It’s been less than a few months since the Italian artist, Salvatore Garau sold an invisible sculpture artwork priced at $18,000 (yes, you read that correctly!) drawing close parallels with the concept of NFTs itself!
Cryptocurrencies and blockchain technology have been all the rage and are restructuring the decaying dinosaur era of traditional banking and finances. The latest addition to the crypto rage? NFTs a.k.a non fungible tokens.
In this article, Cofinex India discusses the fundamental but not limiting definition of NFTs, states the core reason that seems to be backing the NFT craze, and breaks down if NFTs are well, after all, the Internet’s next big thing!
From Snoop Dogg releasing one of his NFT inspired soundtrack titled “Snoop Dogge Coins” (crypto pun intended, for sure) to Youtuber and Creator, Logan Paul, selling $1 million in NFTs within 30 minutes, it seems like the NFT industry has already begun sculpting a close-knit establishment of its own!
So, What are NFTs Anyway? Are They Different from Crypto?
Simply put, NFTs are digital blockchain assets that represent a single unique entity or a proof of ownership of that entity on the digital or progressively physical world.
Think of NFTs as unique trading cards, only one of each type exists and even though the cards are bought with fiat currency (here crypto), individual trading cards can be exchanged between collectors without the actual exchange of money. There you have it, a simple (also cool) analogy you can use while explaining NFTs to fellow crypto and non-crypto users 🙂
Answering the latter question, no! An NFT is not a type of cryptocurrency.
The difference between a fungible and non-fungible token is its unique value. The creator of an NFT decides the scarcity of the asset. 1 digital artwork or 50 tickets to a digital 3D artwork exhibition, they decide. Each NFT has a unique identifier token and the ownership of an NFT can be openly verified.
Fungible tokens on the other hand have consistent 1:1 value. 1 bitcoin has the same value as another bitcoin. Cryptocurrencies are fungible tokens that don’t concur with the same level of scarcity or uniqueness as an NFT.
Fun Fact: Notice the above legendary NFT? Titled “Everyday: The First 5000 Days”, this piece of digital artwork was sold at a whopping $69.3 million and purchased by a young Indian entrepreneur by the name of Vignesh Sundaresan. The artwork captures US artist Beeples’s artistic evolution over the years.
What are NFTs used for?
Digital authenticity certification. Simple.
Your underlying asset can be anything digital (or progressively physical)- artworks, collectables, digital designs, limited-edition sneakers, a domain name, an NBC highlight video, in-games or merely a ticket!
All in all, NFTs can be unique assets that require verifiable ownership rights. Anything flex worthy, anything investment-like, anything rare!
For instance, CryptoPunks are another large set of NFT that are AI produced digital art collectables launched by Larvalabs in 2017. The team announced a free 10,000 token giveaway of initial what they called “unique tokens”. The fixed quantity of CryptoPunks contributed to the creation of a scarce NFT ecosystem. As the NFT marketplace grew in-depth and breadth, these CryptoPunks laddered up in value, making them super scarce!
At the time of publication of this Cofinex article the total volume of all sales of CryptoPunks stands at a humongous $471.37 million!
The Future of NFTs?
Seems welcoming to both creators and investors, evidently!
Owning the Original Mona Lisa will always be far more valuable than a publicly available screenshot of the Mona Lisa, that’s a no brainer!
While NFTs currently bridge the gap between digital ownership and unique asset investments, the future of NFTs is far from impossible. With the lesser blockchain atrocities and improved frameworks, NFTs are projected to have several use cases both in the physical and digital capacity. While most NFTs currently exist on Ethereum blockchains, other blockchain tech pioneers are also experimenting to host NFT projects of their own, making the industry profoundly interesting.
Imagine a world where:
- You own a rare and valuable NFT? Soon be able to collateralise it for DeFi Lending and Loan approvals.
- There exists a unique opportunity for creators and minters alike? Think shareable NFTs that you can own in bits and percentages.
- Own a rare and in-demand sporting event ticket NFT? Exchange it for real-world assets with your minter.
The Future of NFTs?
Based on NFTs smart contract programming capacities, they are definitely a leap forward in the true sense of the term, surpassing manual transaction automation.
On a concluding note, if crypto were to be termed as the time machine for the future of DeFi, NFTs would be the hereafter of transparent ownership.
What do you think?
