Everything you wanted to know about … non-fungible tokens
Tied to the cryptocurrency boom, non-fungible tokens (NFTs) are the latest multi-million dollar internet concept to hit the headlines in 2021.
NFTs are transaction records captured on the blockchain – the web version of a physical ledger. Non-fungible tokens allow people to exchange ownership of digital entities such as memes, media, tweets, arts, articles in a ‘token’ form. As NFTs are supported by the blockchain, these transaction records are permanent, verified multiple times, and cannot be erased or changed. Each non-fungible token is uniquely identifiable. Thus, two digital entities cannot have the same token. An NFT is basically a certificate of authenticity or a digital autograph that can be attached to digital property.
All NFT headlines screaming millions, usually paid for in cryptocurrency, are for this certificate. When you buy an NFT, you don’t necessarily have the artwork, meme, or music connected. This is because an NFT does not convey any copyright or use rights unless there is an explicit license to mention it. The right that an NFT gives you is a digital bragging right.
Multi-million dollar NFT sales have recently gained social media attention. For example, an NFT for an animated GIF of a flying pop-tart cat meme sold for over $ 500,000. An NFT for a single red pixel sells for over $ 800,000. Christie’s sale of an NFT by a digital artist called Beeple set the digital art record as it was snatched by two crypto enthusiasts of Indian descent for $ 69 million. NFTs do not offer any cash flow and are not real assets. The only way to make money is to get others to buy the NFT from you.
Remember that before you sell an NFT, you must create one. Unless you are a blockchain enthusiast, creating an NFT will require spending real money in the range of $ 100 that will go into the crypto economy.
The Covid pandemic has further devastated the poorly paid lives of countless artists, musicians and creators. The digital world offers a creative outlet, but in it any creation can be easily duplicated. This is where NFTs come in. With NFTs, any creation can be tokenized to create a digital certificate of ownership, helping creators secure a life-changing prize for their art.
Theoretically, artists with NFT for their creations can access a global market, retain ownership rights to their work, and directly claim benefits such as resale royalties. But in the real world, the latest generation innovations rarely work as they claim. Some even believe that NFTs will mend the broken music streaming economy and restore the balance of power between art creators and art mediators. But it’s all guesswork at this point. After all, the NFT ecosystem is connected to the largely unregulated world of cryptocurrencies.
Internet concepts, especially those involving technological mumbo-jumbo and millions, are always touted as the next big thing. When they create enough hype, many average people who may not fully understand the concept may simply come in out of greed. Remember what happened with the initial coin offerings, decentralized financial loans, etc. There is discussion of how NFTs are “like” equity shares or akin to “owning a part” of a promising artist or musician. But unless you’re a tech geek with a deep understanding of blockchain and the digital economy, it’s best not to take the hook.
Owning an autograph is good, but it’s hard to make a business out of it.
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