An NFT is a Non-Fungible Token which acts as a certificate of authenticity or a “deed” to a digital “collectable”, or other digital assets. Non-fungible means ‘irreplaceable’ since each token is unique. Uniqueness plus authenticity creates scarcity which, in turn, increases the market value for NFTs.
What is an NFT?
An NFT is a token on the Ethereum Blockchain that acts as a ‘collectable’. This collectable token contains —
- Historical information of all previous transactions of the token as well as all the artist’s information including their public key and the number of likes they have gotten on their NFTs.
- A token ID which is a unique identifiable number.
- A picture of the art.
- A smart contract. An NFT is effectively a smart contract where standard copyright law applies.
- The art being accessible via a link in the description.
NFTs can be any form of art (paintings, graphics, videos, GIFs, songs, poems, tweets, posts even video games, virtual real estate, books), birth certificates, concert tickets, and so many more things. A Non-Fungible token makes whatever the asset is irreplaceable. Think about an NFT as a way to document ownership and authorship.
What is all the hype about?
In the last couple of years NFTs have gained a massive following. Now you might be wondering why? There are three main reasons.
- NFTs are scarce: Part of the excitement around NFTs comes from owning something that is scarce. Since NFTs are non-fungible, by definition, every asset is unique.
- FOMO: When it comes down to it, people have a fear of missing out when it comes to NFTs.
- NFTs can insert trust: Last, but certainly not least. NFTs have the ability to insert trust in what has previously been a trust-less system where it wasn’t always easy to prove ownership and originality.
Five major benefits of NFTs
- NFTs are a new product type: With NFTs a new product/art type is emerging that many traditional artists are taking advantage of.
- NFTs create a new marketplace for artists: New channels have been developed that allow artists to display, promote, and sell their art. These new channels are bringing both digital and non-digital art into the digital world. This is helping to boom a renaissance in the art community.
- NFTs are creating a revenue boost for artists: NFTs are essentially smart contracts and that means they are 100% programmable. This allows artists to build in their own costs, royalties, rights, and other components of their works’ functionality. Artists now have the ability to move outside of traditional contracts where they would receive around 10% royalties off their work to now being able to earn up to 90%.
- NFTs are adding value to art: With NFTs, buyers can be given unique privileges and unlock new experiences. An example of this can be seen through the band Kings of Leon who dropped three NFTs linking the buyers directly to the band’s artwork and some special privileges that included 4 front row tickets for their concerts for the rest of the buyer’s life.
- NFTs are a new medium for buyers: On top of artists seeing benefits from the NFT space, buyers are also given an opportunity. The NFT space is giving buyers new ways to support artists, start collections, build art investment portfolios, or just display the art that they own.
Where can you find NFTs?
Now that you understand what NFTs are and how they are benefiting the community, you might be wondering where you can buy them. There are numerous decentralized platforms that allow NFTs to be auctioned, the most popular being OpenSea marketplace. On this platform you can trade more than 200 types of NFTs and all the trading happens through a smart contract on the blockchain. Click here for a step-by-step guide on how to buy or sell an NFT on Opensea.
Like any collectable, NFTs price depends on the value the consumer associates with it. Some NFTs have exploded in popularity including collections such as Bored Apes, Crypto Punks, and Art Blocks.
NFTs have gained a lot of popularity and exposure over recent years as they act as proof of ownership and authenticity of both digital and physical items. On top of that, NFTs allow users to transfer ownership and eliminate fraud.
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