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NFTs at a Glance

Once you are an internet person, even as a minimalist subscriber, it’s no longer a stretch of research broadcasts before you come across NFTs (non-fungible tokens).

In fact, to a certain degree, no-internet persons would swear to have heard the word, either from a crypto-enthusiast friend or brother, or a roadway gossiper who seems undeniably overwhelmed by the big chunk of money paid for paintings of weird-looking chipmunks or chimpanzees either smoking or wearing big goggles. But it’s not the heard-thing, or perhaps the seen-thing, that might set you on an euphoric quest to understand this strange phenomenon.

It’s the money, the mouth-agape kind of money roaming the air. And you are not on the wrong side of the coin to begin your journey — who wouldn’t, whichever way, after hearing or seeing that last year a digital artist Beeple sold her NFTs, a compilation of the first 5,000 days of work, for almost US$69 million? Or that Jack Dorsey, the co-founder of the popular platform Twitter, sold his first tweet which was a simple “just setting up my twttr” for a whooping sum of (almost) $2.9 million? And to understand a phenomenon, especially a seemingly complex one, is to dissect its many-sided suppositions and contradictories, and that’s exactly the pivotal standpoint of this article.

Understanding Non-fungible Tokens — A Beginner’s Guide

Non-fungible tokens (NFTs) is a digital asset that can be bought and sold online with cryptocurrencies. These assets can be GIFs, art, videos, collectibles, in-game avatars, music etc, and they are a representation of real-life assets. They are encoded on a blockchain software with computational metadata that differentiate them from one another.

Unlike cryptocurrencies which are fungible tokens because of how they can be exchanged at equal rate and therefore, as a result of it fungibility, capable of being used for commercial transactions, NFTs are not bound to the golden rule of equivalency. This means that they cannot be traded for one another, except in rare cases when the price tags are equal. This means that a cryptokitties as an NFT does not have the same worth as EVERYDAYS just because of the mere fact that they are non-fungible tokens. Think about it this way: you are strolling into a shopping mall where each commodity has its own specific price stapled to it.

NFTs have really toppled over the investment world. Musicians, content creators, social media influencers, business tycoons are either scrambling for white list from a newly minted non-fungible tokens, or creating one. The list is a rolling wheel. The scramble has grown into a high-fever sensation, as though non-fungibles have not been existing since 2014. Statistically, at the moment, the market value for NFTs is stated at a staggering $80 billion, which in no distant time would outweigh the collective value of the global fine art market.

However, still in its nascence, there are waiting-to-answered questions brewing underneath its grid. Like what’s the fate of NFTs — a bubble waiting for the prick of a needle or a rocketing star-world? And the most interesting one thrown around especially by beginners: since anyone can view ir download or screenshot the individual piece of art or the whole collective, why scrub off millions of naira to purchase them? While the former remains a question only time can answer, the latter strives for explanation. As the original owner of a non-fungible token, your identification markers are encoded in it as a proof of true ownership, that’s if the bragging right that comes with being the sole owner a popular NFT. Think for a second that you are the original owner of Jack Dorsey’s first tweet. It’s more than just purchasing an item, no doubt.

Why Are NFTs Important?

There’s a revolution happening in the global market. The digital space now sits on the zenith of the food chain. Such leverage stems from the fact that people are endlessly finding new ways to cancel out the rigorous systems that are inherent in physical finance systems, consuming time and energy. To purchase a real estate or artwork will be a gambit of sophisticated processes. But the evolution of NFTs, as a digital substitute for physical assets, has made its purchase easier and infrastructurally better. That’s not to say that the whole concept of representing physical assets in a digital space is a recent finding, or even the framework of identification markers. But the sum of these two concepts, with the commendable framework of smart-contract blockchain, leaves an indelible stampmark. Such excellent management of identity is a huge plus. No entry and exit process comes without a physical passport which does not only foster security in terms of originality and ownership, but also serve as an identification markers in the digital space.

Market efficiency remains the most striking importance of NFTs. Because there’s a streamlining of middle-men souvenirs and tedious paperworks once a physical asset is converted to a digital piece. Not only does it remove the intervention of agents who charge exorbitantly and allow creators and artist to connect and interact directly and openly with their audience, it also helps businesses to track their sales and production.

Another huge benefit of NFTs is democratization of the investment world by making possible the division of real-life assets such as real estate. The truth is that it’s utterly hard to fractionalize a physical asset. But not a digital one. This is not only possible to real estate. Other assets such as artwork, painting, video and so on, can only be partakers. This means that a piece of artwork can have more than a single owner, and each owner is accosted a fraction of the painting, thereby increasing collaboration and worth.

The Final Score. . .

Whether NFTs are a bubble waiting for the prick of a needle or a rocketing star-world can only be answered by time. But, to an in-depth observer of the happenings around, there’s no denying that it has come to dominate the investment market. That’s not to say that NFTs does not have its own problems. Notably, there’s a deluge of risks lurking by it, which is the collateral anthem of all businesses. But the risk doesn’t define the miracle that it is, the miracle that’s bringing a new wave of digital reinvention to our doorsteps.

CrossFi is a cross-chain protocol that provides liquidity to you for Filecoin staking and rewards.

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