NFTs the latest crypto ‘craze’
The world has been buying fine art, luxury goods, baseball cards and pokemon cards based on an emotional connection with the entity at prices way beyond reason. Although, digital art has been under-appreciated for a long time despite its prevalence in popular culture for decades now. Digital media like words on the web, images, GIFs, videos and other creations have taken a back seat as they can be easily copied and shared.
Enter Non-Fungible Tokens (NFTs)
NFT’s are verifiable, unique, non-interchangeable digital assets. Let’s break it down and understand what it means.
In the real world, the physical assets which are emotional investments like books, paintings, sculptures etc have their worth determined by specialists. A certificate of authentication is minted for art pieces that are owned by the owner. Although, at the same time, anyone can create a copy of the art piece. For example, there is only one original Monalisa but there are thousands of identical copies of the same. The only distinction between the original and the fake one is authentication.
Non-fungible tokens(NFTs) are minted as the media for digital assets on the blockchain. Moreover, instead of existing in the real world, it exists in the verifiable blockchain ledger. Once an NFT is minted, it is time-stamped and becomes part of the blockchain, hence uniquely identifiable and traceable. It is verified by a peer-peer system of computers on the network for authentication. All the information is stored on every computer(node) on the system to ensure the verifiability of the data.
NFT’s aren’t a cryptocurrency because cryptocurrencies like bitcoin are interchangeable.
If I own a bitcoin and you do as well, they are virtually the same and we can exchange them. Although, for an NFT, they cannot be exchanged, hence the term: non-fungible. They can be sold, but cannot be exchanged.
NFT is not functional or utilitarian. Although people have been buying it for fulfilling emotional needs or as an investment in the hope that it would go up in value in future.
NFT’s have been going up on google search trends.
National Basketball Association was quick on monetizing on the rising trend. They immediately created NBA top-shot at the beginning of the season for fans to buy NBA highlights as NFTs. The top-shot created a queue waiting list system and random selection of buyers to leverage scarcity for collectors.
Mike Winkelmann, the artist known as Beeple sold “Everyday: The First 5,000 Days artwork as NFT for $69 million. It was 13 years of his life’s work and the highest ever NFT purchase in history. The sale makes Beeple the third most valuable living artist in history.
NFTs are emerging as a new class of asset in the world of creators enabling them to monetize their work through their audience directly without any external aid. NFTs have more functional value than enabling creators to monetize their digital assets. It can be used for authenticating anything from a college degree to buying a house. The future of decentralized applications built on blockchain is only starting to emerge and is already showing true potential with the number of transactions happening on the platforms.
1. morning brew