NFTs : All your FAQs Answered!
At Christie’s auction house, a digital-only artwork was sold at an eye-popping amount of US$69 million. However, the biggest surprise is that the winner of the bid will not receive any painting, a sculpture, or even a print. So, what will the winning bidder receive? The winner will earn a digital token, which is called Non Fungible Tokens NFTs.
To put it into perspective, NFTs can be regarded as the digital answer to collectibles, very similar to the notion of the digital answer to currency. Here is a comprehensive guide that will give you all information about Non-Fungible Tokens.
What is an NFT?
As already mentioned above, NFTs are a short form of Non-Fungible Tokens, which are a special type of digital assets. You can buy and sell NFTs through cryptocurrency exchanges. Buying NFTs is very simple and you can learn more about it in the concluding part of this article.
What are Fungible Assets?
A fungible asset in economics is something that is available in units and can be interchanged readily. One such example is money. Suppose, you have a US$10 note. You can swap it for two US$5 notes and still then the value remains the same.
What are Non-Fungible Assets?
In the case of non-fungible assets, they have unique properties. This means you can’t interchange it with something else. Suppose, you have a house or a Leonardo da Vinci classic, say, Mona Lisa.
These are one of their kind. You can take a photo of the original painting or even buy a print of the same but there can never be another Mona Lisa painting by the famous painter Leonardo da Vinci.
NFTs are “one-of-a-kind” assets. You can buy or sell them like any other property. However, they don’t have any tangible form of their own. Non-Fungible Tokens can be defined as digital tokens providing certificates of ownership for virtual or physical assets.
How do NFTs work? NFTs Explained
A painting by Picasso, Leonardo da Vinci, or Van Gogh is valuable. This is because it is one of its kind. However, digital files can be replicated easily multiple times. However, NFTs enable the tokenization of famous artworks. This creates a digital certificate of ownership, which you can buy or sell.
In the case of cryptocurrencies, all the transaction information is stored on a shared ledger called a blockchain. No one can forge these records because these records are publicly available for verification. In fact, thousands of computers (also called nodes) across the world maintain this public ledger.
In the same way as blockchain technology of cryptos, Non-Fungible Tokens also contain smart contracts. These contracts provide the artist or the owner of the artwork a certain percentage of any future token sale.
Some of the most popular NFTs you can buy are:
- THETA: This is a decentralized video clips delivery network. THETA protocol helps in creating vertical decentralized programs (DApps) on top of the platform for enabling peer-to-peer streaming, enterprise conferencing, education, television/movies, music, esports, and many more.
- Chiliz CHZ: It is the first-ever blockchain-based fan interaction and rewards network in the world, Socios.com. For sports and entertainment, this is the premier digital currency.
- Decentraland MANA: It is an Ethereum blockchain-based virtual reality platform helping users in creating, experiencing, and monetizing content as well as apps. The best thing about this platform is that it allows users to acquire plots of land in the digital environment. After acquiring the virtual land, you can navigate, develop, and monetize.
- Enjin Coin ENJ: It offers a blockchain-based gaming environment, having interconnected products. Its flagship product offers a social gaming platform allowing users to build sites and clans, communicating, and running digital item stores.
At a time when the environmental impacts of mining Bitcoin are capturing headlines, the popularity of NFT markets is gaining momentum. The concerns pertaining to the environmental impact of nfts are also increasing as these tokens are created on the Ethereum blockchain. Experts believe that the shift of technologies to less energy usage alternatives can drastically reduce the carbon emission rate. In fact, more and more adoption of proof of stake technology can solve a lot of the problems faced by the proof of work technology.
However, the paradigm shift in the upcoming updates in the Ethereum blockchain and the rapid shift of the mining industry to a greener and more environmentally friendly alternative is lessening the concerns regarding NFT technology and non fungible token dependent digital collectibles that are worth millions of dollars. There are many Ethereum improvement proposals. All these updates will help the platform immensely.
Decentralized finance and technology are bringing a paradigm change in the art world by bringing in NFT artwork. If you are a lover of memes and sports collectibles, you can buy and sell NFT art through various NFT platforms such as NBA Top Shot, Axie Inifinity, Decentraland, OpenSea, Rarible, and many more. With the rise in popularity of blockchain games and digital art collecting, these platforms are gaining popularity. Billions of dollars of sports and memes NFTs are bought and sold on a regular basis on these platforms.
Will NFT Stop People from Copying Digital Art?
Nothing will stop people from copying artwork or taking a photo with NFT.
Let’s explain with the help of an example.
Beeple sold an NFT at a value of US$69 million. This has taken place despite the fact that the artwork has been copied and shared thousands and millions of times. However, with NFT, the artwork has been tokenized, enabling the artist to own its copyright.
The copies can be produced and sold. When it comes to NFT, it means that the ownership of the original work is retained by the buyer of the token. It can also be compared with that of purchasing an autographed print. That’s the reason why people pay millions of dollars for these tokens.
How much are NFTs worth?
NFT marketplaces can fetch millions of US Dollars. Some of the recent headline-grabbing multi-million-dollar sales tell the tale.
Some of the recent prices at which NFTs are sold include:
- An animated Gif of a 2011 meme of a flying pop-tart cat named Nyan Cat was sold for more than US$500,000 on February 19, 2021.
- Some of the digital art of musician Grimes were sold at over US$6-million in February 2021.
- The first-ever tweet of Twitter’s founder Jack Dorsey was tokenized to an NFT and was sold at bids that were as high as US2.5 million.
- A new record for digital art was reached when digital artist Beeple’s NFT fetched US$69 million during an auction at Christie’s.
Art lovers and various sections of collectors and investors spend millions of US Dollars in NFTs nowadays as these unique digital collections provide secure proof of ownership to these priceless collections.
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