Understanding the concept of NFT
NFTs refer to non-fungible tokens (NFTs) and are usually created using the same type of programming as cryptocurrencies. Simply put, these crypto assets are based on blockchain technology. They cannot be exchanged or traded like other crypto assets.
Just like bitcoin or ethereum. The term NFT clearly states that it cannot be replaced or interchanged due to its unique properties. Physical currencies and cryptocurrencies are fungible, which means they can be traded or exchanged for each other.
What is an NFT ?
NFT stands for non-fungible token, which means it cannot be replaced or exchanged due to its unique properties.
The main features of NFT
- Digital Assets – NFTs are digital assets that represent internet collectibles such as artwork, music, and games, with a certificate of authenticity created by the blockchain technology underlying cryptocurrencies.
- Unique – Cannot be counterfeited or otherwise tampered with.
- Trading – NFT trading takes place on dedicated websites with cryptocurrencies like Bitcoin.
Examples of NFT
NFTs can take many forms, including art, music, videos, tweets, and even virtual real estate. Essentially, any digital file can be turned into an NFT, and the ownership of that file can be verified on a blockchain, making it a valuable asset.
One of the most famous examples of an NFT is Beeple’s « Everydays: The First 5000 Days, » which sold at Christie’s auction house for a whopping $69 million. The artwork consists of 5,000 individual digital images, one for each day that Beeple (real name: Mike Winkelmann) had been creating and sharing on social media for over a decade. The NFT is a unique token that represents ownership of the artwork and is recorded on the Ethereum blockchain.
Another notable NFT sale was Jack Dorsey’s first tweet, which sold for $2.9 million. The tweet, which reads « just setting up my twttr, » was turned into an NFT and sold on the blockchain platform Valuables.
NFT and cryptocurrency
NFTs are often used by people interested in cryptocurrency trading and those who like to collect art. Besides that, it has some other uses, such as:
Digital Content
The most important use of NFT today is digital content. Content creators see NFTs increase their profits as they fuel a creator economy in which creators transfer ownership of their content to the platforms they use to distribute it.
Game Items
NFTs have aroused great interest from game developers. NFT can bring many benefits to players. Usually in online games, you can buy items for your character, but that’s about it. NFTs allow you to get your money back by selling items when you’re done using them.
Investments and collateral
NFTs and DeFi (decentralized finance) share the same infrastructure. DeFi apps allow you to borrow money using collateral. Both NFTs and DeFi are collaborating to explore the use of NFTs as collateral.
Domain Names
NFTs give your domain name a more memorable name. This works like a website domain name, making its IP address easier to remember and valuable, usually based on length and relevancy.
NFT and celebrities
Even celebrities like Snoop Dogg, Shawn Mendes, and Jack Dorsey have taken an interest in NFTs, posting unique memories and artwork and selling them as securitized NFTs.
NBA Top Shot is a popular NFT use case
One of the most popular non-fungible tokens of the past few days is NBA Top Shot, a partnership between Dapper Labs (makers of the CryptoKitties game) and the National Basketball Association (NBA). Among other things, the NBA licenses individual highlight clips to Dapper Labs, which digitizes the footage and sells it to consumers. Each reel shows a video clip, such as B. A basketball dunk of a famous player, some with different angles and digital artwork making them unique. Even if someone makes a perfect copy of the video, it’s instantly recognizable as a fake. The company has generated $230 million in revenue and just raised $305 million in funding from a group that includes Michael Jordan and Kevin Durant.
These video reels are sold at premium prices. The most popular of these are:
- LeBron James « Cosmos » dunk: $208,000
- Zion Williamson Holo MMXX Block: $100,000
- LeBron James from Top Block: $100,000
- LeBron James « Throwdowns » dunk: $100,000
- LeBron James « Holo MMXX » Dunk: $99,999
- Steph Curry Deck the Hoops Grips: $85,000
- Giannis Antetokounmpo « Holo MMXX » dunk: $85,000
- LeBron James « From the Top » dunk: $80,000
These unique NBA moments are created and marketed through Pack Drops. The most common ones sell for as low as $9, but more exclusive packages can go for even more.
Now that you understand what NFTs are for and how you can benefit from them, let’s see how they differ from other forms of cryptocurrency
Why are NFTs becoming more and more popular?
NFTs have actually been around since 2015, but are now gaining popularity due to a number of factors. First, and perhaps most obviously, is the normalization and excitement of cryptocurrencies and underlying blockchain frameworks. In addition to the technology itself, there is also a combination of fan bases, royalty economics and the law of scarcity. All consumers want to seize the opportunity to own unique digital content and potentially hold it as some kind of investment.
When someone buys a non-fungible token, they gain ownership of the content, but it can still find its way on the internet. This is how NFTs gain popularity – the more it is seen online, the more value it generates. If the content is sold, the original creator gets a 10% cut, the platform gets a small cut, and the current owner gets the rest. Therefore, the buying and selling of popular digital assets has the potential to generate ongoing income over time.
Authenticity is the name of the game in NFTs. Digital collectibles contain unique information that differentiates them from all other NFTs and are easily verifiable thanks to the blockchain. Creating and distributing counterfeit collectibles doesn’t work because every item can be traced back to the original creator or publisher. Unlike cryptocurrencies, they cannot be directly exchanged for each other (like baseball cards in real life), because no two are the same.
