During the pandemic, NFTs took over the world.
They were the “next big thing” and everyone from famous celebrities to entrepreneurs wanted a piece of the pie. Once the hype died down and the craze of “digital art” faded, it was clear that everyone marketing an NFT release was doing nothing but attempting to, and in some cases, scam people from their hard-earned money.
This was especially true after the crypto crash. Everyone that had bought into the NFT hype train and didn’t sell before the market crashed all of a sudden, lost hundreds of thousands of dollars. Before they could process what happened, the people who sold them their NFTs cashed in and ran away with all the money. This shined a bad light on NFTs, and now whenever the concept comes up in a conversation, it is quickly brushed past as a “pyramid scheme”.
NFTs are so much more. They represent a key concept in Web3 and the future of technology. This article aims to bring attention to the potential of NFTs and remove the infamous stigma around them.
What Are NFTs?
Non-fungible tokens or NFTs, for short, are sensitive assets that have been substituted with non-sensitive information, such as a general identifier, in order to prevent unauthorized access and usage, also known as tokenization. This process is done via a blockchain and hence, is the reason why they’re highly secure. They differ from other tokens by having different metadata and unique identification codes.
Now, let’s put all the technical terms aside, and help you actually understand what an NFT actually is. Say you have a bitcoin, and you trade it for another bitcoin – you’ll have exactly the same thing, and this is called fungible. However, a rare quarter from the 1800s is completely different. Even if you trade it for another, newer quarter, the value isn’t the same. That quarter is non-fungible. Even though the value of the two quarters looks the same on paper, they aren’t.
Non-fungible tokens are a sort of identification system, almost like a contract or an ownership document, that identifies that you own something and that something is worth this much. Most NFTs are a part of the Ethereum Blockchain, and Ethereum keeps track of who’s holding and trading NFTs.
Keep in mind that while you can copy or download or screenshot the asset that an NFT represents, you cannot copy the ownership of the work. That’s the beauty of NFTs – they allow people to digitally own assets and provide proof that something that isn’t in the real world, is still theirs. Think about the possibilities of this!
What Do NFTs Mean For Artists and Buyers?
For artists, NFTs are a way to sell work that in other places, there might not be a market for. Take a look at the Bored Ape Yacht Club. In 2019, no one would have bought a PNG of an ape for millions of dollars, and yet here we are. Tons of famous celebrities have their own bored ape that they spent an enormous amount of money on. If you can come up with a really cool digital badge or sticker, there’s not much hope for your art to hit off if you list it on Facebook Marketplace or the iMessage App Store. But they can in the NFT market. Some NFT Marketplaces even have features in place to give royalties to the creators. Every time someone buys your art or the ownership changes hands, you get a percentage.
If you’re a buyer or interested in NFTs, you might look at the ridiculous prices and ask, why spend that much money? But hasn’t it been happening for centuries? People love art and spend millions of dollars to get their hands on an original. Now, instead of the original, they get their hands on the ownership.
What Do NFTs Mean For The Future Of Web3
NFTs possess several distinctive features that align with the idea of Web3, with regard to ownership and digital identity. Not only that, but they also have several security measures to make it impossible for hackers to steal your NFTs.
Indivisibility And Uniqueness
Unlike cryptocurrencies like Bitcoin or Ethereum, which are fungible and interchangeable, each NFT represents a distinct digital asset that cannot be divided into smaller units. This indivisibility ensures that each token is one-of-a-kind, enhancing its value as a collector’s item or unique digital creation.
Ownership Of Assets
Built on blockchain technology, NFTs provide a transparent and tamper-proof record of ownership history. Individuals can verify the authenticity and provenance of a particular digital asset. This feature is particularly significant in fields like art, where establishing an artwork’s originality and ownership lineage is crucial.
Authenticity and Verifiability
Every NFT contains metadata that certifies its uniqueness, ownership, and other relevant information. This metadata can include details such as the creator’s name, the creation date, and even additional attributes specific to the asset. This data can be publicly accessed, ensuring transparency and trust within the NFT ecosystem.
Smart Contract Functionality
Smart contracts are self-executing agreements written into the blockchain. This allows for specific rules and conditions to be attached to an NFT. For example, an artist can program a smart contract to receive a percentage of the resale price whenever their artwork is sold in the secondary market. This feature empowers creators and provides ongoing revenue opportunities even after the initial sale.
The application of NFTs goes beyond the realms of art and gaming. NFTs are a key part of a Web3 future. Intellectual property, virtual real estate, identity verification, and even charitable fundraising have all found innovative use cases through NFTs. The potential for NFTs to revolutionize industries, create new business models, and enhance user experiences is vast and continues to evolve.
In conclusion, NFTs have enormous potential in Web3 technology. They have demonstrated their ability to establish digital ownership and create verifiable scarcity. They enable new forms of value exchange in the digital realm. As technology evolves and more industries embrace NFTs, we can expect to witness further innovation and integration, shaping the future of digital assets and ownership in a profound way.
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