No fungible tokens or NFTs are a new variety of collectible that has outstripped cryptocurrency in hype and popularity. But unlike a Pokémon card, a traditional piece of painting, or a comic book, these NFTs are entirely digital and tied to things like a video highlight, a meme, or a tweet.
Introduced first in 2017 named as 'Crypto Punks' on the American Studio Larva Lab's Ethereum Blockchain, these NFTs are quite a fascinating concept to understand.
Everything you need to know like - What is NFT, how it works, why are they so valuable and controversial at the same time, is explained thoroughly in this guide. So, let's proceed!
Non Fungible Tokens (NFT) are substantially a collectible digital asset, that holds some value as a form of cryptocurrency and as a form of art or culture. Moreover, it is an art holding investment in it and is being called NFTs. Wondering how?
Let's understand the term first. Non Fungible Token is a sort of digital token from the genre of cryptocurrency, i.e. Bitcoin or Ethereum. But dissimilar to a standard coin on the Bitcoin blockchain, an NFT is unique and can't be exchanged like for like.
This happens because no NFTs are identical, not even those that exist on the same platform or in a video game. You can understand them as festival tickets. Each ticket contains specific information, viz buyer's name, date of the event and the point of meeting, etc. This unique data makes it impossible to trade one festival ticket with another, similar in the case of NFTs.
The value of art depends on a range of factors, that include age, real owner, and much more details. Since websites, social media, and blogging channels don't provide artists an option to add ownership details, artists often face problems in providing authenticity of their work.
However, with the help of blockchain and NFTs, artists can now upload their art to a platform or website with the true ownership details of that knack. As everything is recorded on a public ledger then, it becomes easy to track down the creator of certain art or skill.
Known Origin is a trending platform among international artists to showcase & sell pieces of rare digital artwork & collectibles by them.
Because the platform uses the Ethereum Network which enables artists & creators to authorize their work by listing it on Known Origin as an NFT, this makes it easier for patrons to identify the authentic owner and gain more confidence in their purchase.
A platform specifically designed to raise funds for charitable causes, Cryptograph is very popular among celebrities. This site allows users to sell collectibles in the form of drawings, paintings, and graphical diagrams. Famous celebrities like Hilton, Seth Green, and Ashly Green have auctioned their creations on Cryptograph for more than 40 ETH i.e. $17000 approx.
Earned its popularity in 2017, Crypto Kitties is a Blockchain & NFT powered game where users can purchase & trade virtual cats called 'Crypto Kitties. As each cat specifies its own abilities and features, it offers you 100% ownership without any possibilities of replication or termination. These virtual cats are NFTs that consist of information in them in the form of meta descriptions such as the owner of the asset and what makes it unique.
Originated from a whopping $10 million funding from visionary investors of the decentralized web, the 'Handshake Domains' provide you proof of ownership of domains bought on NameBase.io without having central authorities asking for control over them.
This means that the buyer's details can be stored on the Blockchain, and no requirement will be there from the centralized party to hold this information.
Besides having its own distinguishable information, there are many other characteristics of NFTs that may amaze you. Let's have a look at them:-
A CryptoKitty carries a distinct value. It is unexchangeable to a Cryptopunk. This specifies how interoperability doesn't exist in the world of blockchain and Non Fungible Tokens.
Non Fungible Tokens have a bit different characteristic to bitcoins. Unlike them, it cannot be divided into small portions and must be taken as a whole item.
NFT data is stored on the blockchain via smart contracts. This means it can't be replicated, destroyed, or removed by any means. Even gamers who possess NFTs enjoy its complete ownership, not the company that has manufactured them. This conflicts with buying things like music from the iTunes store, where you can only buy a license to listen to the music, not the ownership rights to it.
Easy verification by tracing back the original creator of any digital artwork is another unmatched benefit of NFTs on the blockchain. This hardly leaves any requirement for third-party verification.
Non Fungible Tokens are an essential part of the Ethereum blockchain. So they are not merely tokens, they are special tokens with important information stored in them.
This important information can be music or a video in the format JPG, PNG, GIF, or whatever. Because this is the value on which they create their demand in the market and are sold on.
You must be wondering can't NFTs be bought, sold, and made in the form of copies of the original one, just like art prints of an original painting. Then the answer is YES! NFTs can be copied and sold in the market being an important part of the blockchain, but, these created copies will not possess the same value as the original.
Now, don't act childish thinking you are a hacker by clicking copy and save on an NFT image. You must have known by now that NFTs are part of the Ethereum blockchain and possess its true creator's information, which you cannot acquire just by downloading the file.
There's a saying - "Supply & Demand drives the market".
Due to their unique value, NFTs are scarce. And because of its scarce nature, its demand is high among collectors, investors, gamers, and people with golden treasuries.
Still, why do people dig NFTs that much?
NFTs can sometimes make you a millionaire. If you play your cards smartly, it can make you a lot of money. Here's an example:-
A gamer on 'Decentraland' (Virtual land platform) purchased 64 lots together and combined them into a single estate. It'd be hard to believe, but that land he combined got sold for $80,000 just because of its desirable location & road access.
Here's another one:-
An investor arrayed $2,22,000 & purchased a section of a digital Monaco racing track in the 'F1 Delta Time' game. Now, that NFT earns a 5% dividend to him, because of all the races that take place on it. Plus, the investor gets a share of the entry ticket fees as well.
Since 2017, there has been above $174 million spent on NFTs. But the question is why is it so important in the world?
The emergence of blockchain has profited gamers and collectors unimaginably. It has privileged the items and unique assets they buy in a game, along with a great opportunity to make money from them.
Furthermore, players can create and monetize eye-catching structures like casinos, theme parks, hotels, etc. in virtual worlds video games, like 'Decentraland'.
For creators & artists, it has done a god-level job. Now without knocking on the doors of auction houses, and expensive media sellers, they can directly monetize their creativity to a global audience and enjoy every portion of the profits from sales.
Who's been using NFTs is not a mystery anymore. It includes artists, gamers, musicians, and brands of nearly every spectrum. In fact every day more and more creators are joining this landscape.
Artists involved with NFTs share art and make money from it. Every piece ranging from small to big, including GIFs, ambitious works, images, paintings, motion graphic videos can be sold here. A worthless rainbow dripping cat GIF once sold for $6,90,000. What's more is left to say?
Taco Bell once sold taco-themed GIFs and images on a marketplace and each of them sold out in less than 30 minutes. Each NFT they sold held a $500 gift card which the buyer can spend. However, these taco cards are currently selling on a secondary market for $3500 each.
NFTs can be bought on a variety of platforms depending on what is it you want to buy. For example, if you are interested in buying baseball cards, then 'digitaltradingcards' would be a great marketplace for you.
But before you lose even before the race begins, you need to understand how the transaction works here.
You'll need a wallet specific to the platform you're interested in buying on, and that too topped up with money in the format of cryptocurrency. Because, as the sale begins, a herd of frenzy buyers will crush your chance to buy an NFT if you are not already prepared with the right resources to make the transaction successful.
Here are some top sites to shop Non Fungible Tokens:-
What will be the Future of NFTs?
Certainly, with a whopping $100 million total market value by the end of July 2020, the future seems unbearably bright.
Plus, with the decentralized finance industry crossing $4 billion in value, it is confirmed that the scope of Non Fungible Tokens is set to rise exponentially and create a boom in the future.