NFTs stands for Non-Fungible Tokens, meaning it is a digital asset representing real-world items like art, music, in-game items, and videos. Non-fungible stands for irreplaceable. For example, an iPhone 12 Pro max is a product that has serial production.
On the other hand, Leonardo Da Vinci’s Mona Lisa is a unique irreplaceable nonserial work of art. So NFT’s would be digitally coded unique information for the item, the creator, and the owner allowing you a secure way to buy these objects on a digital platform on the internet.
NFT’s are generally encoded with the same underlying software as many cryptos and can be bought or sold online with cryptocurrency.
NFTs have been around since 2014. However, they recently started to become an increasingly popular way to buy and sell digital artwork. Since November 2017, a staggering $174 million has been spent on NFTs.
NFTs are based on unique identifying codes which makes them one of a kind, or at least one of a very limited run. One worthy of spreading statement comes from the Chair of the Washington Technology Industry Association Cascadia Blockchain Council and managing director of Yellow Umbrella Ventures Arry Yu that says: “Essentially, NFTs create digital scarcity”.
Most digital creations are almost always infinite in supply and NFT’s are the total opposite. In theory and practice, cutting off the supply should raise the value of a given asset, assuming it’s in demand.
However many NFTs, at least in these early days, are digital creations already existing in some form elsewhere, like memorable video clips from NBA games or secured versions of digital art that’s already roaming around on Instagram or elsewhere.
Another instance would be the popular digital artist Mike Winklemann, better known as “Beeple”. The digital composite he crafted was consisted of 5,000 daily drawings to create perhaps the most famous NFT at that time. He named his NFT “EVERYDAYS: The First 5000 Days,” and it was sold at Christie’s, reaching a record-breaking $69.3 million.
The individual images—or even the entire collage of images are accessible online to anyone for free. So what drives people to spend millions on something they could easily have by screenshot or download?
It is simply because an NFT allows the buyer to become the owner of the original item. The item contains a built-in authentication to serve as proof of ownership. And it is like a hobby and passion for the collectors who value those “digital bragging rights” almost more than the item itself.
What is an NFT?
Blockchain hosts NFTs running as a distributed public ledger that records transactions. You have probably come across blockchain if you don’t you can discover more on the link of our latest publishing, nonetheless, it is a process that makes cryptocurrencies possible.
Specifically, the Ethereum blockchain hosts NFTs, although other blockchains support them as well.
Once an item is declared as NFT a digital token is generated i.e. “minted”. The items can be both tangible or intangible assets like:
- Videos and sports highlights,
- Digital designs,
- Designer sneakers,
- Virtual avatars and in-game items
The most interesting thing is that even tweets can become NFTs. It is the case with Jack Dorsey, Twitter co-founder who sold his first tweet as an NFT for more than $2.9 million.
In essence, NFTs are digital collector’s items. Instead of getting an actual oil canvas painting to decorate the wall, the buyer receives a digital file instead.
Exclusive ownership rights are maybe the catch with NFT’s to make them more appealing. Only one owner at a time is registered with NFTs because unique data is recorded on the token and it is easy to verify the ownership and token transfer between owners.
NFTs enable the owner or creator to also store specific information inside the NFT. For example, the artist’s signature on the artwork by including it in the NFT’s metadata.
What Are The Benefits Of NFTs?
An NFT comes as a supporter of the unique work as they ease the process of a direct sale and copyright work profiting. NFTs supported by blockchain technology gives artists and content creators a unique opportunity to monetize their work.
Artists for example, no longer need to rely on galleries or auction houses to sell their work. Instead, now there is a direct sale from the artist to the consumer as an NFT, allowing also direct profit to the artist with no additional costs.
Moreover, royalties can be programmed and each time the art is sold to a new owner, artists will receive a percentage of the sale. Generally, artists do not receive future proceeds after their art is first sold and this feature comes up as extremely attractive in terms of copyright.
To make money with NFTs art isn’t the only way. Raising funds for charity was the innovative approach of brands like Taco Bell and Charmin. They have auctioned off themed NFT art and directed the find in charity.
“NFTP” (non-fungible toilet paper) was the Charmin offer, and Taco Bell’s NFT art sold out in minutes. It went like crazy, the highest bids were 1.5 wrapped ether (WETH)—equal to $3,723.83 at the time of writing.
As a kind of digital work of art NFTs can have the etiquette of invaluable works of art and their prices or returns can easily soar up to the sky. Some good examples for these are:
–$600,000 for a 2011-era GIF of a cat with a pop-tart body called Nyan Cat, sold in February.
–$500 million for an NBA Top Shot in sales as of late March.
–$200,000 for a single LeBron James highlight NFT.
-Celebrities like Snoop Dogg and Lindsay Lohan are joining the NFT mania, releasing unique memories, artwork, and moments as securitized NFTs.
NFT and Cryptocurrency Differences
As previously mentioned, an NFT is a non-fungible token where non-fungible means irreplaceable. NFTs are built and rely on using the same principles of programming as in cryptocurrency, like Bitcoin or Ethereum, and the similarity between them ends here.
Moreover, both traditional currencies and cryptocurrencies are “fungible,”.
This means that they can be replaced, traded, or exchanged for one another. Their value also is always equal one dollar equals one dollar always and one Bitcoin is always equal to another Bitcoin. The fungibility of cryptos is adding to becoming a trusted means of conducting transactions on the blockchain.
On the other hand, NFTs are the total opposite in this regard. A unique digital signature is delegated to every separate NFT making the exchange impossible for or equal to one another (hence, non-fungible). For example, an NBA Top Shot clip will not be equal to EVERYDAYS solely because they’re both NFTs. (Two different or same NBA Top Shot clips will not even necessarily be equal to each other in value.)
What Does The Future of NFTs Hold?
It is essentially not hard to imagine what areas will NFTs find application. Each domain that has to deal with forgery and fakes will find NFTs as problem-solver. It is anticipated NFTs will find their way to many domains, including:
– Verification of documents, certificates, and identity
– Domain name ownership
– Real estate
– Supply chain and logistics
– Luxury brands,
– Sports, and Athletic
– Other memorabilia
Mostly interesting, it will enter even event tickets because the industry gatekeepers are always looking to cut down on scalping and fakes, and the NBA and Mark Cuban are admitted “fans.”
We have already witnessed this and you can read more about Miami Art Festival SCOPE: First Ever To Sell VIP Tickets In The Form NFTs
The gaming industry also has a high potential. An example of this is the AnRKey X platform combining DeFi and Esports gaming for users to compete, purchase and stake unique NFTs and win valuable rewards.
The AnRKey X™ protocol platform, founded by recognized global leaders in crypto, DeFi, gaming, and entertainment is a gDEX (Decentralized Finance Gaming Platform Exchange). It was designed to merge DeFi, Esports, and NFTs into one on their gaming platform creating a brand new industry called m$ports (money sports).
The future will give birth to new ideas and areas of NFT implementation as we become aware of the benefits it offers as a system, approach, and technology. We just need to wait and see it on Cryptogoldie. It will surely be published as news or wiki 😊.
NFTs are not popularized so much by the ordinary person as they are by the business owners and the big companies that are in a need of them. NFTs may look unappealing and may be an unnecessary luxury to most people for now.
However, it is a 3-way win-win-win scenario, and, at this point, it is hard to imagine all the domains NFTs will enter and the transformation they will drive on a large scale transforming our everyday life from the bottom up.
Even though the technology allows for innovative contracts and sales to be made in a cryptographically secure manner it is still difficult to say whether NFTs will become a get-rich-quick scheme for artists. In practice, blockchain technology allows us to track and exchange ownership of anything, including homes, cars, company shares, art, and copyright and NFTs are the tokens that fully close the circle of unique verification.
Eventually, only time can reveal the future. Until then, it is up to us to find multiple ways of how NFTs can assist us and ease our everyday lives.