NFT is a relatively new phenomenon that, however, is increasingly making headlines.
The main difference between these digital assets and regular cryptocurrencies is that they are unique, as their name suggests.
First, let's turn to the definition of NFT
What is NFT?
NFT stands for non-fungible tokens. To understand tokens, you need to figure out in what environment they exist - in this case, in the blockchain.
A format of non-fungible tokens was created as we need to transfer unique items to the blockchain.
Blockchain is a database that is simultaneously stored on a huge number of computers. In the traditional model of the Internet, all devices are connected to centralized nodes (in the form of servers or Internet providers), while the blockchain works in a different way. It does not provide for any central nodes; in his system, all devices simultaneously store all information published on the blockchain.
Cryptocurrencies such as Bitcoin, Ethereum or Monero work precisely thanks to blockchain technology.
Tokens, in turn, represent a register entry within this blockchain. A distinctive feature of most tokens is the principle of fungibility. It can be compared to currency (including cryptocurrency), but not all digital assets are fungible.
For example, a painting by Salvador Dali is not identical to the one by Claude Monet, and an mp3 file with a song by Madonna can hardly be replaced with a recording of Metallica concert. Therefore, in order to transfer unique items to the blockchain, the format of non-fungible tokens was created.
How long have NFTs been around?
NFTs are relatively recent. These kinds of tokens were created back in the mid-2010s, but the first NFT projects became available only in 2017.
NFTs are unique
Each of the NFTs is unique and exists in a single copy, it cannot be divided, and all information about its author, buyer and all transactions with it is securely stored in the blockchain. In other words, an NFT is a digital certificate attached to a unique entity.
Due to the reliability of the blockchain, diplomas, certificates and various documents can be issued in the NFT format, which can potentially help eliminate the risk of counterfeiting.
NFT plays a big role in art, as art historians and experts can spend hundreds of hours evaluating a work of art to verify its authenticity.
Will you have full rights for the NFT after you purchase it?
Critics often draw attention to the fact that owning an NFT does not guarantee full rights to the subject. If you purchase a NFT animation, another person can easily find a copy in internet, download it or copy it.
You can buy this “NFT”, but you do not own the rights to it and cannot dispose of it outside the blockchain.
Why then do people buy NFT? The blockchain reliably records the fact that it was you who acquired a certain unique item, previously created by its original owner, the data of which is also stored in the blockchain. The main value lies in their exclusivity - not their availability on the Internet.
The ability to resell NFTs inherent in their smart contracts allows them to be considered as investments as well.
What can you sell in NFT format?
In the NFT format, you can sell virtually anything - music, images, text, video, 3D models - that is, any digital product claiming to be unique.
Collectors, gamers (who are interested in game items: weapons, collectible cards, etc.), as well as figures and art lovers pay special attention to NFT.
In the gaming industry, NFT has gained particular popularity - the possession of a digital character for many has proven to be more valuable than a digital painting - so much so that in 2020 41% of NFT was used to buy in-game items. Game items and lack of advertising were sold and bought long before the advent of NFT for real money, and the transition to tokens in this area is quite easy.
So, not only music tracks or drawings, but also models are exhibited as NFT lots. Canadian artist Christa Kim was able to get $ 520 thousand for a minimalist model of a house designed in a Martian setting.
Other musicians who have also sold their creations as NFT include Kings of Leon and singer Weeknd.
The record was the sale of the painting "Everydays: The First 5000 Days" by artist Mike Winkelmann (known as Beeple). JPG file, consisting of all the images that the artist painted daily for five thousand days, sold for $ 69.3 million
Non-fungible tokens are of interest not only for artists, but also for large publications. The Times magazine put up three of its covers including the iconic "Is God Dead?"
Social media is also taking an interest in this technology, with information emerging that Instagram is eyeing the NFT market as a way to monetize content.
NFT is a great example of how we may use blockchain, cryptocurrency and tokens in new ways in the future. The NFT is likely to have (and already has) some impact on the formats for creating and distributing content and art. What do you think about the future of NFT?
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He uses to dedicate part of his life to inspire others and help them achieve the most out of their lives. Since he was 20, he had successfully founded and managed several companies operating in the field of management consulting, wealth management and fintech. He is Member of Institute of Directors in London, Member of Changer Club in Riga, Member of Fintech Association of Hong Kong, Member of Singapore Fintech Association, Member of Non Executive Director Association in London and Member of Alumni Network of Draper University in San Francisco. He loves travelling, he is a cigars lover, an amateur golfer and a dapper man.
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