Would be interested in a market that has grown by a whooping 725% from 2018 to 2020 and had a transaction value of $10.7 billion just in third quarter of 2021. Would you be interested in a market, where an electronic piece of art is being sold for more than $69 million.
If you have been following the news very scarcely, you know we are talking about Non-Fungible tokens.
We are here to briefly talk about the one of the most famous buzz words in Crypto Industry right now.
A non-fungible token (NFT) is a type of cryptographic token that represents a unique asset. NFTs are tokenized versions of digital or real-world assets. They function as verifiable proofs of authenticity and ownership within a blockchain network. NFTs are not interchangeable with each other and introduce scarcity to the digital world.
But what ‘exactly’ is an NFT? NFTs can really be anything digital (such as drawings, music, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art.
‘Non-fungible’ here means that whatever you own is unique and can’t be replaced with something else. Let’s take an example here. Bitcoins or such payment tokens are fungible in nature. Meaning, if you trade one bitcoin for another, you still have the exactly same thing. But, if you have a trading or collectible card, it is unique and non-fungible. If you trade it with something else or some other card, you’d have something different entirely.
How do you really create something like this? Well, we have good news. There are various frameworks which facilitate the issuance of NFTs. The most prominent of these is ERC-721, which is a standard for the issuance and trading of non-fungible assets on the Ethereum blockchain. A more recent, improved standard is ERC-1155, which enables a single contract to contain both fungible and non-fungible tokens. And if you are wondering, ERC stands for Ethereum Request for Comments. This isn’t a technology or platform, it provides technical guidance to developers for construction.
But people will say, if it is just a picture, I can just download it off the Internet. Why really buy an NFT for that? Well, this is where it gets a little awkward. You can copy a digital file as many times as you want, including the art that’s included with an NFT. But NFTs are designed to give you something that can’t be copied: ownership of the work ( though the artist can still retain the copyright and reproduction rights, just like with physical artwork ). To put it in terms of physical art collecting: anyone can buy a Van Gough print. But only one person is the owner of the original.
Well, this is all fancy, but is there even an application of this concept? Well, this is already being applied in the following fields :
1. Digital Art
3. Virtual Worlds
6. Others : Memes, personal work, and really anything in the world.
Is this going to solve World-peace? Well, not exactly! NFTs have their fair share of problems. The NFTs can sometimes contain the asset sometimes, but the physical assets or even digital assets need to be stored off-chain. As with general blockchain, there are concerns with environmental effects of NFTs. And, all of the applications of NFTs may not be that scalable like gaming. Well, and nothing really is fool-proof. There have been examples of "artists having their work copied without permission" and sold as an NFT.
Do we have your interest now? You can read more about it here :
1. VC firm a16z on NFTs: https://a16z.com/tag/nfts/
2. NFTs on Wikipedia - https://en.wikipedia.org/wiki/Non-fungible_token
3. NFTs on Binance - https://academy.binance.com/en/glossary/non-fungible-token-nft