The popularity of non-fungible tokens or Non-fungible tokens (NFT) has skyrocketed in recent months and, with it, the doubts surrounding this new phenomenon. For this reason and to clarify possible doubts about what exactly this concept is, in this article we explain what are NFTs and we anticipate its evolution in 2021. Want to know more? Keep reading!
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What are NFTs?
We could define a token as a “contract” in which it is stipulated that a person owns a unique and irreplaceable copy of a digital asset, with that asset. To ensure that the “contract” is safe and true, it is stored on a public network, which is technology blockchain. Being on the blockchain ensures that it is auditable and that if those buyers decided to sell said contract for owning a single asset, a follow-up could be done.
Material goods that can be touched and seen, such as stamps, works of art or jewelry, are often valued. Now, more and more, this is also done with intangible goods which, although we see it, are not material. Although the crypto-currencies approach this definition, the NFTs go further by applying this concept to oriented objects, in particular to the collection.
Unlike cryptocurrencies, NFTs are not interchangeable as they are unique, although there may be copies on the outside. However, an NFT can be sold to someone else. In addition, most of these “tokens” are written on the network Ethereum.
The relevance of NFTs comes from the fact that their origin can be assured by the introduction of a code in programming. This allows that if the work is sold to another owner, the transaction is recorded in that public network, which can be Ethereum or whatever, and the creator or artist will be remunerated with a percentage for each transmission of it. In this way, digital targets with many business possibilities can be uniquely represented.
Examples of NFT
As in the world of cryptocurrencies, tokens operate like something speculative. One of NFT’s most famous sales was made by famous American boxer and youtuber Logan Paul. A few months ago, he released 3,000 NFT of Pokémon cards and within days, he sold all the assets for 5 million euros.
The interesting thing about this action is the value these cards will have in the future, since in 2021, they cost 2,000, but it is estimated that in 2030, it could rise to 30,000.
Another well-known case is that of artist Mike Winkelmann, nicknamed Beeple, who sold his NFT “EveryDay – The First 5000 Days” in March for $ 69 million.
On February 19, the GIF of Nyan Cat or “Cosmic Cat,” arguably the best-known cat meme since 2011, sold for $ 500,000.
A few weeks later, Canadian singer Grimes sold a collection of digital works for over $ 6 million. But art is not sold only through TVN. Jack Dorsey, the founder of Twitter, has decided to sell his first tweet on the social network for $ 2.9 million.
Theft of NFT artwork
With the rise of TVN, digital art theft. At the end of March, the NFT platform Nifty Gateway reported the theft of all of its NFT collections being their hacked accounts, which triggered the theft of digital assets valued at $ 150,000 and the purchase of others through their credit cards.
The platform ensured that users who had been pirate for not having enabled two-step authentication. This is the main problem with tokens. Even if there is an original version of the artistic product, this does not prevent making several copies. However, there is only one original, the ownership of which is recorded on the blockchain.
How to do an NFT step by step
An NFT is simply the stamp we put on something to say it has one or more owners. We can do NFTs with everything, with music, pictures, with lands in a virtual field, etc. It’s a new way to verify ownership.
We can all create an NFT and the process is very simple. You just need to follow the following steps:
1. Scan a file
The first thing to do is scan a file. Although it sounds very complicated, we all do it on a day-to-day basis. For example, when we take a photo with the mobile, a screenshot, when we record an audio on WhatsApp, etc. We do something that surrounds us something digital. If we take a photo of a plant and upload it to a social network there, we already have an image with which, if we wanted to, we could create an NFT.
2. Register a “node” on the blockchain network
We could auction this image that we created so that someone could buy it from me for an ether’s value, for example. Remember that this contract that we put on the image to say that it belongs to someone, what we do is deliver the digital asset (image) with the seal.
In order to transfer this image with the seal to someone, you need to be in the blockchain network, which is the one that works. To do this, you need to register a node. It’s like registering your IP address on the blockchain network. Its associated cost is moderately low, currently varying between $ 19 and $ 40.
3. Mint or coin
Finally, once inside the network, all that’s left is to seal your digital asset, which is the process called knock or knock. This is currently a fully automatic process with many platforms. One of the platforms you can do this with is Open Sea.
How to measure the price of a TVN
To understand how the price of an DFT is measured, you need to understand where the value lies. It basically depends on three factors:
1. Rarity or rarity
When we speak of rarity or rarity, it is because the fact that an item is unique or that there are very few series of something gives it a lot of value. Imagine a Picasso painting. We have a unique print of a painting that was hand painted by Picasso. It is rare because only this painting exists, despite the fact that there are thousands of replicas. No matter how similar they are to the original, it does not give any value to the copies, since the value of the painting is given by the fact that it was painted by Picasso.
Therefore, this scarcity and rarity is what gives value to this digital asset.
Second, the utility of the asset must be taken into account. Maybe you are selling tokens for something that has value. For example, you can sell land from a virtual world, because this virtual world is a kind of game and people can do things in it. It has a specific use which is that you can later build a house or whatever you want.
In summary, if the token is useful, it will give it a value.
3. History of the property
Finally, the ownership history is also very important. If I created an image because I’m a digital artist, auction it off, and it’s bought by a very famous person you know, that will add a lot of value to the NFT as well.
If you’re trying to sell a digital asset, they can buy it from you, but surely you can’t give it the value you want because it’s not up to you.
The future of NTFs and the blockchain industry
This crypto art and non-fungible token or NFT market is expected to maintain the same growth curve despite the slight drop in popularity in recent weeks. Indeed, according to a study by the firm Invezz, nothing indicates that the NFT market is a bubble and the volume of operations is expected to reach 145 million euros by October.
It is true that the NFTs experienced a boom in the press for these large purchases that we mentioned above. There have been a lot of purchases which apparently may seem unnecessary to us. These large purchases are likely to stop because in the end it is a technology that is being born.
However, This is a great opportunity for digital artists to have control over asset ownership and that later they may have a greater royalty right. It’s a system that greatly benefits artists and digital content creators.
Besides what is happening with NFTs, blockchain technology and finance the decentralized have come to stay. Fairly significant growth is expected in the market and this will create a huge disruption in terms of accessibility and availability of basic financial products.
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