If you have even remotely been interested or part of the crypto world, chances are that you have heard the term NFTs. Well, what exactly is it? It stands for Non-Fungible Tokens. But what is behind this exciting name? We have all the insights right here. Dive in and explore the world of NFTs with us by coming along for a ride that I guarantee you will relish.
Non-Fungible Tokens, or simply NFTs for short, are a class of digital assets that have recently been popping up everywhere on the crypto landscape. They are touted by some to be a game changer that will bring in a renaissance in the art world, and by others, as simply a pop culture craze not much different from the dot-com in the nineties. Which school of thought is proven right over the course of time is a matter of time, but one thing is for sure, NFTs are disruptors opening up exciting avenues for investors, some of whom have already bet big and won big on the NFTs. Till now, it has been nothing short of a wild ride.
Simply put, NFTs are a digital asset most prevalent in the form of Art, which can be owned and sold like any other digital asset. They bear much in common with the crypto coins as the underlying technology is much or less the same. Most are traded using crypto coins and are made possible by the beautiful thing we all have come to know as blockchain technology.
Although they have been around for almost the better part of a decade, it is only recently that they have gone viral, and that is due to the online digital artwork being sold as NFTs. As recent as 2001, the value of digital Art being traded online in the form of NFTs was around US$ 45 billion. That is almost the equivalent of the global fine art world, if not more. This is no ordinary feat in itself. The technology, as the name itself implies, enables the creator and, later on, the owner to claim exclusivity of the one-off digital asset and can prove its lineage. This is otherwise also known as creating value through uniqueness or digital scarcity, hitherto quite impossible in the online arena due to concerns of piracy, etc.
We can also view this as basic economics in play what we might call the supply and demand principle. By creating a way of ensuring authenticity and thus curtailing the number available online, the demand automatically rises, considering the limited supply. The ease of the online trading platform and the freedom from the middleman, when coupled with the exclusivity of ownership, gives rise to the unprecedented growth of digital Art and thus makes NFTs a household term in play.
These gained wide acceptance when storied arthouses that auction traditional Art, such as Christie’s, auctioned the NFT collection made by ‘Beeple’ at a staggering and mouth-watering value of approximately US$ 70 million. This led to NFTs gaining credibility as Art that can be used to store value much like other traditional assets. You might ask if anyone and everyone online can view, keep and even download the said artwork; what gives it the inherent value? Well, as we already explained that the proof of ownership made possible to the underlying blockchain using built-in mechanisms like authentication allows the owner to claim ownership of the one true original, and as they say, ‘there can be only one.’
The main difference between a common cryptocurrency and an NFT, as well as the name, suggests the concept of fungibility. Whereas one bitcoin is similar to another one in value and thus can be traded, each NFT is unique and therefore is a collector’s item. It is made special by its digital signature and cannot be traded against another. Here comes the main difference in making an NFT non-fungible. It opens up countless possibilities for digital creators as well as owners or collectors. To learn how to buy, create, or trade in NFTs, you can look at online platforms such as bitcoinsentralen and learn all there is to learn about the exciting world of NFTs.
Whether the sun will set on the NFTs much like the dot-com crash or they will lead to a new dawn and totally change our understanding of the fine art world and digital assets is left to be seen. However, one thing is for sure for now; they are going nowhere.
