Non-Fungible Token (NFT)

As a digital artist, Tim created a physical photo of his work to create an NFT. He chose his skull design because it suited the idea of a collector’s item. The idea was that we would release 100 of these NFTs, one for each of the different embossed Word editions. If there are 10 of each NFT, then one would make the others rarer for each other NFT. Sources: 4

NFT creators could create shares of their NFTs. This would allow investors and fans to own part of an NFT without having to buy the whole thing. It would also create more opportunities for NFT coin makers and collectors. This is not difficult in the Ethereum world, as NFT and DeFi share the same infrastructure. Fractionalized NFTs can be traded on DEXs like Uniswap, but not on NFT marketplaces. Sources: 3

NFTs can democratize investments by fractionalizing physical assets such as real estate. It is easier to divide digital property assets between multiple owners than physical ones. Tokenization ethics need not be limited to real estate; it can be extended to other assets, such as works of art. Sources: 1

Decentraland, a virtual reality platform on the Ethereum blockchain, implements this concept. As the complexity and integration of the NFT into the financial infrastructure increases, it could become possible to implement the same concept with symbolic plots of land that differ in value and location from the physical world. Sources: 1

The intended scarcity of an NFT is a matter for the creator. The creator intends to make the NFT unique and therefore create scarcity by producing several thousand replicas. NFTs receive a royalty to their creator when they are sold. This is an evolving concept, but one that could be very effective. Sources: 3

A start-up lets people use their NFTs as collateral for loans. Silicon Valley investors say the opportunities to make money in the NFT world are limitless. Tens of millions of dollars in transactions have already flowed, and NFT enthusiasts say the platform could expand beyond trading in art, music, video clips and memes. Digital artists can build on their Nets royalties for future sales, and many artists see the platform as a promise because it eliminates middlemen and opens up new ways to make money. Sources: 7

The Ballyhoo around NFT appears to be similar to the hyped phenomenon known as Bitcoin. People are enthusiastic about one and tend to be interested in the other, which tends to be technology-related. If you are thinking of buying from NFT, or if you want to talk about it, you should know what you need to know. Sources: 2

A non-fungible token (NFT) is a piece of digital content linked to the blockchain, the digital database that underlies cryptocurrencies such as Bitcoin and Ethereum. An NFT asset is fungible, which means that it can be replaced in exchange for an identical value, such as a dollar note. NFTs, on the other hand, are unique and non-interchangeable, meaning that no two NFTs are the same. Sources: 6

Buying an NFT means buying a hacker-resistant, public proof of ownership for a particular digital asset. They cannot be pirated, and their origin gives value to the non-fungible symbol. The basic concept of a non-fungible token brings together the worlds of digital assets, securities, and cryptocurrencies. It is a digital good with a certificate of authenticity and legal rights in one. Sources: 2

An NFT is a token that allows us to represent ownership of unique items. It allows us to symbolize things like art, collectibles, real estate, etc. An NFT always has only one official owner, it is secured by the Ethereum blockchain, and no one can change ownership by copying a new NFT. Sources: 3

In a boring technical sense, NFT is a unique symbol in the blockchain. That’s part of what makes it so messy. It is like Van Gogh: there is no definitive, actual version, it is like trading cards where there are 50 or hundreds of numbered copies of the same work of art. If people treat NFT as if it were the future of art collecting (read: a playground for the mega-rich), or treat it like a Pokemon card, it will be more accessible to ordinary people than the playground of the mega-rich. Sources: 5

To put it in terms of collecting physical art, buying Monet’s is like printing. You can copy a digital file as often as you like, including the art contained in the NFT. The NFT is designed to give you not only a copy, but ownership of the work, as the artist retains copyright and reproduction rights to the physical work of art. Only one person can own the original. The shades in the Beeple video are not Monet’s. Sources: 5

In March, a work of art that does not exist in physical form was auctioned at Christie’s in the first auction in a major auction house. Created by digital artist Beeple, it sold for $69.3 million (50.3 million euros). A week later, digital artist Pak sold a total of 16.8 million dollars (12.2 million euros) online at Sothebys, including an image of a single pixel that sold for 13.6 million dollars (987,000 euros). Skeptics are not convinced that there is any reason why investors would be willing to part with their money. Sources: 4

An artist named Krista Kim sold a virtual house called Mars House, created in NFT format, for $500,000. A pizza shop in Los Angeles has given a lucky owner an NFT, which translates into a free cake for life. Sources: 2

Although blockchains were originally designed to support fungible assets such as Bitcoin and other cryptocurrencies, they have evolved to allow users to create a special type of cryptocurrency that is non-fungible, i.e. unique. An NFT is like proving that your copy of a digital file is original by owning an original painting. When you pay for an NFT, you get the right to transfer it to your digital wallet. Blockchain-based, most NFT blockchain offerings support the ERC 721 token standard, which allows NFT creators to gather information about the relevance of their digital artifact and store it as tokens on the blockchain. Sources: 0

Nonfungible means that you cannot exchange it for things of equal value. An NFT is called a currency unit in the blockchain. A gold bar can be exchanged for another gold bar of the same size. A $10 note can be exchanged for two $5 notes. But NFTs are unique. Sources: 7

The ERC-1155 standard takes this concept further by reducing transaction and storage costs by requiring NFTs to be grouped into several types of non-functional tokens in a single contract. Developed by the same people responsible for the Smart Contract ERC 20, the ERC 721 defines the minimum interface, ownership details, security and metadata required for the exchange and distribution of tokens. Sources: 1  

Cited Sources