NFTs, huh? Maybe you’ve heard about them and maybe even not, it probably depends on when you are reading this. NFTs have been making the headlines everywhere recently and it’s probably going to stay this way for quite a while. This new way of selling digital art (of any kind) has become a new trend today. Let’s find out more about what they are, where to find them, who is eligible for creating or buying NFTs, and more.
What are NFTs?
A non-fungible token (NFT). This is a digital file that is unique and cannot be changed with something else. They are stored on Blockchain, which is a system based on cryptography that cannot be hacked and guarantees security and authenticity in such a way. With NFTs you might often hear the word ‘crypto’ but NFT is not a cryptocurrency, however, it can be thought to be crypto-art, crypto-possession, etc.
So, NFTs are any type of digital art, such as digital images, videos, sketches, GIFs, and many more that people can create and turn into an NFT on Blockchain and then sell it on their preferred marketplace online. NFTs are not physical objects but rather digital art that can be purchased and created for different audiences.
Hmm, don’t you get it quite yet? Just keep reading and you will catch up.
Is NFT the Same as Bitcoin?
The short answer is NO. Cryptocurrencies and Bitcoin can be traded easily. One can sell and buy bitcoin very easily or trade it with someone for another Bitcoin but this is not the case with NFTs. Bitcoins are limited and fungible, while NFTs are not limited and non-fungible. You cannot for example trade one NFT for another because they might have different values and could be purchased for different amounts of money. The word itself “Non-Fungible Token” says that it cannot be traded with another NFT as a currency.
Here’s an example to understand it better: as you can trade a one-dollar bill for another one-dollar bill, or trade one Bitcoin for another Bitcoin, you cannot exchange an NFT let’s say a digital image with another NFT let’s say a digital video. In theory, maybe you could but you might be tricked in what value you trade your NFT with the other one.
The History of NFTs
NFTs have been around since the 2010s but gained some attention only since 2017 when ‘CryptoKitties’ was first introduced. CryptoKitties allowed people to buy and “breed” digital cats that were on a limited edition with a cryptocurrency. After that NFTs were used to let gamers win in-game assets like digital swords, shields, etc. This allowed the tokenization of game NFTs to become very popular as they allowed gamers to use their digital assets in different games and even transfer them to other gamers on NFT marketplaces.
Today, NFTs are so much bigger than those in the past. NFTs allow people to sell anything in a digital form, such as images, music, videos, GIFs, and yet virtual real estate in a virtual world (Decentraland).
How and Where to Buy NFTs
When someone creates a piece of digital art, they can “mint” that and turn it into an NFT on Blockchain. Once it is turned into an NFT that piece of art becomes the ownership of that person and is stored in their digital wallet. Blockchain is the one that proves your ownership of that exact authentic NFT and as long as it is in your digital wallet, no other exact copy will hold the same value as your NFT.
Once an artist has their NFT in their digital wallet they can choose a marketplace (e.g., OpenSea, Rarible, Mintable, etc.). People that are interested in buying the NFT can purchase that for the listed price and will also claim ownership of that NFT. The creator of the NFT can in some cases also receive % from future sales if their NFT will be sold again. However, even though the buyer then claims ownership of the NFT, they are not granted any rights to the intellectual property of the NFT. This is like when you own a painting, you do claim ownership of that but it does not entitle you to the intellectual property and the underlying artwork in that asset.
Who Sells/Buys NFTs?
Anyone can create and sell NFTs. People do not even have to create anything but turn something they have already created into an NFT and sell it to someone. On the other hand, this is an amazing opportunity for artists and mainly those who create digital art to earn money and show themselves to the public. NFTs will not only let digital artists unleash their potential but it will also direct many artists to shift to digital artwork!
However, artists are not the only ones that can sell NFTs. Many famous people and celebrities have been involved in NFTs and made sales worth millions of dollars. Some examples include the founder of Twitter that sold a tweet as an NFT for just under $3 million; famous YouTuber Logan Paul sold a video clip for up to $20,000; famous model and actress Emily Ratajkowski is preparing to sell an NFT at auction; Elon Musk wanted to sell a song about NFTs as an NFT but changed his mind; people can even buy digital NBA cards some worth over $200,000.
If you are thinking that people are not going to pay for digital art, then you might be a bit wrong. There are many audiences that are interested in NFTs and are willing to pay big money for them. These audiences can include collectors, fans of celebrities, supporters, just people that are interested, and generally, it can be anyone.
NFTs Against the Environment
You might be thinking how can digital art affect or even harm the environment in any way, but believe me it does so! NFTs are considered to be the opposite of eco-friendly and here is why: NFTs are built on the same tech that Blockchain uses and these are some thousands of computers that use up tons of energy. To illustrate, every NFT transaction that is on the Ethereum network uses the same amount of energy as do two American households in a day. Blockchain’s security network does even worse, as they depend on special computers that use enormous amounts of energy.
This technology is developing and evolving towards an eco-friendlier standard. NFT’s future might also depend on how fast will Blockchain transfer to environment-friendly tech because many artists that fight against climate change and global warming are opposed to NFTs and this might also influence some bigger audiences as well!
The Future of NFTs
The overall crypto economy and crypto trading have received a lot of positive thoughts from millions of people. NFTs are also kind of a part of this crypto economy and they have received a lot of attention and positive reviews as well!
NFTs are growing very fast and more people day by day get to know this field. As some proof, the biggest NFT sale till now was over $69 million.
Yes, the industry of crypto trading and NFTs is growing but if the future generations will also support and develop these fields is a matter of social and economic interests and opportunities.
A great thing that NFTs have already achieved is that they gave so many digital artists the opportunity to show the world what they can and be valued for it. NFTs were another example proving that crypto-economy is something people favor today and for what is to happen later the future will show us.
|Written by Luka Botchorishvili