What the hell is a Non-Fungible Token?
Learn all about NFTs, what drives them and what's the future?
If you follow Crypto you’ll know that Crypto Community people are just crazy about NFTs. I didn’t know anything about it and have a ton of questions so, I read a ton of articles about them and in this article, I summarize my learning.
Let's get started
Jack Dorsey, of Twitter, has recently sold a tweet for $2.5 million. If you, like me, find yourself puzzled about how such a free item can be sold online, then continue reading.
During the past few months, a new phenomenon called the non-fungible tokens (NFTs) has become increasingly popular, enabling people to trade and invest in a wide array of digital properties, ranging from tweets to GIFs, video to digital artwork.
The real question was still: What is a non-fungible token?
The term fungible asset refers to something that may be exchanged for another very similar asset.
Let’s take an example
Cash is fungible. The dollar bill is no different from another: If you trade it with your friend, you can still buy the same things.
Okay, One more time- If you take one dollar coin from a friend and lost it and your friend asks you to return it, you can still give him the one-dollar coin by borrowing from someone else or you can do Google pay. What I mean by that is you cannot differentiate one dollar coin from another one-dollar coin.
Now let’s take an example of a house -
A house is generally non-fungible;
If someone chooses to buy a house, their Realtor cannot simply replace it with another at the closing.
Okay, one more time let’s take an example of a Domain name like Vocal.media or Swapnilporwal.Com you just cannot replace Vocal. Media with Swapnilporwal.Com They are totally different and not like dollars which can be replicated. Their value is different.
Let’s talk about What is Token?
A "token" is evidence of ownership. These are examples of tokens including car titles, concert tickets, shares of stock, and deeds of properties.
Now let’s put it all together
A "non-fungible token" is a unique digital representation of ownership of something within a blockchain. It’s created to ensure the authenticity and integrity of the token by giving the token a unique signature and a mechanism for recording its legitimacy. ( You can Tweet this)
What Are NFTs Used For?
NFTs, what we call the non-fungible tokens (NFC), add a level of authenticity to digital items like artwork or tweets.
In essence, an original author or painter of a digital work can create an NFT for that work and then sell it, creating a new owner for the original electronic work.
Despite the fact that an image of your painting may still be freely available to anybody on the internet, this person will be able to claim ownership of that painting.
A new investment market is emerging due to NFTs
The industry is seeing heated investment market activity on sites made specifically for this purpose. In 2020, NFT sales reached $250 million, quadrupling volume over 2019. This year, they’ve exploded in volume: February alone doubled in volume.
For the first time in 2017, NFTs reached the attention of cryptocurrency enthusiasts as people were using them to "breed" digital images of cats called CryptoKitties before selling them for hundreds and thousands of dollars.
In recent weeks, the digital artist Beeple dipped his toes in the NFT market and sold a digital painting for $69.3m at Christie’s. This shows that the NFT market has taken the leap from niche online platforms to major auction houses in the art world.
As one of my favorite genius businessmen, Elon Musk offered to sell a tweet featuring a video and a song branded as an NFT for $1 million. However, he then changed his mind and rescinded the bid.
NFT is also widely used by sports card collectors; a digital still from a game can sell for tens of thousands of dollars.
Even though a buyer does not acquire ownership of copyrighted artwork, the NFT market continues to grow rapidly.
NFTs can be sold to other collectors, but they cannot be used on coffee mugs and sold. It's a little like buying a limited-edition baseball card: though you own the car, you aren't the owner of the image on the card.
I wonder who the hell is buying NFTs?
Most NFT buyers generally fall into one of four categories:
- Many collectors buy NFT’s because of the thrill of owning a special piece of pop culture.
- Individuals who feel a strong connection to their favorite artists are often delighted to have the chance to support them financially.
- Individual investors looking for a quick buck by selling their NFTs
- Individuals who see NFTs as a form of investment, speculation, and collecting
Where will NFTs be in the future? What road lies ahead for the NFT?
For centuries, people have attached significant value to physical objects like artwork or collectibles, but not to digital media, which is easy to copy and can be accessed by anyone. With NFTs, digital items will be viewed as valuable assets too.
Digital artists are therefore perfect candidates for them, since they now have a way of making money through their work that was previously considered unprofitable due to unlimited, free reproduction.
In the past, investors dismissed non-fungible tokens (NFEs), but their rising popularity—and the inclusion of NFTs in traditional auction houses like Christie's—have made them a popular choice of investment nowadays.
NFT's fate is inherently connected to the cryptocurrency phenomenon. As of now, we don't know whether a cryptocurrency will be banned or whether it will be freely used.
But, I feel that it is changing the way for artists.
I will end this article with a GaryVee Note - Just like Instagram makes you an influencer, NFT’s will make you an artist.
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