What is a NFT?
NFTs, pronounced “Nifties”, are a means of creating any digital asset as a unique “original”. Because they use blockchain technology, it means that a NFT is traceable back to the asset’s original creator. You can think of it as a digital representation of that creator’s “signature” authenticating the asset as the original version. Before it was very hard to impossible to prove ownership of digital assets, endless copies could be made without know which one was the original. This is huge for the art world; finally it is possible to have provable ownership of a digital artwork.
Fungible v.s. Non-Fungible
NFT stands for ‘Non-Fungible Token’. So what is the meaning of a NFT? The Fungibility-part is relatively easy to understand. It means that two or more things are interchangeable. For example think of a cash banknote of 10 euro. It does not manner which one you receive or pay with: all notes are the same. They are fungible.
Items that are non-fungible on the other hand, have unique properties that make them different from another one in the same class. For example collector card X is different in both the way they look and possibly value than collector card Y. Or think about paintings, concert tickets et cetera. Two paintings are indeed both paintings, but are different in the way they are painted, by who, with a different technique and may differ in value when you sell them. Just as front-row tickets and back-row tickets for a concert are both tickets, but the former is generally more valuable.
The ‘token’-part means that all information about the artwork is put together in a so called ‘smart contract’ and exists as a token on a particular blockchain. Thus if you sell that token, you effectively sold ownership of that digital artwork to someone else, who now owns it.
What to use NFTs for?
NFT’s are applicable in a wide range of use cases. Some examples of where a NFT can be used:
- Collectibles: i.e. digital trading cards. A popular one are the NBA Topshots, built on the FLOW Blockchain.
- Gaming: you own the items you buy in a a videogame, or for example you buy some brand shoes in a store, and then you could receive a code to also use them in a videogame.
- Art: digital tradeable artworks
- Virtual Assets (metaverse, for example buying buildings or land in an online game)
- Tokenizing Real World assets: (for example OpenLaw created a system to trade real estate)
- Identity: (store, control and protect information in a flexible manner)
NFTs in the World of Art
In the context of art, creating a NFT (also called ‘crypto art’) of a digital artwork assures that is provably unique, scarce and only one person can hold ownership. You can just sell that particular artwork like you would have done offline.
NFTs have gained massive popularity in the media. The most famous example is “Everydays: The first 5000 days” by artist Beeply. It was sold for almost $70 million through an online auction by Christie’s.
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Last Updated on 06/02/2022 by Jeremy Timessen