With the onslaught of everyday development in the crypto world, it gets really hard to keep up with new terminologies popping left and right constantly. By now you must have come across NFT. It’s all for lack of the better term ‘the collectible rage’ these days.
So what is NFT? Is it a currency? Is it art? Is it collectible?
NFT stands for ‘Non-fungible Tokens’
Sounds like something to do with mushrooms! So that is not very self-explanatory. We’d need to get into the basics first.
NFT, The Basics – What are they and how do they work?
A non-fungible token is something that is unique and cannot be replaced. Each token has its identification and value. The ownership of these tokens lies with one individual. In comparison, fungible coins can be converted, replaced, or traded for another and essentially non-distinguishable from each other. Like one bitcoin can be replaced by another bitcoin. But one NFT is not the same as the other NFT and that makes it non-fungible.
Now that we know what non-fungible means, let's discuss what the NFT represents, if they are not the traditional digital coin – what are they? NFT are individual assets of cryptocurrency that can represent various sorts of unique tangible and intangible items, they can range from digital art, music, virtual real estate, gaming assets, fine arts, etc. More and more real-world use cases built around a collectible and ownership concept can be applied to NFTs.
NFTs work on various special blockchain frameworks, where one can create and issue NFTs. One of the mainstream ones is ERC-721, which is a typical network used for the issuance and trading of non-fungible assets on the Ethereum blockchain.
Key Features of NFT
- Its unique and distinct digital certificate
- The ownership is individual through unique identifier
- Its indivisible
- It cannot be replaced or converted
How does NFT relate to the real world?
NFTs have been around since 2017, but again are gaining traction since Beeple’s 10-sec video sold for $6.6 million, sounds highly outrageous – but it’s legit. The digital art realm has been taken over by the NFT storm with digital artists getting their due and more. Previously digital art ownership wasn’t taken very seriously, people would produce copies, take screenshots, illegal downloads and copyright laws would only do so much, but with NFT the ownership of such assets is recorded in smart contracts thus becoming truly unique.
Not only to art, but the importance of NFT be seen with the boom in the gaming economy too. Only last month a virtual real estate sold for a record sale of $1.5 million on Axie Infinity, a real estate game. Only recently Nike came with Cryptokicks a way to track authentication of individual sneakers, color me impressed!
The application of NFT will be far wide with the future to come. It will revolutionize the event ticketing system, cutting all the possible reselling of tickets. Raising funds, transparency of supply chain and anything that revolves around verifiable ownership can be streamlined with NFTs.
Creating, Buying, Selling and Storing an NFT
Anybody can create an NFT. Yes. Just about anyone. You can do it too. Who would have thought a bunch of pixels can sell for so much?
All you need to create and sell NFTs is access to an NFT dedicated marketplace. There are a bunch of these, most common being OpenSea, NiftyGateway, Rarible, and KnownOrigin. Register on one of these, set up a legit profile, and upload your collection for sale.
For buying an NFT you have your eye on, you need to enter its auction. Bid the price in cryptocurrency, if your bid wins the ownership gets transferred to you and you get to own the NFT now. When buying an NFT, remember to first have a secure compliant Wallet at hand. Not all crypto wallets are NFT compliant. Some secure NTF collectible wallets are Pillar, Coinbase, Trust, Enjin, Metamask, etc.
Future Impact of NFT on Buyers, Collectors & Content Creators
By now you must understand that NFT is capable of revolutionizing anything that has to do with ownership. Its impacts will be seen more as blockchain continues to scale up and integrates with our lives more smoothly.
With NFT, buyers, art supporters, and genuine enthusiasts will get more opportunities to support a cause or an artist directly giving them more avenues to show their appreciation.
For Content Creators, NFTs open new avenues of monetization. Not only will it be a way to connect with fans, but creators can also create their custom digital art masterpiece and put it up for auction allowing them to further grow their revenues. Grimes, Chris Torres, Logan Paul, Mike Shinoda, Beeple, William Shatner, and even Jack Dorsey few of the people who have put up NFTs for sale.
For Collectors, NFT is a dream come true! NFT takes the process of authentication out of the equation. The lineage of ownership would be easy to track etc. The NFT technology has made it possible to add a price tag to digital art which has instantly kicked into collector’s hoarding instinct which was up till now only extended to physical pieces of art. Christie will be holding an auction for Beeple’s art that is supposed to end on 11th March and has already reached a tag of $3.7million.
Can someone pull a heist on NFTs?
Ocean’s 14 may probably be about this –no kidding. Blockchain has even changed the concept of a ‘heist’. Well, anything in crypto does carry with it a slight chance of being hacked cause of its digital nature. Always make sure the marketplace you are using and especially the wallet that you’d be storing your NFTs in are ‘hack proof’.
NFTs are here to stay. Its application and impact to the real world would be far and wide. It is currently used in terms of investment, but the volatility of the cryptocurrency industry doesn’t make it a safe bet. Still however as NFT grows it will soon become more than just an investment vehicle, and a means to ensure ownership.