Why is the NFT and crypto topic important for everyone?
Digital assets will soon be part of our lives — and there is no need to be afraid of that.
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More or less, we have all at least heard about NFTs from the news about an anonymous person selling his digital art for millions and millions of dollars. Or, popular brands and people from different industries sell their NFTs and make a fortune from them. But, what are these non-fungible tokens about? What makes them so popular over the past few years?
The best way to explain an NFT to someone is by saying that it’s art in digital form, although some NFTs have already surpassed that definition. Either way, NFTs are becoming one of the popular ways to introduce your work to a large community on a platform many artists before could dream about.
What differentiates NFTs from previous methods of selling digitised artwork is that it provides exclusive ownership on the blockchain. In other words, you can own a piece of digital art that nobody else on the planet has besides you. Then, depending on how much this art is valued in the NFT space, you will be able to keep it as your collectible or trade it with others for a profit.
However, keep in mind that a non-fungible token image can be duplicated very easily, but that’s not the point of this hype at all. People are excited about actual ownership which is carved in the blockchain. Let’s take the Mona Lisa as an example to explain better why actual ownership is crucial for NFTs. There might be hundreds of copies of the Mona Lisa around the world, but there is only one original stored safely in the Louvre Museum in Paris.
The Potential of NFTs
There are many values we can already see from those who are working with NFTs, either as creating their work or purchasing it. Undoubtedly, NFTs are becoming one of the fastest and most interesting ways to invest your money. However, that is only the beginning of its potential. One of the aspects it is bringing a lot of value to is marketing and advertising. So, why have brands like Coca-Cola, Taco Bell, and Gucci immediately jumped on the NFT train and started investing heavily in it? Many more brands have also offered their limited-edition NFTs for sale.
The same goes for the entertainment industry. Many moviemakers and signers have already started making their own NFTs and selling them to their audience. Both brands and celebrities see non-fungible tokens as a way to engage even more with the content their target audience will love. Seeing how these NFT communities are growing rapidly, businesses and individuals see them as easy access to a wide audience where they can sell their NFTs. After all, some of the blockchains used for NFTs have more than dozens of millions of members. One of such examples was the show Blade Runner which was selling its limited edition on WAX to their fans. The NFTs themselves have impeccable design and animation which blended perfectly into the cinematic style of the Black Lotus. Being both limited-edition and high-quality, there is almost no doubt that these NFTs will quickly find their owner in the NFT space.
Security
However, the real value doesn’t only lie in its implementation. In a blockchain, all blocks are chained together and each of them contains information from the previous block. If someone tries to tamper or replicate a block, the entire chain will be broken. Knowing that this information is shared across every user and computer across the NFT space, Ethereum has 300,000 nodes that automatically store information in new transactions to ensure nobody can tamper with each block. In other words, such technology ensures the integrity of the entire system and avoids the double well-known spend risk of cryptocurrencies.
The transaction is verified only when more than 50% of the computers on the global network give the nod, meaning that a forger would need to fool thousands and thousands of nodes to achieve its objective. All of this makes blockchain technology impossible to forge and much safer even than the bank systems. All of this mentioned above refers to the first level of security in a blockchain, but non-fungible tokens offer a second level as well. This is where they are becoming so valuable in selling digital works. Being non-fungible, every NFT is unique, except the 1155 standard on Ethereum.
No More Middlemen
An NFT can have only one owner at a certain moment. Its unique data simplifies the process of verifying NFT ownership and transferring tokens between owners. The NFT owner or creator can also save a piece of information inside them. For example, an artist can sign their artwork by adding their signature to an NFTs metadata.
Another aspect that needs to be mentioned in the information economy, has been everything but kind to the artists. Especially with the rise of social media, many artists witness their work being shared and copied for free, and most of the time — without their approval. For those who were selling on platforms like Spotify and Amazon, although they were getting paid, a lot of the money was sucked up by gatekeepers, leaving artists with no other choice to earn more money.
NFTs are cutting out the middlemen like Spotify, Amazon, or any other platform that is charging enormous fees to artists who are looking to monetize their work online. Also, it allows them to display their work to a large audience instead of trying to get their work into art galleries or using any of the digital platforms mentioned above. In the NFT space, people will pay how much they think something is worth. If you’re an artist, someone might decide to purchase your artwork for $10 million, while other times it will be impossible to surpass several hundreds of dollars. The demand is regulating the market, which brings in another factor — competitiveness.
If someone is willing to pay for something a certain amount of money, that is the current value of it. With no rules on value, artists are finally allowed to freely create and sell their work and communicate with their audience without gatekeepers. Also, we need to keep in mind that the current use of non-fungible tokens is only in the first phase, as the technology is still being tested. Shortly, we will be seeing NFTs being used in scenarios we aren’t able to imagine at the moment — just like it was with other emerging technologies.
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