The Non-Fungible Token: Here’s What You Need to Know
From artwork and rap music to trading cards and “first tweets,” the non-fungible token (NFT) has stormed the crypto stage with its singular ability to prove authenticity and track ownership of physical or virtual assets using blockchain technology. And it is reshaping crypto popular culture.
Twitter CEO Jack Dorsey sold his first tweet — “just setting up my twttr,” posted Mar. 21, 2006
— as an NFT for over $2.9 million on the “Valuables” platform, run by Cent.
NYSE President Stacey Cunningham marveled recently at the ability of NFTs to “capture a moment in time.” When a company going public rings the storied NYSE bell, it can trigger billions of order, quote and trade messages on a busy day. But only one, she notes, marks the moment the company actually makes its public debut.
The NYSE NFT captures that historic crossover trade, as it did with Spotify, Snowflake, DoorDash, and other listings, allowing others to participate in their milestone.
And no NFT conversation would be complete, of course, without mentioning the famed Beeple collage, “Everydays: The First 5000 Days,” digital work which sold online for over $69 million with an NFT at Christie’s auction house.
These assets have seen wild innovation and exponential growth. So what do we need to know?
Unlike cryptocurrency, NFTs aren’t interchangeable
An NFT is a unique cryptographic token on a blockchain that can’t be replicated. Specifically, it is a unit of data stored on a blockchain’s digital ledger and it can represent a unique digital item — such as a piece of art.
But NFTs are not interchangeable, or fungible, unlike digital currencies such as Bitcoin. One Bitcoin, for example, can be traded for another equally valued Bitcoin, making the cryptocurrency ideal for economic transactions.
Each NFT, however, holds a different value and can represent ownership of any unique asset. They are defined by properties rather than value. Many see them as a way to decentralize the art world, shifting power to content creators to collect royalties and better fight counterfeits, while putting prohibitively costly pieces within reach of less affluent seekers through fractional ownership.
Like cryptocurrency, NFTs are traceable
Like cryptocurrency, all NFT transactions are recorded on a transparent and unchangeable digital ledger, allowing others to trace and easily verify the original creator and past owners.
Minted tokens have unique identifiers. They can’t have more than one official owner at a time and the records of ownership can’t be modified. You can easily prove you’re the creator of an NFT. You can also gauge its scarcity and collect royalties each time it’s sold.
NFTs live on Ethereum
NFTs are secured by the Ethereum blockchain. Ethereum introduced the ERC-721 standard specifically to address the range of possibilities presented by NFTs, which are ideal to use on platforms with offerings such as collectibles, access keys, and lottery tickets.
Tokens from the same smart contract can have different values. Once deployed, an ERC-721 NFT Contract keeps track of the created tokens on Ethereum.
One of Ethereum’s most popular NFTs is CryptoKitties, a game centered around breedable, collectible, virtual kitties with bulging eyes that are, of course, one-of-a-kind creatures that can’t be duplicated. They can sell for more than $100,000.
This leading blockchain-based technology is also what powers stablecoins recently launched by GMO-Z.com Trust Company, Inc., a New York subsidiary of the GMO Internet Group, a publicly-traded Japanese IT, financial, and digital asset conglomerate.
With a green light from the New York Department of Financial Services, we issued the first JPY-pegged stablecoin (GYEN), with the US dollar-pegged stablecoin, USD (ZUSD), with the goal of connecting traditional finance and blockchain for everyone.
We expect NFTs to continue their rapid growth and broaden their applications.
In the meantime, GMO Trust is collaborating with INX Limited on an NFTs winning campaign. The traders who generate the highest volume during the campaign period will be awarded a special NFT as a reward. In addition, the top three traders will be awarded GYEN aside from the NFT. Check out the details on INX and start trading!
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INX aims to provide a regulated trading platform for digital securities, combining traditional market expertise with a novel technology-driven approach. INX is led by an experienced team of business, finance, and blockchain technology experts unified by the vision of redefining the world of capital markets by leveraging blockchain technology and a fully regulated approach.
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