Ever made $3 million from one tweet? The answer is likely no. The same cannot be said for Jack Dorsey, Twitter’s co-founder. His first tweet dated March 22nd, 2006, “just setting up my twttr”, has sold for a whopping $3 Million. An animated cat’s 3-second video more or less $500,000. This sale of digital assets for absurd amounts of money is happening on, you guessed it, blockchain technology. The ownership of these digital assets is called NFTs or Non-Fungible Tokens. These tokens are bought and sold on the Ethereum blockchain. Therefore, it is important to understand digital assets, blockchains and Ethereum to have a full grasp of NFTs.
Simply put, digital assets are electronic data owned and controlled by an individual. These are also used to store artwork, contracts and videos. For instance, if bitcoins store asset-backed coins, NFTs or non-fungible tokens store digital media.
Where there are databases, there is sharing. Thus, a blockchain is designed to store a database or history of information. The system typically records data that cannot be hacked. For instance, data and transactions of cryptocurrencies bought and sold are stored in blocks. Hence the term “blockchain”. These blocks with data are mined by computers worldwide and subsequently verified one by one before being processed.
Ethereum(ETH) is one of the world’s biggest crypto-currencies, and it operates on smart contracts. For example, NFTs are bought and sold on the Ethereum Blockchain, and if you buy an NFT, the purchase would be recorded on the Ethereum blockchain. Subsequently, the ownership of the concerned asset is transferred to your name, and the information will be on the public record.
So, what is an NFT? The ownership token to a specific digital asset is called an NFT. It is a new niche for artists, where digital art is quickly becoming the most popular form of NFT. Conventionally, artists could earn money from online streaming platforms and social media platforms through revenue sharing for advertisements. However, the media would usually retain considerable revenue, dissipating only a meagre amount to the sellers. The sale of NFTs for vast amounts of ETH can enable an artist to reach the heights of success and support more artists. A new world has formed where digital art holds high emotional value and uniqueness, consequently affecting these art pieces’ prices. Artists like Beeple and Cryptopunk have sold multiple paintings for millions of dollars.
How are NFT’s unique?
Non-Fungible are not interchangeable; it is a unique piece of digital content that you cannot replicate worldwide. For instance, an ERC-721 token is specially used for NFTs; this token has a specific address and code on the blockchain, which cannot be reproduced. An NFT is unique in its code, and of course, in its existence.
MYTHS vs REALITY
There is much doubt surrounding NFTs, and many people do not understand them. Therefore, they have concluded that the world is boarding a hype train with no potential.
The most popular point of ridicule is, “Why would somebody buy them, if a piece of art is that good, we can just take a screenshot and have them on our phones.” Yes, you can have an excellent painter paint you a replica of Da Vinci’s Salvador Mundi. You can also have it painted in the same size and the exact dimensions as the original painting, but would you then be known as the person who owns the great Salvador’s painting?
It is precisely the same for NFTs; once you buy an NFT, the transaction to purchasing it is recorded in the blockchain, and the ownership contract is stored in a private key. A public record of this transaction is available for every person in the world to see who owns that particular piece of art. Think of all of this as a deed of sorts, but only more error-proof as several computers and data strings will verify this information for whoever wants to know. The creator is only the artist, but the person who buys the NFT owns all the publishing rights to that painting. For example – a Saudi Prince owns the Salvador Mundi painting, so when a museum or an art exhibition wants to display it in their show, they would need approval from the Prince himself and probably have to pay a fee. If a digital platform showcases the NFT you own, you will be recognized as the person who owns it currently.
THE FUTURE OF NFTs
The world is rapidly evolving towards the digital, where even art is being sold and bought using blockchain technology, and this is only the beginning. NFTs are fast becoming valuable for content creators due to their guaranteed authenticity and ownership. In addition, sellers can now be assured of a recurring income every time a token is sold, thus bestowing more control over their art. Scepticism erupts only due to the unregulated nature of NFTs, which can be dissected using means of digital awareness that foster optimism.
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