What is NFT in Blockchain technology? Why are people spending millions of dollars over it? And what is so significant about it?
While the world moves towards a higher definition graphic and resolution, a less than a 240-pixel doodle icon is being sold for millions of dollars.
Wait a minute! WHAT?
That’s right, in recent months, the implementation of blockchain technology called the NFT has completely taken over by the storm. It has become one of the most trending topics in the world of crypto art and trade, where, from the looks, it has strong potential to shake multiple industries and generate exponential revenues.
What is NFT? Why are people spending millions of dollars over it? And what is so significant about it?
In simple words, NFT is a Non-Fungible Token displayed in the ledger transaction of blockchain, letting the trade of unique digital artwork possible.
So what’s so special about it, you might ask?
The word “Non-Fungible” itself is what makes it so special. The term fungible means that one particular thing or an asset with a certain level of value can be exchanged with something completely different that holds the same value as the asset. Let’s take a scenario of a simple currency value.
A $100 note will have the same value as two $50 notes, despite both of them being completely different yet holding the same value.
The same is the case with bitcoins, where one cryptocurrency is exchangeable with another different cryptocurrency, holding the same value.
The opposite of this is Non-fungible. A certain asset is unique and would not hold the same value as something different—for example, a concert ticket, games, or precious artwork and paintings from previous centuries.
So, getting into it,
NFTs are designed to create a market environment where the trade of non-fungible and unique assets is possible through NFT. These non-fungible assets can either be digital assets like artwork or songs and even physical assets like houses or vehicles.
So what’s the significance of NFT?
The significance is the authenticity it conveys. NFT issues a certificate of ownership and authenticity of a particular asset, making the blockchain security to back your product and not allow anyone to duplicate the token and sell it in the market.
Anyone can either create a replica, download or duplicate an image or a painting and sell it online, claiming it is original. But through NFT, the blockchain lets the buyer know whether this particular painting or art is original and from the original owner or not. Anybody can create 100 copies of a painting done in Microsoft paint, but only one will have the original ownership, where NFT blockchain helps to identify this aspect.
How does that work?
NFT blockchain displays metadata to other users, describing the details of the digital artwork, even explaining what makes it unique from other digital goods.
NFT became well-known back in 2017, when the Ethereum ERC-721 standard was released to support the non-fungible token, making the NFT trade widely possible.
Interestingly enough, after the release of ERC-721, NFT went mainstream when the game called “crypto kitties” was developed. People spent millions of dollars over it because it was a game that appealed to many cat lovers.
The Benefits Derived From NFT
Currently, it is no doubt that NFT is shaking up the world of art in a very positive way. It allows the artist to sell their unique art, which might not have an existing market, as it feeds the purpose of being unique.
NFT helps the artist keep their rights protected, eliminating all the middlemen in the selling process. NFT can most likely abolish the concept of a broker, helping the artist enjoy the benefits of high revenue, as the transaction takes place directly from the owner and the buyer, cutting the costs of any intermediary seller.
This promotes the concept of P2P, which is peer-to-peer transaction further and allows either full ownership or half ownership change from seller to the buyer. Once the transaction is done, the blockchain metadata updates and records the selling history of the artwork and its change of ownership, keeping everything organic, transparent and eliminating any fraud attempt in the world of art.
Another benefit for the artist is that the NFT blockchain provides a particular characteristic. It pays the original owner a percentage every time their artwork is sold in huge quantities, trending and popularizing NFT further.
Speaking about businesses, what does this mean for brands in multiple industries?
NFT opens the door to expand its portfolio by penetrating the digital world and target that particular niche. The brands can create any artwork and sell it online as digital goods through NFT. Brands can sell their artwork like gears, T-shirt logos, message stickers, mini-games, and even their music, expanding their reach to the digital audience, fully controlling their pricing strategies, and allowing them to earn higher revenues.
Gucci introduced a digital footwear sneaker, where the shoes can be worn only through virtual and augmented reality, being sold in the NFT market. The price of the digital footwear was $17.99. This creates an opportunity for other businesses to capitalize on this concept and sell digitally innovative products in the NFT market.
That’s not all; NFT is a game-changer in the music industry, as it gives the musicians more control over their final product, pricing, release deadlines and makes them less reliant on third parties like music promoters and music streaming platforms.
But why are people investing crazily in NFT?
The answer is a simple, huge return. I mean, insane returns. Many NFT investors and sellers have experienced high profits over the years.
An example is an art collector from Miami, by the name of Pablo Rodriguez-Fraile, who resold a digital artwork of Beeple for 1000% more than the original, earning $6.6millions with the investment of $67,000 for just a 10-second video, which shook the art industry and caught everyone’s attention. This goes to show how successful and beneficial the NFT market and crypto art is.
The digital artist Beeple himself sold his digital artwork for $70million, where even other similar artists have managed to make explosive returns through crypto art and NFT.
Even in music, an artist like 3LAU has sold music and conceptual art through NFT and made millions just within a matter of hours.
NFT marketplace is currently valued at around $250million, where this number will increase in the future as more people discover it. Also, there are high chances that one can attain more than 1000% of profit returns by investing in the NFT market.
Due to the pandemic and closure of many activities, many people have increased their savings and withdrawn investments. Money has been lying around idle with the fear of currency devaluation.
On the other hand, bitcoin value and the emergence of multiple other Coins or tokens are insanely increasing for investment with their savings.
As an alternative, people discover NFT, where many are shocked to notice how a simple pixelated doodle is creating a fortune for many online.
Moreover, the investment for this is much feasible compare to stock markets or real estate in this covid-19 pandemic. Just by reading the success stories of other investors online, many are curious and willing to invest in crypto art through the NFT market.
Virtual Real Estate
Another interesting fact is that NFT has made its way into virtual real estate, where millions of dollars are being invested. Virtual cities are virtual lands on the screen, where people can purchase that piece of land and sell it for profits virtually.
Decentraland has recently created a virtual city by the name of Genesis, selling 1000 sq ft land for more than $200,000, as many are willing to invest. Even more recently, an artist named Krista Kim developed a Mars-like architect in a video game that became the first-ever digital home sold for 288 Ethereum, which is $500,000, catching the attention of real estate investors worldwide.
How is this possible?
If crypto and digital artwork are being sold in the NFT market, then game developers can easily sell their art on the NFT market as well, as they are in high demand.
NFT, as usual, requires a digital wallet where you can explore the NFT market on platforms such as Rarible, SuperRare, OpenSea, Axie Infinity, The SandBox, and more.
These are some of the many platforms which allow you to trade in NFT and even browse for crypto art.
NFT is most definitely a thing of the future that will revolutionize the crypto trade and potentially become a disruptive innovation at some point.