What And WHY You Need To Know About Non-Fungible Tokens (NFTs)
Non-fungible tokens (NFTs) seem to have exploded out of the ether this year. From art and music to tacos and toilet paper, these digital assets are selling like 19th Indian Jewelry — some for millions of dollars.
But are NFTs worth the money, time and energy — or is just a hype? Some experts say they’re a bubble poised to pop, like the dotcom craze . Others believe NFTs are here to stay, and that they will change investing forever.
What is an NFT?
An NFT is a digital asset that represents real-world objects like art, music, in-game items and videos. They are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos.
Although they’ve been around since 2014, NFTs are gaining notoriety now because they are becoming an increasingly popular way to buy and sell digital artwork. A staggering 1.99 Millions NFTs sold in the month of December (2021) on Polygon network alone. In July, less than 50 Thousand were sold.
NFTs are also generally one of a kind, or at least one of a very limited run, and have unique identifying codes. “Essentially, NFTs create digital scarcity”.
This stands in stark contrast to most digital creations, which are almost always infinite in supply. Hypothetically, cutting off the supply should raise the value of a given asset, assuming it’s in demand.
Now, you must be thinking that anyone can view the individual images — or even the entire collage of images online for free. So why are people willing to spend millions on something they could easily screenshot or download?
Because an NFT allows the buyer to own the original item. Not only that, it contains built-in authentication, which serves as proof of ownership. Collectors value those “digital bragging rights” almost more than the item itself.
How is an NFT Different from Cryptocurrency?
NFT stands for non-fungible token. It’s generally built using the same kind of programming as cryptocurrency, like Bitcoin or Ethereum, but that’s where the similarity ends.
Physical money and cryptocurrencies are “fungible,” meaning they can be traded or exchanged for one another. They’re also equal in value — one dollar is always worth another dollar; one Bitcoin is always equal to another Bitcoin. Crypto’s fungibility makes it a trusted means of conducting transactions on the blockchain.
NFTs are different. Each has a digital signature that makes it impossible for NFTs to be exchanged for or equal to one another (hence, non-fungible). One Limited Edition NFT of Sachin Tendulkar, for example, is not equal to NFT of Kunal Pandya because they’re both NFTs. Let’s take another example NFT of Dhoni’s winning sixer in ODI World cup is much more valuable than his own Everyday Sixer. I think you get my point.
NFT allow to own a part of History, in digital form and of course gives a bragging right.
How Does an NFT Work?
NFTs exist on a blockchain, which is a distributed public ledger that records transactions. You’re probably most familiar with blockchain as the underlying process that makes cryptocurrencies possible.
Specifically, NFTs are typically held on the Ethereum blockchain, although other blockchains support them as well. An NFT is created, or “minted” from digital objects that represent both tangible and intangible items, including:
• Art
• GIFs
• Videos and sports highlights
• Collectibles
• Virtual avatars and video game skins
• Designer sneakers
• Music
Even tweets count. Twitter co-founder Jack Dorsey sold his first ever tweet as an NFT for more than $2.9 million.
Essentially, NFTs are like physical collector’s items, only digital. So instead of getting an actual oil painting to hang on the wall, the buyer gets a digital file instead.
They also get exclusive ownership rights. That’s right: NFTs can have only one owner at a time. NFTs’ unique data makes it easy to verify their ownership and transfer tokens between owners. The owner or creator can also store specific information inside them. For instance, artists can sign their artwork by including their signature in an NFT’s metadata.
What Are NFTs Used For?
Blockchain Technology and NFTs afford artists and content creators a unique opportunity to monetize their wares. For example, artists no longer have to rely on galleries or auction houses to sell their art. Instead, the artist can sell it directly to the consumer as an NFT, which also lets them keep more of the profits. In addition, artists can program in royalties so they’ll receive a percentage of sales whenever their art is sold to a new owner. This is an attractive feature as artists generally do not receive future proceeds after their art is first sold.
Art isn’t the only way to make money with NFTs. Brands like Charmin and Taco Bell have auctioned off themed NFT art to raise funds for charity. Charmin dubbed its offering “NFTP” (non-fungible toilet paper), and Taco Bell’s NFT art sold out in minutes, with the highest bids coming in at 1.5 wrapped ether (WETH) — equal to $3,723.83 at time of selling.
Nyan Cat, a 2011-era GIF of a cat with a pop-tart body, sold for nearly $600,000 in February. And NBA Top Shot generated more than $500 million in sales as of late March. A single LeBron James highlight NFT fetched more than $200,000.
Even celebrities like Amitabh Bachchan and Salman Khan are jumping on the NFT bandwagon, releasing unique memories, artwork and moments as securitized NFTs.
According to me and many experts, by 2025 everyone will own an NFT. I give you reason why I think so. Your metro pass will be an NFT. Your favorite Football team’s season pass will be NFT. Even college and Office ID card will be NFT.
What are our thoughts about NFTs?
NFTs is remind me of how ICOs were like in 2017. Right now as more projects are flooding the market as it’s lucrative, it’s hard to determine which one is a get-rich-quick scheme for the NFT creator and which projects are legit.
It is still at an early and experimental stage as people are learning how blockchain and NFT technology could work. I feel like the narrative surrounding NFTs would continue to evolve as more people discover what are the best use cases for the technology.
In my personal experience seeing behind the scenes where Jingles launched an NFT project, I could see him trying to explore ways to harness and apply the technology in his work. Like how bitcoin used to be a currency and now it’s a stored value. We could see really cool inventions and innovations in this space.
NFTs appeals to high-risk taker investor with an opportunity to make huge profits if you can discern what is a good investment.
Cryptocurrency is already considered quite a volatile investment for many. So if you are someone who likes to play it safe, perhaps NFT might not be your cup of tea as you could potentially lose all the money that you put in.
But if you are still keen to see how you can still participate and have a stake future of blockchain technology, but you are not really sure which NFT projects are good, you can consider investing in cryptocurrency instead.
NFTs are bought and sold using cryptocurrency are usually Ethereum, Solana, Cardano, Polygon, Terra. These cryptocurrencies can be bought from various exchanges such as Binance, Coinbase, Wazirx, CoinSwitch Kuber, and many more. Typically, we would buy our cryptocurrency via exchanges.
According to me, we will see the NFT Winter (some are calling Crypto Winter). Meaning we will see large number of crypto Currency and NFT Projects will become valueless and only a few number of NFT Project will survive this Winter. The project that will bring true value to society and create a productive atmosphere and eco-system for its user and team will thrive and come out strong as ever. Just like DOTCOM Boom we will see history to repeat itself.
NFT has a bright present and brighter Future. Learn more and more about NFT. Most importantly Invest in NFT projects that you feel make valuable to change in society and your life, Instead of watching charts and changing price, Watch how this NFT will change your life. In the End:
