Wondering why all this buzz around NFTs?
We’ve got this!
But before all that details, these are some of the buzz news in recent times in the NFT space.
- The first tweet ever tweeted in the history of Twitter – sold for 2.9 million USD
- NBA’s little moments of basketball games – sold for hundreds of thousands of dollars
- Nyan Cat, a cat GIF – sold for 600,000 USD
- Everydays – The First 5000 Days (massive compilation of artworks by Beeple) — sold for $69 million
If you’re confused, these are all NFTs.
NFT means Non-fungible Tokens.
What is the big deal about them?
Some people consider them as the same deal as legendary art pieces, like Mona Lisa. The only difference is that NFTs are for digital items.
Non-fungible in a way means non-replaceable. These are unique digital items that just have only one of them, the original piece, and that makes them valuable.
But, can’t we just copy the image or the video?
Yes, but the single original digital item will be owned by someone else in the record, and that is possible by the underlying technology behind all this, blockchain.
Most NFTS today are on the ethereum blockchain. The ownership of the NFT piece is secured by a token, a digital certificate of authenticity. Since the token is on a blockchain, no one can tamper with that information.
If I own a piece of music NFT from Linkin Park, it means that my ownership is recorded as a digital certificate, securely in the blockchain.
If I need to sell it, the ownership of this NFT changes.
Think of it like how your account balance is shown in your bank account online. The balance is just a number stating that you own it, and when you make transactions, it changes.
Now, let us think about why do people consider NFTs to be valuable when you can watch the video or see the image without paying a buck. And which also can be copied a million times.
You can just think of this in terms of the whole art industry. There are artists and art collectors, and this is a speculative market for sure. There is an emotional value attached to the painting or the art piece and there are people who are ready to spend millions to buy them.
In the case of digital art, how do we keep the value intact?
An artist might spend countless hours creating an art piece, but once the sale is made, the same art piece can be copied millions of times. Does the artist gets rewarded for the future demand of the same piece? Is there a way to get the royalties for the artist?
The one good thing I see due to the NFTs is the power shift from buyers to art creators.
In a way, NFTs fulfill these conditions. This too is a speculative market. People buy those digital art pieces assuming that there will be a huge demand for them in the future.
One fact which we cannot ignore now. Ethereum blockchain, on which most NFTs are, uses a tremendous amount of energy. It sure has implications and has to be mitigated using innovative approaches.
Is NFTs a complete hype?
Maybe 50%. As in the case of any new tech, the hype around it is mostly due to the excitement. That goes away in some time. But there will be countless applications using the underlying tech, the smart contracts powered by blockchain.
Oh, and in case if you need to purchase these NFTs, there are marketplaces like OpenSea, Rarible,…
The only requirement is to have those crypto coins in your digital wallet. If you need to create an NFT and make some money, you can do that too…
The NFT tech will evolve for sure. We’re looking at a bright future.
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