Non-Fungible Tokens (NFTs)

With NFTs, artists, musicians, and sports franchises can monetize digital goods that have previously been cheap or free. Linking a digital file to its creator is what the art world needs in an increasingly digital world.

Photo by Ivan Samkov from Pexels

What are NFTs ?

With a cryptocurrency such as Bitcoin, all tokens are fungible, in other words exchangeable. This means that each token represents an equal asset. It doesn’t matter what specific token you have. It is worth the same as any other holder’s token. This is how our money works too. It doesn’t matter which specific $ 20 bill you use. You can also use two $ 10 bills or ten $ 2 bills, or any other combination. In this case, the means of payment are exchangeable.

This is precisely not the case with the NFT. Non-fungible, which means non-exchangeable tokens, represent a very concrete asset and are therefore unique. They only have the technology of storage on the blockchain in common with currency tokens. Notably, the majority of NFT activity to date has taken place on Ethereum.

That’s what makes NFT ideal for assets of which there are only one or a few. Examples include digital trading cards, game characters, digital art, or videoclips. These are already traded by this system. Besides, documents, ID cards, and vaccination certificates could also be saved and secured via the blockchain. That’s what makes this technology so interesting for the future.

Foto by David McBee on Pexels

NFTs could have a lot of completely different uses

A system of digital identities could be built on this, for example. Each person could then receive an NFT as a kind of digital passport. This could simplify the traveling process and is probably also more resistant to abuse.

Digital art attracts buyers, for example, because they can become the only real owner of an object, even if copies of this object are shared millions of times on the Internet. The value of an NFT could also be viewed as an object of speculation, bought as cheaply as possible and sold again as expensively as possible. But that’s no different with physical collectibles. Until now, digital art has not had the same value as painting or sculpture, but NFTs change that.

Previous big sales

  • The digital artist Mike Winkelmann alias Beeple recently sold a collage of 5,000 images for 69.3 million dollars.
  • Musician and Elon Musk friend Grimes sold ten pieces of digital art for a total of 6 million dollars. 
  • Twitter founder Jack Dorsey sold a signed version of his first tweet for just under $ 400,000 and now it is being traded for far more.
  • Actor William Shatner has created his own trading cards, which he sells as NFTs, as does the YouTuber Logan Paul.

These examples show that this technology is already ubiquitous.

Innovation with a future?

NFTs are still very new, and even people interested in cryptocurrencies often don’t know how to use the term, even if the technology has been around since 2016. The current hype for overpriced art will flatten somewhat and the technology will most likely establish itself for useful purposes. NFTs generally make a lot of sense and I am convinced that they will make the big breakthrough.

What do you think of NFTs? Let me know in the comments below!

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