NFTs (Non- Fungible Tokens)
Q. WHAT EXACTLY ARE NFTs?
NFT stands for a non-fungible token, which means that hidden in those quirky artworks, there's a unique and non-interchangeable unit of data stored on a digital ledger using blockchain technology to establish proof of ownership. Essentially the same, or similar technology used for cryptocurrencies like bitcoin and ether is used to guarantee the uniqueness of each NFT and to prove who owns it.
Unlike a unit of bitcoin, however, each NFT is completely unique, so it can't be exchanged like-for-like. The file stores extra information that elevates it above pure currency and brings it into the realm of, well, anything, really. As a result, NFTs have become collectable digital assets that hold value, just like how physical art holds value.
Any kind of easily reproduced digital file can be stored as an NFT in order to identify the original copy. The NFTs you're most likely to have seen or read about tend to be minted from trippy futuristic motion artworks, NFTs can be made from any kind of photography, art, music or video file. Even memes have been made into NFTs. Essentially, you can make NFTs from almost anything unique that can be stored digitally and holds value. They're like any other collector's item, like a painting or a vintage action figure, but instead of buying a physical item, you're instead paying for a file and proof that you own the original copy.
WHY THE HYPE AROUND NFTs?
The hype around NFTs is increasing exponentially, prompting several people to think about the use of NFT as an asset class. The classification has several advocates and several nay-sayers.
The success of NFTs is unprecedented; the previous success of the Internet or any other technology could not be used to predict the popularity of NFTs.
NFTs are the future of digital transactions. They are also at the core of the Arianee Protocol, which digitally verifies physical luxury products. The protocol proves that what you are holding in your hand is in fact what it purports to be. In addition to this type of assurance, the Arianee ecosystem also opens a new way for the consumer to communicate with the brand of each product. It’s an entirely new and augmented form of ownership, and it’s all verified on the blockchain.
The stories revolving around NFTs fetching millions of dollars have prompted a lot of buyers to take the plunge. There are many tutorials guiding people to pick a particular niche to buy NFTs and several websites have come up to cater to this demand.
HOW DOES AN NFTs WORK?
NFTs exist on a blockchain, which is a distributed public ledger that records transactions. You’re probably most familiar with blockchain as the underlying process that makes cryptocurrencies possible.
Specifically, NFTs are typically held on the Ethereum blockchain, although other blockchains support them as well.
An NFT is created, or “minted” from digital objects that represent both tangible and intangible items, including:
• Art
• GIFs
• Videos and sports highlights
• Collectibles
• Virtual avatars and video game skins
• Designer sneakers
• Music
Even tweets count. Twitter co-founder Jack Dorsey sold his first ever tweet as an NFT for more than $2.9 million.
Essentially, NFTs are like physical collector’s items, only digital. So instead of getting an actual painting to hang on the wall, the buyer gets a digital file instead.
They also get exclusive ownership rights. That’s right: NFTs can have only one owner at a time. NFTs’ unique data makes it easy to verify their ownership and transfer tokens between owners. The owner or creator can also store specific information inside them. For instance, artists can sign their artwork by including their signature in an NFT’s metadata.
WHO USES NFTs ?
NFTs are having a moment among artists, gamers and brands across all kinds of sectors. In fact, it seems every day brings a new player to the NFT marketplace. For artists, stepping into the NFT space adds another possibility for selling art, and provides fans with a way to support it. NFT art ranges from small, quick-to-make GIFs to more ambitious works. Celebrities are also getting involved, either as investing as collectors, or creating their own NFTs (or having them created for them by artists).
It would be expected that work by well-known artists would fetch big bucks as NFTs, something an anonymous group of 'art enthusiasts' relied upon when they burned an original Banksy in order to increase the value of an NFT. However, some sales are still eye-popping for the prices they reach. When Pak's NFT Artwork 'The Merge' sold for $91.8 million in December (he actually sold shares in the artwork), it was the third-highest price ever fetched by the work of a living artist.
NFTs are shaking up the concept of in-game purchases in video games. Up until now, any digital assets bought inside a game, still belonged to the game company – with gamers buying them to temporarily use while playing the game. But NFTs mean that the ownership of assets has shifted to the actual buyer. That means that they can be bought and sold across the gaming platform with extra value applied based on who has owned them along the way. Whole games are now being made based entirely around NFTs.
