Non Fungible Tokens – The next big thing
NFT’s are risky asset categories at this point, but they will form the bedrock of the virtual economy – John Egan
Who doesn’t like a new fad? That’s what some say the NFT is, the next big bubble ready to burst. For the ordinary man, it might be one of the craziest things people have done but for the discerning few, NFT’s are the next big thing. Non Fungible Tokens are digital assets that are traded for millions of dollars. Be it a meme or a piece of art or something insignificant as a tweet or a Gif, these are selling like hotcakes. For the investing world, Non-Fungible Tokens are collectibles, which are diversified investment portfolios.
An NFT is a digital asset that works on the Ethereum blockchain and is similar to a cryptocurrency. They cannot be traded or exchanged due to their non-fungible property. But can be replicated on any blockchain. Though anything can be sold in a digital form as an NFT, there is a lot of hype around art and how it can be turned into a digital asset. They are like chattels.
Much like a cryptocurrency, the NFT works on the same model but it cannot be traded or exchanged with another NFT like the currency. They are individual tokens with additional information stored in them. As they hold value, they can be bought and sold like any other type of collectible. Its value is set by market forces. NFT guarantees exclusive ownership rights and the blockchain contains data on ownership. It allows the makers of these assets to monetize their creations as royalties which are transferred to them for each resale.
NFT is a unique token on the blockchain. The upside to having such an asset in the music industry is that it allows artists to connect directly with the global market and leads to lesser reliance on intermediaries. It also helps them connect with their fans directly. They can be bought over a variety of platforms and the buyer has to have an E-wallet specific to the platform topped up with cryptocurrencies. Apart from art and gaming, NFT is heavily onto domain names, gaming and slowly creeping into physical assets. The day is not far behind when land parcels and cars or homes are sold as NFT. The fractional ownership concept gives everyone an opportunity to be a part of the NFT brigade.
Though there have been talks of an Eth2 which is arguably cleaner and greener, the focus shifts to the amount of carbon footprint and environmental impact. I guess only time will tell if we are looking at a future with less detrimental bearing.
But the buildup and argument surrounding owning an NFT and having duplicates of its digital form ready to be downloaded and used is similar to gloating over the rights of owning the physical asset. My guess is only a connoisseur could tell the actual difference.
Authors – Benila Jacob, Jerrin Thomas