial coin offerings (ICO) mania of 2017. He said both trends are “very similar” and went on to:
“I think the vast majority of NFT propositions currently available are wrapped in a hype cycle and have no real value. That does not mean that NFTs have no value. I think NFTs are of extraordinary value as infrastructure in the long run. ”
NFTs built on shaky foundations
Earlier this week, we already posted an article indicating that NFTs may not be as safe as many think. The main selling point of NFTs is that they will live on the blockchain forever. However, this does not appear to be entirely true, according to a study by Jonty Wareing.
Wareing examined the blockchain data of two well-known NFTs and found that it consists of a URL address or IPFS hash. In other words, the existence of those NFTs depends on whether the seller continues to operate in the market.
Short version: The NFT token you bought points to a URL on the Internet or an IPFS hash. In most cases it refers to an IPFS gateway on the internet run by the startup from which you bought the NFT. Oh, and that URL is not the media file. That URL is a JSON metadata file. ”
Wareing then noted that, for example, Beeple’s NFT token for CROSSROADS is a JSON file hosted on Nifty Gateway servers. He stated that if Nifty Gateway stopped trading, CROSSROADS would also cease to exist. He concluded that the play would be worthless if that happened.
“DAT file refers to the actual media you just” bought “. Which in this case is hosted via a @cloudinary CDN, again served by Nifty’s servers. So if Nifty goes out of business, your token is now worthless. It does not refer to anything. This cannot be changed. ”
Likewise, a study of Beeple’s “THE FIRST 5000 DAYS” refers to an IFPS hash. This, in turn, refers to a JSON metadata file that points to an IFPS gateway from NFT marketplace Makersplace. This piece sold for $ 69 million and it would be a shame if the artwork disappears after your purchase.
So coming back to Egan’s statement, it does indeed appear that investing in Ethereum at this point is still a lot safer than investing in NFTs. At least until the above problem is solved.