What is NFT and how high will it thrive
💫 NFT is a common term among the blockchain-based digital economy enthusiasts, and at the same time, a burning hot topic for debates and opportunities. As technological advancement progressing, the digitizing era commences and is slowly expanding around the world. NFT is proving its significant and resilient features to modern inventions.
💎 1. What is NFT?
To better understand how NFTs work and what possibilities they have. We need to first get what “NFT” stands for. “NFT” is an abbreviation of “Non-Fungible Token”, which is a unique unit of data on a blockchain that represents ownership of digital or physical objects. The thing that makes NFT noteworthy is the “non-fungible” part. While “fungible” means an item could be traded for the one with the exact same type and value, “non-fungible”, of course, has an opposite meaning. Each token is not interchangeable due to its difference in value despite being the same object.
NFTs can be created by individuals to buy and sell conveniently using blockchain technology. And blockchain technology helps to secure the ownership of these NFTs. No one can alter the ownership record or duplicate the exact same NFT item. However, as unique as they sound, NFT owners do not exactly buy the copyright, intellectual property rights, or commercial rights of those assets, unless otherwise stated. Fractional NFTs are also emerging as a way for everyone to claim ownership of the same NFT by buying fractions divided from that NFT.
Being a “token” reminds some people of cryptocurrencies. In fact, NFTs do share some similarities, though quite the basic features like being digital assets, built with the same technology and software, and can be secured in digital wallets. Aside from those, the major difference between these two types of tokens is that NFT is non-fungible, while cryptocurrency is fungible. As a result, NFTs’ distinctiveness and scarcity raise their worth and desirability. Cryptocurrency is also purely economic as it serves as a currency for trading items. NFT can be both economic and non-economic since it can be utilized to distribute other creations.
💎 2. How NFTs work
NFT comes in forms of different assets such as digital artworks, music, collectibles, avatars, in-game items, or real-life items like real-world event tickets, tokenized invoices, legal documents, signatures, etc. Most things can be converted into an NFT and get their scarcity determined by creators, depending on their creative minds.
As stated above, NFTs can be created by individuals. The process goes like this:
– An individual (or an organization) creates or selects a distinctive asset to sell as an NFT.
– They go through the “minting” process through smart contracts to add this item to a supported blockchain platform, which results in the creation of an NFT.
– This NFT is now available as a digital asset version of that item on the blockchain, verifying proof of ownership in an unalterable record.
The creator of NFT can easily prove their work due to this unalterable record stored permanently on the blockchain. This record also contains information of transaction history. This way traders can easily verify if an NFT is a counterfeit or not. What’s more, creators are free to sell them on any NFT market, and are not bound by any platform’ restrictions or intermediation. They also earn royalties from all secondary sales of their creations.
NFT owners can verify their possession in a few ways, beginning with them purchasing an NFT by cryptocurrencies. Their private key serves as a proof-of-ownership of this original NFT. And the creator’s public key is a certificate of authenticity written in that NFT’s history, contributing to its market value. And since the owner’s private key is part of the record, they can sign messages to prove that they also own that private key, in which that NFT is in possession. By signing a message, their private key is non-disclosure information to the public. NFTs are permissionless to sell, and in some situations, sellers can also earn royalties from creators for these reselling activities.
💎 3. NFT’s development and potential
NFTs are both economic and non-economic. Therefore, this token’s potential exceeds the relatively straightforward concept of cryptocurrencies. An enormous wave of interest in NFT has created a surge in crypto-collectibles and NFTs, starting with the creative content. Art NFTs could be called the pioneer for all forms of NFT collectibles and digital representation. Artists started to digitize and monetize their artworks, videos, music, merchandise, and concert or event tickets onto the blockchain. Gamefi projects also quickly adapt NFT as an improvement to traditional games, where players have full ownership of their in-game possessions like characters, costumes, weapons, skill sets, etc. Along with breedable features, players can breed new game characters and sell them to others, creating vibrant trading markets and enriching game’s resources. Meme NFTs is a funny variation and a literal gold rush at that. With the popular Nyan Cat being sold for roughly $580,000 last year. The value of these memes is of course, heavily dependent on the virality and the originality of the digital possession.
The scarcity and the hype of NFTs have undoubtedly skyrocketed their asset value. Similar to how traditional antique collectors have inexhaustible passion for antiques, the collecting nature inside some people will drive them to be active in NFT markets. “It’s cool knowing you own the only piece in existence.” – A shared mindset between NFT enthusiasts. This may seem strange to some, as everyone else can interact with a piece of NFT artwork. However, there is only one owner of this NFT. The proof of possession is an understandable desire and is enough for them.
Thanks to blockchain technology’s secured and safe features, NFT collectors can easily appraise and protect their assets. By tokenizing possessions, people can preserve their precious collections more efficiently than traditional preserving methods. NFT also empowers creators and guarantees their copyrights forever carved into their creation’s history. In this respect, fans are able to enjoy their own limited edition of their favorite creator’s work and enrich the market by directly supporting creators by trading their NFT creations. Gamefi projects are another part of a well-established NFT market with inexhaustibly booming potential. Players interact with NFTs and contribute to the blockchain-based digital market way since they started the game. Crypto mining and NFT trading sustain their lives as much as other jobs offer. And gamefi projects just keep getting more professional, fun-to-play, and creative.
Non-Fungible Token has extremely convenient and secured features to protect ownership, thus is self-explanatory for its overwhelming interests and market value. Real estate, fashion, sports memorabilia, and many more fields are making their way to NFT markets after the success of art NFT and gamefi industry, promising a lively digital trading place where people can rest assured that their possessions are secured with them forever.