Non Fungible Tokens, otherwise known as NFTs, are the biggest thing in the tech world right now. Some of the biggest companies in the world all have a stake in this new phenomenon. For example, Nike have acquired ARTFKT, an NFT collectible startup. The NBA have also given fans an opportunity to ‘own’ some of the most memorable moments in the history of the sport. Some of these NFTs have sold for millions of dollars – the most expensive NFT is worth over $69 million USD. This is an eye watering figure considering they’re an asset that can only be sought, sold, and traded.
A majority of the NFT’s supports the Ethereum cryptocurrency, which is a part of the Ethereum blockchain. Annuity.org, perfectly elaborates that the “NFTs are differentiated from the cryptocurrency because their identification codes reflect additional information, including metadata that describes the digitized asset.”
NFTs are still very much an unknown market to most people around the world. This two-part guide will help you understand what NFTs are. They will also provide you with ideas for opportunities to utilise them, either as a business or individually.
An NFT is a non-transferable digital asset that confirms unique ownership of an object but has no fixed value. It typically comes in the form of artwork, whether that be as a picture, video, 3D image, or an animation. There has also been a recent rise in more obscure NFTs such as digital real estate.
Owning an NFT gives you the right to display said artwork in your digital wallet. ‘Non-fungible’ means that something cannot be interchanged. This therefore makes an item that is ‘non-fungible’, unique. This makes the value of the tokens increase, which therefore brings up the value of the overall NFT market. However, most of the time the ownership of the actual artwork remains with the artist and you only own your copy.
The NFT world predominantly uses crypto as the form of currency in which they trade their NFTs. The Ethereum blockchain is the most popular platform to trade on. Ethereum protects your collectible so that no one can alter the ownership rights or even copy your collectible into another digital wallet.
NFTs are now getting used to not only hold ownership rights of digital assets, but you can now have non-digital assets held as an NFT. For example, you can purchase tickets for events in the form of an NFT or have NFT legal documents, such as deeds to a car. You can now even use your tokens as collateral for a decentralised loan! The list of different uses for NFTs is growing everyday.
Why is there so much hype?
It’s human nature to want what we cannot have, which has propelled NFTs into becoming a billion dollar industry. In 2021 alone, sales of NFT art has already hit $3.5 billion before the year has even finished. This is because of the scarcity of each token and naturally we see value rise when there is demand for a product. It is also because NFTs are on-trend right now. People are scared to miss out both on trends and on a profitable market.
It’s looking like the digital world is going through the next phase of innovation, especially with Facebook introducing the Metaverse to the general public after their rebranding. The Metaverse is a digital world where you ‘live’ through augmented and virtual reality. If this is shaping up to be the future then owning some of the most sought-after digital collectibles before the rest of the world could be an extremely profitable investment in five to ten years.
Artists are flocking to the digital artwork market because NFTs have also caused a resurgence in the popularity for artwork, but more importantly, artists are now finally able to receive a fair revenue from their work. With NFTs you are selling directly to the consumer, thus cutting out any other external parties (other than the platform you make the sale on). Since NFT platforms often take a lower revenue percentage than say, an auction, they’re becoming increasingly enticing to digital artists.
Ready to learn more? Check out Part 2 of our Ultimate guide to NFTs for tips on how to employ NFTs in your startup.