NFT, or non-fungible token, a digital asset represents a unique digital value. Where did this technology come from, what is it really and, most importantly, why in some cases it is necessary to pay hundreds of thousands, if not millions of dollars, for it?
Blockchain technology is gradually entering new realms of our life. Recently, NFT tokens have become more and more popular. According to some experts, they have a chance to revolutionize areas such as art, entertainment or even real estate.
Undoubtedly, blockchain has become the contemporary technology of the 21st century. Basically, it is a decentralized database that records assets and transactions in virtual money (cryptocurrencies). NFT tokens play almost a major role here, as they are considered a key element of the entire blockchain-based economy.
One NFT token sparked a global frenzy after it was sold for $69.9 million. And the whole world still does not know what these digital items are and why they can get such an estimated value. To be honest, I also couldn't understand the idea at the beginning.
Some say this is a whim; others are convinced that NFT will stay with us for a long time and become another element of culture, like music, films, and games. Rather, NFTs will become another collectible that we buy because they do not lose value and are resistant to inflation. In addition, we also buy them in the hope that they will become even more expensive over time.
NFT - What Is It? Why Was It Created?
NFT, short for a non-fungible token, can be converted into a non-fungible token or simply a unique digital item. NFT is part of the new digital economy and Internet 3.0, which uses blockchain technology and cryptocurrencies, and decentralized finance.
One-of-a-kind digital assets without any tangible form that can be bought and sold like any other property in the digital world. These digital tokens can be viewed as certificates of ownership for virtual or physical assets.
NFT is a collector's digital asset that is viewed as an art or culture form. These items are viewed (or at least should) as investments that will retain value over the long long term. In some respects, NFTs are similar to Bitcoin, but unlike standard Bitcoin coins, NFTs are unique, and if you buy such an item, you become the rightful owner of it.
What Are the Standards for NFT Tokens?
ERC-20 is the most common standard for creating and issuing tokens, but other standards exist (such as ERC-223, ERC-721, ERC-777, and ERC-1155). Each new standard is upgraded, safer, faster to use, and offers new features.
The NFT itself can be de facto anything that is digital. For example, it can be an image, a photo, an animated GIF, a movie, music - anything that is unique, digitally stored, and considered valuable. We look at these items as collectibles, such as old Nintendo games, Pokemon cards, or pictures. The difference is that instead of a canvas painting that can be hung on a wall, you get, in this case, a JPG file. However, it all began imperceptibly.
History of NFT Tokens
The history of NFT tokens dates back to 2012 when experiments began with the so-called Colored Coins. These are the basic units of bitcoin that can represent many resources and therefore have many uses. They were used as coupons, company shares, access tokens, or just collectibles. In the meantime, other projects using NFT have appeared (for example, Rare Pepes memes or CryptoPunks pixel portraits).
The technology gained popularity in 2017 with the CryptoKitties virtual game, which allowed players to accept and sell virtual cats. The launch of the CryptoKitties game coincided with the rise in the popularity of cryptocurrencies. Some also found a way to get rich quick here (the most expensive cats cost $ 100,000!).
How Does NFT Work?
NFTs are part of the Ethereum blockchain. Therefore, they are separate tokens with additional information stored in them. This information allows them to take the form of images, music, videos, and other elements that we save in JPEG, MP3 or GIF format. Because they have value, we can buy and sell them just like any other art form. Cost, in turn, as in the case of art, is determined by demand and the market.
As in the art market, there are still actual copies of NFT. However, they will not have the same value as the original. For example, if you see a JPG image sold as NFT on the web, you might think that you just need to save it to disk, which is how you "bought" the NFT for free. You have tricked the system and are the owner of a unique item. Unfortunately, this is not so. This type of file will not contain information that makes you the owner. Only when you buy NFT on one of the sales sites you will receive a corresponding certificate and additional elements, thanks to which you become a unique owner of this product.
Where Are They Sold?
NFTs are currently available for purchase on various platforms, and the choice depends on what you want to buy. For example, if you're looking to buy digital baseball cards, your best bet is to go to Topps or digitaltradingcards. Each platform supports a specific digital wallet that needs to be populated with cryptocurrencies. In addition, some physical item auction houses have recently started using NFT. This was the case with Beeple's Everyday - The first 5000 days, sold at Christies. This particular JPG image was sold for a fantastic $ 69.3 million. Yes, you read that right! It's incredible, but this is the amount that was paid for the already famous picture.
Many NFTs are sold at auctions that require registration in advance. Then, when the sale starts, users place bids, and the NFT eventually goes to the highest bidder. Where to buy NFT? Some of the more popular locations are OpenSea, SuperRare, Nifty Gateway, VIV3, BakerySwap, or NFT ShowRoom. There are, of course, many more. I am sure that you will write more than one such resource or exchange in the comments.
NFTs are becoming popular with celebrities as well as in video games. Actors or sports stars sell their NFTs. Of course, the most significant fans buy them. You can purchase unique items that only you have access to in games, such as special swords or skins. In other words, everything that has a digital element can be sold or bought.
Who Is Using NFT? And Does It Make Sense?
NFT tokens are gaining traction, and it looks like the world is seriously and permanently interested in them. For artists, entering the NFT space is invaluable because they can offer their products for sale. This was often a problem in the past. If you are an artist who creates, for example, 3D animation, you could fill orders for clients, but you could not create your own original work that could be put up for sale. Currently, if you prepare them as NFTs, you can sell them in an online store or at an auction.
For example, if you work with GIFs, you will no longer be able to receive an order for the manufacture of a cat that leaves a rainbow trail behind.
Meanwhile, NyanCat was sold for $ 690,000. Someone on the Internet decided that he wanted to buy such a GIF, and it is of great value to him. Big enough to pay $ 690 thousand for it. Yes, someone on this planet would rather spend that amount on a GIF instead of, for example, buying a house or the latest Maserati model.
NFTs are also starting to gradually infiltrate games, which is where they can make a slight difference. Until now, all digital assets acquired in games have de facto belonged to the gaming company. Players bought something temporarily to use this resource throughout the game. However, the possibility of NFT transactions means that you can buy something and that asset will belong to you. This suggests that you can later sell the item to other players, but often at a much higher price.
Imagine a top player and streamer who bought a unique rifle. He has hundreds of thousands of fans, and one day he decides to sell his favorite weapon by putting it up for auction. Do you already understand what the matter is? In the future, some games will also allow you to buy NFTs and then bring them outside of the gaming world on the Internet.
The Possibilities Are Endless
In the future, NFTs will become more and more attractive to well-known brands. For example, Taco Bell sold gifs and tacos images, with many designs being bought almost immediately after the sale. Each token contained a $ 500 gift card that the owner could spend at the store. Today, TacoCards are already on sale in the secondary market, some of which can cost over $ 3,000. And they no longer have gift cards.
Even tweets, that is, tweets, can be of high value. Jack Dorsey, the co-founder of Twitter, sold his first tweet for about $ 3 million. The possibilities seem endless, which stimulates creativity. If someone is willing to pay some amount for a given digital item, why would someone else stop them, right? After all, this is his money, and he has the right to spend it on whatever he wants.
Can you create tokens yourself? Technically yes. Anyone can create digital content, which is then turned into NFT and put on the blockchain. This process is called coining. However, the problem may be with the subsequent sale. Because why would someone buy something from you? If you have a well-known brand or you are famous yourself, you will surely find a buyer. If not, it can be difficult without prior advertising campaigns or publicity.
What is the future of NFT tokens?
Some argue that these technologies will gain popularity over time and find their application in new areas of our life - such areas as art, entertainment, and even real estate have a chance. There is even talk of accelerating the economy or the phenomenon of minimizing inflation. There are also critical opinions about the temporary popularity of NFT or the speculation game.
NFT is still a very fresh technology, and it is difficult to say what its further development will be, but it is definitely worth watching the projects that arise with its use and not only in the field of art. Perhaps we are on the verge of the most interesting ideas and prospects!
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