MAKING SENSE OF NON-FUNGIBLE TOKENS
Non-Fungible Tokens (NFTs), also known as Nifties, revolutionize the ownership of digital assets by tokenizing virtual assets on the Blockchain.
For centuries before money was invented, humans worked with the barter system. Bartering was a method of exchange of goods based on their valuation and/or demand. And much like ‘bartering’ the value of a non-fungible token is based on the asset it represents and is determined by what someone else is willing to pay for it and nothing else. The truth is that the value of any NFT is speculative. Indeed, an NFT’s value can be a lot if the NFT is made by a famous artist and the buyer is a wealthy collector.
Non-fungible tokens provide proof of ownership for digital items. Several NFT marketplaces have cropped up in popularity recently, where we can see various categories of digital assets being traded. While digital assets can be of various forms, the most popular NFTs are based on digital artwork are images or videos created by a unique class of digital artists. Music, audio files, and even text are some other forms of digital assets. We also have virtual real-estate NFTs being sold on virtual worlds like Decentraland using their native cryptocurrency MANA.
Difference between Fungible and Non-fungible Tokens
The ERC-721
It is impossible to talk about NFTs without mentioning Ethereum’s ERC 721 token standard on which NFTs are primarily based. It enables NFT creators to store relevant information of their digital artifact as a token on the blockchain, while also storing its ownership. A pair of crypto keys — the creator’s public key and the owner’s private key — is what determines the ownership, origin, authenticity and the value of any NFT token.
Read more about Blockchain Development.
The Digital Art Form
Digital Images have been around for long, but one could never really secure the ownership of a digital item. A skin on Fortnite or a sword on World of Warcraft will no more be yours if these apps or games die away. NFTs exist in digital form, with the blockchain acting as a public ledger to verify and persist ownership status. So while the asset itself might be stored on-chain or off-chain, the Nifty or the ownership token is on-chain.
Several questions come to the mind, like…
“Are a lot of people buying digital art only to make money out of It in the future? “It’s easy to copy, and can be shared online, so why should I buy it?” “Digital art cannot be physically displayed on my wall. Why are people willing to spend money on art that cannot be put on display in the traditional sense, like in museums?”
Indeed, there is a lot to get our heads around. Let’s try to find some answers…
For artists, unlike when they sell physical work, will receive royalties further down the line, with every transfer of the ownership of the digital art. So this keeps the artists making money.
Also, decentralizing the marketplace means eliminating the middle man. Today art studios earn more out of the sales than the artists themselves.
For the buyer, it’s as much about ownership as about investment. Even a physical art piece can be copied, but the original is what has the value, while copies are after all copies!
While there is considerable doubt as to who would dare to invest in something as intangible as virtual art, I saw that there’s a whole marketplace of individuals, mostly in the younger demographic, who have relinquished interest in physical, tangible objects, that their predecessors had, and are most definitely invested in the idea of digital art and digital assets. These are the same flock of early adopters who could make their fortune in cryptocurrencies as they believed in it since the beginning. The fact that they have bought into the idea of digital assets, goes to say that this is going to become ingrained into our future world.
Digital Music
It is interesting to watch how NFTs are changing the landscape of the Music industry. The fact that there are no middlemen, makes NFTs so attractive for artists and fans. NFTs can take the form of concert tickets, limited-edition experiences, merchandise, and music. Fans pay the price to get a unique piece of content. In these transactions, artists can make good money for their content as they get to keep the entire sale amount.
You may have heard of Kings Of Leon becoming the first band to release an album as an NFT. “When You See Yourself” album will give fans special perks such as limited-edition album package, and lifetime front-row seats to gigs.
YellowHeart, the same company which handled the Kings of Leon NFTs is now orchestrating the controversial rapper XXXTentacion’s NFT drop which will release a series of Nifties for rare tracks that have never been commercially released, as well as never-before-seen footage from the rapper’s only tour. (Read about it here )
A interesting combination of digital artwork and music can be seen in Nifty Gateway’s Goldweard x Logan Nelson Drop on May 11th. (Read about it here.)
Sports NFTs
Sports has carved itself a niche market in NFT circles for Sports fans.
“Sports clips sell for anywhere from $20 to thousands of dollars on NBA Top Shot.” NBA Top Shot
NBA Top Shot is a site where fans can buy video highlights as NFTs.
Fantasy Sports has also found its space in the NFT market. Sports Fantasy site Sorare, operates as a fantasy soccer game, where people can buy, sell, and manage virtual teams via digital player cards.
Sorare explains its digital sports card as a digital collectible of a football player for a particular football season. It is minted as an NFT on the blockchain, and fans can collect their favourite players with the benefits of provable scarcity (fixed supply), whereby some players are made rarer to have than others. Each collectible gives ownership and cannot be copied or taken away from the owner. Users also have access to the complete digital history of the card.
Is it our future?
As digitization, AI, IOT, etc., and now lockdowns, disrupt more and more jobs, people are finding more and more time for virtual worlds. Virtual realities will soon become an intrinsic part of our survival.
If you are looking for NFT Developers, write here.
FAQs
What are Nifty Drops? Nifty Drops are live sales of NFTs held directly by the art creators, for a limited period of time. Art is available to be bought directly from the creator before they sell out, to be purchased from other users on the secondary marketplace.
What is Decentraland?
Decentraland is the biggest decentralized VR platform in the NFT space that enables users to buy and trade land, create scenes and artwork, play games, and interact with other users. It is on the Ethereum blockchain with its non-fungible token known as LAND. Only LANDowners can determine the contents of what sits on their land. MANA is their fungible token that can be used to buy LAND and other premium items like Crypto Collectibles, etc.
What is Minting and how is it done?
Creators place digital assets on the marketplace by minting an NFT Token. The first thing you need besides the digital asset itself, is a suitable marketplace that has a modest audience for the kind of digital asset you wish to sell. Secondly, you would need an account on the selected platform to trade on, and a crypto wallet to hold your NFT token. Some marketplaces allow trade only in their native cryptocurrency while a few enable payment through fiat currency as well.
Which are the popular Nifty marketplaces around?
The following is a list of popular NFT marketplaces with their peculiarities:
Rarible is a community-owned NFT marketplace hosted on the Ethereum blockchain. Buy and sell is enabled using ETH and many other tokens. RARI is its native governance token that can be used to give active platform users with a voice on the platform’s future.
OpenSea is probably the largest NFT marketplace for digital goods, again on the Ethereum blockchain. OpenSea accepts payment in a number of cryptocurrencies however, Ethereum (ETH) is the most popular form of payment. Creators can place their digital goods on sale without any down payment. Creators can also specify their royalty percentage on secondary sales. A Metamask account is required to receive the payouts against sales.
Nifty Gateway, now acquired by Gemini, is one of the most exclusive platforms for Nifty drops from leading artists, athletes, brands, and creators. Drops are sold directly by creators, while they could be re-sold on Nifty Gateway’s own secondary market. This platform allows bids to be made in USD using credit/debit cards.
Foundation is the NFT marketplace that marked the fierce bidding of Nyan Cat, and has since soared in popularity. Users can see featured artworks and participate in live auctions. Bids can be made in ETH held in MetaMask wallets.
SuperRare is yet another NFT marketplace that connects artists and collectors to trade unique artworks. Like the others, it allows customers to purchase directly from artists, but it also empowers creators on the secondary market by giving them a 3 percent royalty from secondary sales.
Resources
Originally published at https://www.linkedin.com.
