Centralized or Decentralized?: Concerns and Value Judgments of Stakeholders in the Non-Fungible Tokens (NFTs) Market

Paper: arXiv 2311.10990

Abstract

Non-fungible tokens (NFTs) are decentralized digital tokens to represent the unique ownership of items. Recently, NFTs have been gaining popularity and at the same time bringing up issues, such as scams, racism, and sexism. Decentralization, a key attribute of NFT, contributes to some of the issues that are easier to regulate under centralized schemes, which are intentionally left out of the NFT marketplace. In this work, we delved into this centralization-decentralization dilemma in the NFT space through mixed quantitative and qualitative methods. Centralization-decentralization dilemma is the dilemma caused by the conflict between the slogan of decentralization and the interests of stakeholders. We first analyzed over 30,000 NFT-related tweets to obtain a high-level understanding of stakeholders’ concerns in the NFT space. We then interviewed 15 NFT stakeholders (both creators and collectors) to obtain their in-depth insights into these concerns and potential solutions. Our findings identify concerning issues among users: financial scams, counterfeit NFTs, hacking, and unethical NFTs. We further reflected on the centralization-decentralization dilemma drawing upon the perspectives of the stakeholders in the interviews. Finally, we gave some inferences to solve the centralization-decentralization dilemma in the NFT market and thought about the future of NFT and decentralization.

Complexity vs Empirical Score

• Math Complexity: 1.0/10
• Empirical Rigor: 3.5/10
• Quadrant: Philosophers — conceptual discussion, limited math and data

Why this score: The paper employs mixed-method social science research (Twitter analysis and interviews) with no advanced mathematical formalism. Its empirical rigor is limited to qualitative data analysis and basic network graphs, lacking backtesting, statistical modeling, or implementation-heavy quant finance methods.

Research Flowchart

  flowchart TD
  A["Research Question<br>Centralization vs Decentralization<br>in the NFT Market"] --> B
  B["Methodology<br>Mixed Methods"] --> C
  subgraph C ["Phase 1: Quantitative"]
      C1["Twitter Data<br>30,000+ Tweets"] --> C2["NLP & Sentiment Analysis"]
  end
  B --> D
  subgraph D ["Phase 2: Qualitative"]
      D1["Stakeholder Interviews<br>15 Participants"] --> D2["Thematic Analysis"]
  end
  C2 --> E["Computational Synthesis<br>Merged Concerns & Trends"]
  D2 --> E
  E --> F
  subgraph F ["Key Findings"]
      F1["User Concerns<br>Scams, Counterfeits, Hacking"]
      F2["Centralization Dilemma<br>Decentralization Ideals vs Stakeholder Interests"]
      F3["Policy Inferences<br>Regulatory Solutions & Future Outlook"]
  end

Cited References (138)

1. Replication Data for: ``Centralized or Decentralized?’’: Concerns and Value Judgments of Stakeholders in the Non-Fungible Tokens (NFTs) Market (2023) — link
2. Empirical analysis of eip-1559: Transaction fees, waiting times, and consensus security (2022)
3. The design principle of blockchain: An initiative for the sok of soks (2023) — link
4. Machine Learning for Blockchain: Literature Review and Open Research Questions (2023)
5. Decoding Social Sentiment in DAO: A Comparative Analysis of Blockchain Governance Communities (2023)
6. On the Mechanics of NFT Valuation: AI Ethics and Social Media (2023) — link
7. SoK: Blockchain Decentralization (2022) — link
8. Machine learning practices outside big tech: How resource constraints challenge responsible development (2021)

2 of 138 cited works are in the corpus; resolved via arXiv source bundles, Semantic Scholar and OpenAlex. Corpus-wide: 2518 linked papers.