NFTs: The Latest Innovation in Blockchain Technology
NFTs: The Latest Innovation in Blockchain Technology
We have all been hearing about entrepreneurs and artists selling works of art for multi-millions via NFTs. Any innovation in blockchain tech gets everybody excited but this has left a majority of us confused. We looked at all the information there is regarding NFTs and have simplified it for our readers.
What are NFTs?
NFT stands for "non-fungible token." An NFT is basically information that is stored digitally that represents something specific. NFTs can be anything that is digital and unique. For instance Jack Dorsey's (Founder of Twitter) first tweet with his signature on it is an NFT.
A common misconception is that NFTs are a type of cryptocurrency. The similarities between crypto and NFTs are that they are both stored on a blockchain. However, cryptos are like coins which means that you can replace one with another and have the same value. Whereas the Mona Lisa is one of a kind and can not be replaced.
Anyone can download digital art at anytime because of the Internet, so why purchase it?
Similarly, to collecting fine art, a buyer is interested in either purchasing it for a collection or to sell it when the art has gained popularity. By purchasing the NFT you are purchasing the ownership of the artwork. To simply state it, the Mona Lisa can be copied multiple times but there will only be one original.
Why are NFTs popular?
NFTs have opened up a new realm of blockchain tech. NFTs come with multiple use cases such as creating a digital marketplace for an artist. For example, a band can sell unreleased music via an NFT. The benefit to the band is the NFT is sold to a sole owner, they can earn royalties on the music. The idea is that all digital forms of media are now open to be “Autographed” or become “One-of-a-kind” and then be sold. This allows for the eccentrics and collectors to expand their portfolios or grasp a lucrative opportunity.
Where do we fit in?
Anyone can create work, turn it into an NFT on the Blockchain (in a process called 'minting'), and put it up for sale on a marketplace of choice. You can even attach a commission to the file, which will pay you every time someone buys the piece – including resales. Much like when buying NFTs, you need to have a wallet set up, and it needs to be stuffed full of cryptocurrency. And this requirement for money upfront is where the complications lie, because a majority of us do not own enough cryptocurrency to promote an NFT. Here are a few times NFTs were purchased for truly generous amounts:
- On 19 February, an animated Gif of Nyan Cat - a meme of a flying pop-tart cat - sold for more than $500,000.
- A few weeks later, musician Grimes sold some of her digital art for more than $6m.
- Christie's sale of an NFT by digital artist Beeple for $69m (£50m) set a new record for digital art.
Nyan Cat - a 2011 meme promoted as an NFT in 2021
Ultimately, the NFT market is similar to the fine art market in many ways. The market is for people with a significant net worth and the eccentricity to purchase such an item.
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