Wait a minute.
What the heck are NFTs?
NFT stands for – Non- fungible token. Sounds complicated?
Well, in reality, it is not that difficult to understand what it means. Before we try and interpret the meaning of NFTs, let’s look at what its opposite, fungible assets, mean.
A fungible asset is something with units that can be readily exchanged. For instance, your own money is a fungible asset; you can take one bill of $100 and exchange it for two bills of $50 or ten bills of $10. However, if something is non-fungible, the example highlighted above is impossible and cannot be interchanged for something else.
Examples of non-fungible assets could vary from a farmhouse or a painting which is one of a kind – these assets have unique properties which make it challenging to interchange or swap them. Similarly, NFTs are ‘one of a kind’ assets in the digital world that can be bought or sold just like any other property piece, but they have no tangible form of their own.
A Few Examples Of NFT
Let’s review some more examples to know the variety of situations where NFTs can prove to exist:
- A unique digital artwork
- A spectacular jacket – limited edition clothing line
- A specific game reward or booster
- A personal writing piece
- A digital collectible
The Internet Of Assets
Getting to the point, NFTs are tokens that we can use to represent the ownership of specific unique items that we want. They let us ‘tokenize’ objects like art, collectibles and real estate, and so on. The Ethereum blockchain secures these NFTs. Ethereum is a cryptocurrency just like Bitcoin.
Some crucial points to keep in mind when understanding NFTs:
- NFTs are digitally unique; no two NFTs can ever be the same.
- Every NFT must have an owner. These details are available to the public and can be viewed by anyone.
- NFTs are compatible with anything built using Ethereum.
For example – The owner can trade an NFT ticket for a specific event on every Ethereum marketplace.
- Content creators can sell their work anywhere and can access a global market.
- Creators can retain ownership rights over their work and claim resale royalties directly.
- Items can be used in surprising ways. For example, you can use digital artwork as collateral in a decentralized loan.
How Do NFTs Work?
Now that you have more information about NFTs, let us have a look at how they work. As mentioned before, NFTs have a few unique properties, they are discussed below:
1. Each minted token has a unique identifier.
2. Each token has an owner, and this information is easily verifiable
3. If you own an NFT:
- You can easily prove that you own it
- No one can manipulate it in any way.
- You can sell it, and in some cases, this will earn the original creator resale royalties.
- Or, you can hold it forever, resting comfortably knowing your wallet secures your asset on the Ethereum blockchain.
4. If you create an NFT:
- You can easily prove that you are the creator of the NFT
- You determine the scarcity
- You can earn royalties every time it is sold
- You can sell it on any NFT market or peer-to-peer marketplace
Are NFTs A Digital Supermarket for Art?
Now that we understand what NFT is and how it works, let us dive in and get a feel of some exciting aspects around it. NFTs are extremely ‘hot’ right now and are pushing the scope of the digital frontier even further. They have been the source of talks across the world and are stealing the spotlight in the crypto world this year.
In 2020 alone, NFT transactions tripled and touched $250 million, and this snowball effect shows no signs of slowing down. There is an enormous boost in the market space about both buying and selling digital art using NFTs. They have transformed how the art world works.
Artists are being offered a unique way to portray their art and even sell it, which may not have been otherwise possible during the ordinary course of life. Moreover, it encourages artists to come up with these fabulous ideas. The reason for this is the more incredible or attractive their digital art is, the more it will exchange hands, and the original creator will receive a proportion of the value of the transactions that will take place for their valuable creations. Also, an artist or a creator can enjoy the benefits of a ‘first-mover advantage’ as only a few brands are currently offering their products in the marketplace. This is the time to jump into the niche and reap all the benefits. Which brand or seller can say no to a larger audience or more popularity?
If you are a buyer, you are automatically motivated to stay up to trend and purchase spectacular items. Brag it up all you want; you own the rights too! You can also earn rights to share the image on the Internet with whomever you like. You can even set it as your display picture! Furthermore, this is a perfect place for investors as NFTs operate as speculative assets. An investor can buy, say, a digital art piece online and hope that its value increases with time, sell it for a higher price than initially purchased, and boom, profit!
Bringing future into the present
The market for NFTs is like the ‘Wild West.’ The world is ripe for opportunity. Now is the perfect time to be a part of the NFT market space, the boom is here, and it is here to stay.
Brands can find their next audience just within a fraction of seconds. Some people have criticized the volatility of the market. However, the beauty of the market lies in the volatility. It is pulling investors closer to its oasis.
This is how our future will be. We will store everything in a bucket of blockchains. NFTs, bring our future closer to our present.
What the fact? – NFT facts
Before ending this piece, experiencing a pinch of reality would give you a different outlook altogether. Let’s look at several fascinating facts about NFTs. Be ready to have your minds blown!
- Beeple’s “The First 5000 Days” (first purely digital NFT based artwork) sold for a staggering $69 million.
- The musician Grimes sold a collection of digital artworks for $6.3 million
- Boyart, who was once facing difficulty in spreading his street art, recently sold his NFT “Contemplations of the Red Jester” for 75 ETH (which amounted to $112,000 at that time).
- NFT of LeBron Dunk – Sold for $208,000.
- The recent Bitcoin- code inspired artwork sold for over $130,000.
- Mean Girls superstar Lindsay Lohan jumped into the NFT market; she released her new single “Lullaby” on NFT.
- Paris Hilton auctioned off a cryptograph drawing of her cat Munchkin for 40 ETH (worth $17,000 at time of sale).
The list of these exciting stories does not end in a snap, they are just so many! So, don’t you think 2021 will be the year for NFTs?