Non-fungible tokens are the next big thing in the blockchain industry. And the wave is real and thriving. Will it ever rule the world? Read about the power of NFTs here!
Non-fungible tokens are the new darling of the blockchain industry, strongly favored by investors frustrated with crypto’s ever-frustrating volatility.
NFTs grant the power of artistic authenticity and is a literal dreamland for artists looking for how best to sell their work. For art collectors, it’s a brilliant way to support their favorite artists while stocking up on assets with the potential to skyrocket in the future. That’s why everyone wants to know how to buy NFTs!
But that’s a story for another day. Because now, you’re going to learn all about NFTs and what exciting promises they hold for future technologies.
Why the NFT rave in 2022?
Everywhere you go, people are talking about NFTs. On Twitter, Discord, and Facebook, thriving communities exist, distinct from the established crypto-speculating virtual gatherings.
While it’s true that you can make a handy profit in passive income from owning an NFT, the rave is more than simply that.
It comes from the fact that many people think NFTs are a scam!
Funny, isn’t it? Why should you pay top dollar for a PNG you could easily download, copyright-free, off the internet? If it’s about the image resolution, plenty of pixel-enhancing tools help you, along with the plethora of media editing apps.
Still, people continue to buy NFTs. And the investors are caught up in a frenzy, splurging on rare collections and fresh NFT mints by famous and upcoming artists.
So, should you be doing the same? Or, is this just some new wave that’ll die down after a quick boom-bust cycle?
And, perhaps, somewhere amid all the colorful digital excitement, is there something truly unique with the potential to rule the world? Let’s find out more!
First, we’ll do the basics.
What are NFTs?
Perhaps, you learned about it first from juicy bits of strange news, of people spending thousands and millions of dollars on “digital art.” Maybe, you were confounded when you heard about how the everyday collection was sold for nearly $70 million.
Either way, you’re not the first or last to be interested in this technology. And, to be at par with its reality, you have to know exactly what NFTs mean.
NFT stands for non-fungible token. The word “fungible” refers to any commodity that can be easily replaced with something similar. For instance, a one-dollar note is a fungible item. They’re interchangeable, as you can spend another person’s one-dollar bill to the same effect- one note has the same value as others.
An NFT’s the opposite. Each item is unique and cannot be interchanged. A real-world example would be certain priceless artifacts like the Rosetta Stone or the Igbo Ukwu artworks.
NFTs also differ from regular cryptocurrencies in that the latter is fungible. For example, one BTC in your wallet is the same as one BTC in another’s. You could do a switch, transferring the contents of the wallet, one to the other, without any market difference.
No two NFTs are the same.
Why does this have so much value if this is just digital art? How’s it created, and what technology does it run? Find out more in the next section.
How do NFTs work?
You can’t discuss NFTs without mentioning blockchain technology, as the two are interlinked.
Think of a rail track and a big train with many big coaches. If the hardened steel tracks represent the blockchain, the coaches are the items that ride on the widespread network of the tracks.
In itself, the blockchain is a decentralized platform of interlinked transactions, secured like never before.
When browsing, you use the centralized ecosystems of the platform to carry out tasks. For instance, any dealings you have with Amazon go through its servers. And everyone else accesses the platform the same way.
In a decentralized ecosystem, several independent nodes very your transactions by solving complex computational puzzles, for which they get a reward. This activity, called mining, forms the bedrock of Bitcoin’s blockchain.
More recently, it has become the norm to validate transaction blocks on the network by using tokens. But, this is a story for another day.
The point is that this complex, decentralized, peer-to-peer system is highly secure and has the potential to host more than cryptocurrencies.
As each digital imprint on the blockchain can be designed to be unique, it’s possible to make NFTs!
However, there’s an essential key ingredient involved: smart contracts. This is why and how NFTs sprung up from the Ethereum blockchain.
So, how then is it possible to own them or even create art on the blockchain?
Owning an NFT gives you exclusive rights to a piece of art on the blockchain. And, the rarer an NFT design is, the higher its price. The most popular NFT collection, Cryptopunks, is also one of the most valuable.
Anyone can mint art on the blockchain, as it offers better control over copyright than real-life copyright. You can transform a piece into a unique digital token if you pay the relevant fees.
Factors driving the NFT wave
Now, we know how NFTs work and how expensive they are. So, why are NFTs such a big deal? And what realities are driving this boom?
Many gamers are art lovers, and the idea of seeing their favorite digital characters and events immortalized as a blockchain token is almost too good to be true.
As artists, NFTs are an alternative way to publicize works, control distribution, and earn money.
With digital art a significant feature in modern technologies like gaming, AR, and VR, there’s even more potential for the growth of NFTs.
The promise of the Metaverse
The Metaverse and other web 3 technologies are based on NFTs. This is the very reason why they’re so potentially game-changing!
People are investing in NFTs not necessarily because of what it stands for but what they potentially stand to gain from it. However, what NFTs truly promise and hold are the keys to a unique virtual web technology that’s fast approaching, even if many can’t see it yet.
Yes, you heard right. Sooner or later, NFTs will determine many real-world activities. And, as their utility grows, so will the demand.
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