NFTs and the Future of Trade
Browsing through online spaces, or sitting amongst friends having a cup of tea- we have heard the term NFTs being mentioned countless times; and let’s be honest, we are still not quite sure what it means. Worry no more, for this article is here to help!
Firstly, let us try to answer the big question:
What are NFTs?
NFT stands for non-fungible token. The phrase non-fungible applies to any object that is unique in itself and cannot be replaced by something else. It also means that an NFT cannot be broken into parts or added to other NFTs in order to create something new. A simple way to understand this better is to take examples of other non-fungible objects like the original Mona Lisa or a collectible pair of shoes. On the contrary, the example of a fungible item is a $100 bill. You can trade it in and get two $50, or five $20 bills. Similarly, with cryptocurrency, you can sell bitcoin and get other ones of the same value.
Now that we’ve covered the basic definition, let us dive into,
What can be considered a non-fungible token?
Absolutely anything digital. That’s right, anything in the world that is one of its kind or irreplaceable can be considered (and sold) as an NFT. It sounds a bit wild until you get to learn that the founder of twitter sold the first tweet ever made as a non-fungible token; or that musician Grimes sold auctioned artwork worth $6 million just this year.
In essence, NFTs can include everything from a piece of digital art, a song, a video, a tiny GIF (Nyan Cat- sold for $580,000), to a picture of Lindsay Lohan’s face (sold for $17,000). Does this mean that the product being sold will not be available on the internet for users to download, share and enjoy? Nope. Surely, Miss Lohan’s face has been photographed enough times to fill up pages upon pages of Google Images, including countless copies of the photo in question; but who has the rights to the original picture? The owner of the NFT.
This is where it gets a little bit complicated.
Where does the value of NFTs come from?
The value of a non-fungible token is determined the same way as that of any other collectible, rare object or piece of art- by how much it can be used to show off. There is absolutely no monetary value in a tweet, for example, but just the idea of being rich enough to own something that no one in the whole world can ever own- that’s what makes NFTs powerful. Whether you are a collector or trader of items such as these, you will benefit most from the tokens most scarce and desired by the world, and therefore, priced the highest.
So it is about the glamour?
Quite possibly, but is that not exactly in line with what we have previously valued and cherished as buyers? Not just in terms of rare and collectible items but also with clothing, accessories and even shoes- it is the hype that counts. The way owning an object puts you in a high-class, members-only club type of thing. NFTs are just like that.
In that case, are NFTs useless?
No. The creation of NFTs, as well as their increasing buying and selling could not have come at a better time. For the digital world, where artists and creators are drifting more and more towards digital expressions of their artistic creativity- digital art, multimedia content, etc.- NFTs provide a means of successfully and effectively trading art and earning money through it. Studies show that young people are able to make ample amounts of money to live off of, comfortably, by selling their art online. Even if they sell a hundred copies, the original, with the rights and licenses, will belong to only the NFT buyer, and that means something. To the buyer, it means ownership; and to the seller, it means appropriate value for their art.
So How Exactly Do NFTs work?
The question of how exactly they work can be answered by considering how they are stored to be sold or bought. Like every bitcoin, a record of every NFT is stored on a shared ledger known as the blockchain. On this, are records of every buyer, seller and current owner of non-fungible tokens. In the case of any digital piece of art, it can be copied millions of times but the blockchain will know- by way of smart contracts- who actually owns the tokenized original, and so it is almost impossible to steal them. Also keep in mind that only the token is stored on the blockchain, and the data or media is stored somewhere else. This adds an extra layer of safety to protect buyers from losing money and valuable items.
Where Can You Buy an NFT?
There are several trusted marketplaces from where you can buy NFTs, and sell them further. Most of them require the seller and buyer to have a crypto-wallets and use bitcoins as the currency of transactions. Some of these places are
7. Myth Market
All of them are different in the kinds of digital items they can house and allow the trade of. For example, one can support only digital art, while another one can also support audios, videos, and textual content, etc.
To conclude, it must be noted how critics have expressed their reservations about NFTs. They think that this is a big bubble that will pop soon, causing distress and financial loss to all parties involved. Moreover, they say that it is foolish to put value on, and spend actual money on something that ‘doesn’t exist’. Some make-believe token that gives you power over a digital entity, but has no way of stopping the copying, reproduction or recreation of said entity.
Even so, the cynics must acknowledge the power NFTs have given to creators of art who no longer have to wait decades of their life- or even past their deaths- to make good money from their art. As for the crazy ones who buy tweets or celebrity photos just for the fun of it- may their zealous purchases continue to make them happy.