NFTs have been trending as digital collectibles in the current market as it’s a new concept hanging around in the crypto space. They become the trend because of their notable features. As it is using blockchain, they are verifiable and tradable and can create digital scarcity. These unique features attracted many institutions and investors to check out and explore this space and make this a best place for investment.
These digital assets have wide range of possibilities for artists, creators, musicians and mainly gamers. But most of the people haven’t understood the possibilities of this new tech. In this article, I will be explaining about NFTs and the things you need to understand about NFTs.
What is an NFT?
NFT stands for Non-Fungible Tokens. They are unique digital collectibles with lots of use-cases. The idea is to own a piece of digital content/asset that we can take with us anywhere, as it is digitally stored. This can be any text, picture, video or even music in the form of an NFT generated mixtape. The underlying blockchain technology tracks the ownership records and provides transparency for the buyer and seller of the NFT.
Why is it unique?
NFTs are one of a kind digital asset in which the ownership is verifiable and registered through a smart contract on a distributed ledger using the Blockchain. This makes them unique as hell. The authenticity can be verified by anyone using block explorers. Because of this you can make sure that the digital asset that you hold is an original piece from the creator. Uniqueness comes with scarcity. The creators can decide on the number of NFTs to be made.
Different types of NFT
NFTs can be of any type, as I said any digital assets can be minted as NFTs. The commonly seen type is digital art. Also, gaming NFTs are gaining popularity among people.
Arts, collectibles like trading cards, sports moments, digital worlds, memes, and even physical assets can be tokenized as NFTs. All these are made into NFTs by minting them using smart contracts. Minting is the process of uploading your work or art or anything you want as NFT to the blockchain. Only after then, these assets can be categorized as Non-fungible tokens.
Benefits of having an NFT
Let’s talk about the benefits of buying/holding an NFT. Most of the NFTs are not just tokens, they may be representing a brand, company, project or even public figures. So as a holder you will be entitled to utilities like IRL meet or virtual meet, where you can spend time with other holders or even the founders of that project. These tokens can act as tickets for events and membership in digital and real world. By using NFTs, we can exchange physical items in the digital world with proof of authenticity and security.
For gamers, these tokens can be used to redeem avatars, lands and other in game assets. Play to Earn games are trending on NFT industry right now. People are spending lot of time on games and play to earn games are incentivizing gamers for playing & spending their time on the game ecosystem. They can get mystery boxes & earn in game assets. In the growing Defi (Decentralized Finance) world, NFTs are the entry tickets to many of them. Being a holder of NFT provide you many other utilities too. NFTs are used by brands to market their product in the global market and making their entry to the world of Metaverse. Most of the metaverse have token gated entry, that’s where NFT dominate in the web 3 industry.
What are the unique Advantages of NFTs?
Authenticity of ownership: A proof of documentation showing that you are the owner of a particular asset can be simply verified.
Royalties: Creators can get a percentage from each secondary sale in an automated manner. In the traditional art world, artists don’t get these cuts of secondary sales.
Where is the NFT stored?
NFT-Metadata can be stored either on- or off-chain. On-Chain Storage can be, in the case of Ethereum, very costly. This is why a majority of the NFT Metadata is stored on decentralized storage networks like IPFS. So, these images or any other files that you want to mint as an NFT are stored on IPFS storage. IPFS storage is a decentralized data storing platform.
Value of Non-Fungible Tokens
The value of an asset is determined by people who love that asset and their feel when purchasing it. It is also determined by demand & supply of an asset. In case of NFT, the digital scarcity makes them rare & unique. Value can be added by giving quality and some utilities along with it. NFTs provide many utilities to the holders. That’s what attracting people to buy & hold these non-fungible tokens. The ownership of the asset can be verified simply giving them an added value.
You can download and save any art which is trending on the market. But does that mean you own that art? Let’s take the art Mona Lisa done by Leonardo da Vinci. If you were able to take a screenshot, will you be the owner/holder of that unique art piece? Or can you identify when someone offer you a replica of the same art? NFTs solve these problems by easily verifying the current and previous owners of the art. As the metadata of an NFT is stored in decentralized storage space and is distributed among several computer network, no one can delete or edit the data stored. Also, it will be visible to public to verify and validate the authenticity.
NFTs are going to disrupt the entire economy. It is providing decentralized data storing and security. Many are against this new tech as most of the NFTs are minted on the Ethereum network and this network uses high electricity to do a transaction. Also, many people assume this is a bubble that can burst at anytime. But in the future, people will surely understand what NFTs are and how they can be useful to society. I’m pretty sure they will be all around the globe within a few years.
The purpose of this article is to educate people who are unaware of this technology. People will understand what a non-fungible token is !!
NFTs are the future.
