What is NFT?
NFTs are intangible digital assets that can be bought and sold like any other property. These tokens can be thought of as certificates of ownership of virtual or physical assets.
By purchasing an NFT, you get both a record of ownership of the asset and access to the actual asset. These assets can be anything. These are now (mostly) digital artworks or collectible cards. Some are virtual goods that only exist in the marketplace where they are sold, and some come in JPEG or PDF formats. A small fraction of NFTs are digital records of ownership of an actual physical object.
How it works?
Non-fungible tokens use blockchain technology. It also supports cryptocurrencies such as bitcoin. But there is a key difference: NFTs are not interchangeable, meaning each one is unique. Fungibility (in economics) means that a product is not unique and can be exchanged for another thing. For example, bills of the same denomination are interchangeable because they are identical.
Think about Mona Lisa. You can take a picture of it and hang it on the wall, but it will not be the same — and it will not have the same value — as the Mona Lisa, which is in the Louvre. Like other original paintings, it is not interchangeable due to its uniqueness.
NFT is a digital interpretation of this phenomenon. Someone might have a copy of the same digital image, but not the original file.
Purchased through the cryptoasset marketplace, the NFT can be stored in a digital wallet or put up for sale. When an NFT is sold, all computers on the decentralized network write the transaction to a shared ledger, which essentially creates a certificate of authenticity. This certificate cannot be changed or deleted. NFTs can also contain smart contracts that give the performer a share of future token sales.
Why did the tokens catch the hype?
Recently, there has been a lot of hype around the token market, and high-profile stories about prices in the millions. Examples include a GIF of the Nyan Cat meme sold for nearly $ 600,000 and Twitter Gen. Jack Dorsey's first tweet, which sold for $ 2.5 million. If we thought the GameStop rally was wild, that's a whole different level of madness. Christie’s began auctioning the Beeple painting with just $ 100, and a few weeks later, the bid reached $ 69 million!
In addition, celebrities added fuel to the fire: the singer Grimes' income from the sales of her work reached $ 6 million, and Kings of Leon sells the new album for NFT.
What is the future of NFT?
Some consider NFT to be just a hype fad that, like the GameStonks bubble, will eventually burst and leave behind many winners and losers. One of the obstacles to NFT is that it is an artificial scarcity market. There is no limit to how many NFTs are created — literally any bit of data can be authenticated and sold. However, there are several prerequisites for the further development of tokens.
Blockchain technology will make transactions in the art world more transparent. It will become easier for artists to keep track of the movement of works around the world, and NFT will be a revolutionary technology in the field of royalties: the Rarible platform, for example, allows you to include in the deal a percentage of royalties to the artist on the next resale - 10%, which the artist will receive every time someone resell his work.
NFTs are intangible digital assets that can be bought and sold like any other property. These tokens can be thought of as certificates of ownership of virtual or physical assets.
By purchasing an NFT, you get both a record of ownership of the asset and access to the actual asset. These assets can be anything. These are now (mostly) digital artworks or collectible cards. Some are virtual goods that only exist in the marketplace where they are sold, and some come in JPEG or PDF formats. A small fraction of NFTs are digital records of ownership of an actual physical object.
How it works?
Non-fungible tokens use blockchain technology. It also supports cryptocurrencies such as bitcoin. But there is a key difference: NFTs are not interchangeable, meaning each one is unique. Fungibility (in economics) means that a product is not unique and can be exchanged for another thing. For example, bills of the same denomination are interchangeable because they are identical.
Think about Mona Lisa. You can take a picture of it and hang it on the wall, but it will not be the same — and it will not have the same value — as the Mona Lisa, which is in the Louvre. Like other original paintings, it is not interchangeable due to its uniqueness.
NFT is a digital interpretation of this phenomenon. Someone might have a copy of the same digital image, but not the original file.
Purchased through the cryptoasset marketplace, the NFT can be stored in a digital wallet or put up for sale. When an NFT is sold, all computers on the decentralized network write the transaction to a shared ledger, which essentially creates a certificate of authenticity. This certificate cannot be changed or deleted. NFTs can also contain smart contracts that give the performer a share of future token sales.
Why did the tokens catch the hype?
Recently, there has been a lot of hype around the token market, and high-profile stories about prices in the millions. Examples include a GIF of the Nyan Cat meme sold for nearly $ 600,000 and Twitter Gen. Jack Dorsey's first tweet, which sold for $ 2.5 million. If we thought the GameStop rally was wild, that's a whole different level of madness. Christie’s began auctioning the Beeple painting with just $ 100, and a few weeks later, the bid reached $ 69 million!
In addition, celebrities added fuel to the fire: the singer Grimes' income from the sales of her work reached $ 6 million, and Kings of Leon sells the new album for NFT.
What is the future of NFT?
Some consider NFT to be just a hype fad that, like the GameStonks bubble, will eventually burst and leave behind many winners and losers. One of the obstacles to NFT is that it is an artificial scarcity market. There is no limit to how many NFTs are created — literally any bit of data can be authenticated and sold. However, there are several prerequisites for the further development of tokens.
Blockchain technology will make transactions in the art world more transparent. It will become easier for artists to keep track of the movement of works around the world, and NFT will be a revolutionary technology in the field of royalties: the Rarible platform, for example, allows you to include in the deal a percentage of royalties to the artist on the next resale - 10%, which the artist will receive every time someone resell his work.
