Why NFT(Non-Fungible Token) is the next big technology?
Until now, you would only have gained popularity creating memes. What if I told you that you could actually earn money by creating memes.
For example, this Nyan cat meme was published on youtube in 2011 and has over 185 million views. The meme’s creator recently sold it for 580k Dollars.
Many of you might ask- How was a meme sold?
The answer to that question is — NFTs. The NFTs have revolutionized the concept of digital art. For example, Digital artist Mike Winkleman, also called Beeple, recently sold his art collection for 69 Million Dollars, the third-highest price paid to any living artist. Beeple stated that this is a new chapter in the history of art.
So What is NFTs? And how do digital artists earn money with it? The craze for NFT started in 2017 due to a game called Cryptokities, where players can buy, breed and sell virtual cats.
These cats are similar to Pokemon cards, and the only difference is that they are digital. For example, the cat, known as Cryptokitty or Dragon, was sold for 172 k dollars.
NFT stands for Non-Fungible tokens, which are unique and can’t be replicated. For example, the value of a 100 dollar note is 100 dollar. If you exchange this note with another note, its value won’t change.
But the Mona Lisa painting is unique, and you can’t replicate it.
Now the token is a digital asset. Assets can be digital or physical, and this dollar note is a physical asset, while Bitcoin is also a digital asset. So, NFTs are non-fungible digital assets. Jack Dorsey, the founder of Twitter, sold his first tweet published in 2006 as an NFT and Elon Musk wanted to sell a song about NFT as an NFT.
Many private companies sell digital collectables by using this craze for NFTs to earn profit. We used to play with collectables like Pokemon cards and WWE cards in our childhood. They are selling digital versions of these. For example, the NBA has licensed the NBA top Shot, which sells the NBA highlights as NFTs.
You can buy Lebron James slam dunk from this website, and recently, somebody paid 208k dollars for this clip.
NFTs are special because they are certified on digital diaries known as Blockchain. Blockchain is a digital ledger or a diary where you can note the ownership of digital assets. For example, to prove that you are the owner of your car, you need to show the document of car registration. Blockchain works similarly, but the document of car registration can be replicated, so it isn’t easy to replicate such a thing in Blockchain. That’s why it’s easier to verify the ownership of an NFT on Blockchain.
Suppose I own an NFT; this doesn’t mean you can’t see or download it. For example, there is a video created by Beeple, which is valued at 66 Million Dollars and can be easily downloaded from the internet. Experts argue that the NFTs aren’t trying to solve the issue of somebody getting a peek at your digital art.
Though NFTs can solve this, it focuses mainly on establishing ownership. It verifies you as an owner of digital art. Experts suggest that an asset is valued only when we are 100% certain about its owner.
The NFTs can help digital artists receive their due credits and revenue. For example, Photographs can be easily copied and reproduced, but many spend millions to buy original photographs. While earlier, digital artists could only ask for likes and subscribers, now they can actually earn money for their work and not just for the first sale, but they receive a royalty for each time their art is sold.
Beeple will receive 10% royalty whenever his artwork is sold. Second, the NFTs give status to digital artists.
But what do Buyers get? They get exclusivity in which memes you would be among the selected few who own the meme. For example, Logan Paul, a popular American Youtuber, created an NFT of Pokemon worth 17K dollars and can be bought by only 4 individuals. Due to the craze of NFTs, several new investors have entered the market with the hope that they would be able to sell the NFTs at a higher price in future. You can buy NFTs if you love digital art or if you want to earn a profit by investing your money in the NFTs.
There are third-Party websites where you can buy NFTs using a cryptocurrency known as Ethereum. The speculators are relying on an economic concept known as Veblen Goods. You would have come across this during your school time. Usually, when the price for any good falls, its demand increases, but this isn’t the case with Veblen goods.
Usually, these are luxury items; the higher the price for these items, the more the demand. The speculators believe that such would be the case with the NFTs.
We may experience more innovation in this area in the future. Currently, the NFTs are being used for digital artworks, but they can also be used for physical assets in the future. For example, Nike has devised a method by which you can verify the authenticity of the sneakers.
There are other applications too. For example, many websites are offering cryptocurrency loans if you deposit an NFT as collateral. This Means that NFTs and crypto loans are analogous to a house and personal loan. Nike calls this NFT system- Cryptokicks.
But there are several major issues regarding the NFTs. The first is the environmental impact. A month ago, the online art platform ArtStation had to cancel the sales of NFTs due to social media backlash regarding the environmental impacts of NFTs.
Secondly, many people believe that the NFTs are still a bubble. For example, Vignesh Sundaresan, who bought Beeple’s artwork at 69 Million Dollars, suggests that the craze of NFTs may not last very long.
But the idea and technologies on which the NFTs depend upon are in Blockchain, which has been used in many industries and sustainable.
