NFTs (Non-fungible tokens) are unique digital assets representing real-life objects such as art, images, and videos, among many other things. These artifacts are stored on a blockchain and come with a certificate of authenticity. NFTs have taken the art and investment market by storm because they have opened an entirely new way for creatives to sell their offerings.
The real reason NFTs are worth a lot of money is because they have metadata inside them that verifies their validity and authenticity. Yes, you can create digital copies of NFTs. However, the actual (and often sole) ownership of that piece of digital content rests with the owner and can be filed in the ledger that way. Since each NFT is distinct and can be easily verified through a blockchain ledger, it’s an effortless way to prove ownership over a piece of digital content.
NFTs are highly beneficial to collectors since they are considered a digital equivalent of a transaction receipt for ownership. Even though others may see it or copy it, its ownership only belongs to one person. And the original NFT is marked through a unique and non-interchangeable code, assuring its originality and authenticity. Furthermore, since the blockchain ledger is replicated across computers and servers worldwide, anyone can access the ledger and cross-check the validity of an NFT.
What can be an NFT?
An NFT can be any digital object marked through a blockchain ledger, such as music files, memes, art, GIFs, or videos. They have to be a nonfungible piece of content whose ownership is yet to be defined.
They can be anything, ranging from a single tweet to an HD version of a pre-released movie. And people sometimes get a really high price for their NFTs. For example, Jack Dorsey sold a single tweet as an NFT for $2.9 million.
Right now, Ethereum NFTs offer artists a way to sell their work up at a fixed price or auction them. They also have a feature that ensures that the artist is paid a certain percentage of that sale every time an art piece is resold. This creates a lifetime source of income for creators who work on novelty pieces.
NFT in the news
The first NFT project was launched in 2015. Since then, NFTs are getting a constant increase in popularity due to their ability to authenticate ownership of assets. In addition, many celebrities have jumped on the NFT train, making it even more popular. It is a creative way for people to invest their excess funds.
According to a recent report, $2.5 billion worth of NFTs were sold in 2021, with buyers acquiring 10 to 20 thousand NFTs per week. The most expensive NFT ever sold was a Beeple artwork, sold for a jaw-dropping $69 million.
How to buy NFTs?
You can buy NFTs on different platforms depending on the type of product you want to purchase. There are also marketplaces you can use for common products such as music, and art. There are also NFT drop websites where an NFT is only available for a specific period of time.
Often, you require a wallet specific to the platform you are purchasing NFT from, and you need to top it up with cryptocurrency to facilitate the purchase (and own the digital piece).
You can also license it from the artist (you can use the NFT, but the ownership remains with the artist) or rent it (you get the ownership for a short period, and then it goes back to the original artist).
Some of the popular marketplaces include OpenSea, Foundation, and SuperRare. To validate an NFT’s authenticity, you can check the blockchain ledger for buying history and current ownership.
How to create and sell NFTs
The process of creating and selling an NFT is simple. First, you have to pick out a digital piece of content to turn it into an NFT. It can be an art piece, sound or video clip, a content piece, or any other digital file.
Then you need to recognize a blockchain which you’ll use to turn that piece of art into an NFT. This process is called mining. This requires a gas fee and is typically paid via cryptocurrency (most commonly Ethereum).
You also need to select a digital wallet for your art piece (non-custodial) and use it to sign up to a marketplace. You might need to enter more information when you’re signing up. This step may also involve you paying some selling fee to the platform.
Once all these steps are completed, your NFT will be listed on the marketplace. After that, people will be able to bid on your token. Once a bid comes through, you have the option to accept or reject it.
Controversies regarding NFTs
Even though NFTs are highly popular, they are also the subject of heated controversies. The creation of NFTs requires huge amounts of energy, which is often diverted onto the seller in terms of gas fees. This, along with conversion fees, means that the seller doesn’t see all the profits from their art piece.
NFTs are also notorious for charging a very high gas fee to beginner artists, prohibiting them from entering the marketplace and selling their work.
Creating NFT also requires a lot of computing power, which means that you’re using up a huge amount of resources every time you create and distribute an NFT. This type of carbon footprint has a huge impact on the environment. This criticism has led to major backlash over NFTs and their impact on climate change.
Another controversy of NFTs is that hackers can still hack them, regardless of their inability to be copied. Many online platforms have reported NFT vulnerabilities issues resulting in loss of credibility and income.
Whether you like NFTs or not, they are everywhere. For now, at least. This is a unique and easy way for artists to break into the art industry and create a sustainable source of income.
NFTs as an investment is, however, a matter of debate. Many people have speculated that we’re living in an NFT bubble. Whether that’s true or not, one thing’s for sure. NFTs have changed how we look and perceive art and will continue to do so in the near future.