With the advent of the internet, the world has come closer. Digital media has evolved greatly allowing people to share a variety of things online, be it pictures, videos, audios, etc. Every day we wake up and see thousands of posts shared on social media. But what if we tell you that these social media posts can become digital properties?
You must be confused, let us clear all your doubts and confusion through this article. Well, it is true, now digital files can go on to become digital properties. How? Through NFTs. The internet was taken by storm when the founder of Twitter put an autographed tweet for sale as an NFT. And then there was an explosion of blockchain news about NFT token development, leaving everyone wondering as to what NFTs are.
What are NFTs?
NFT stands for the non-fungible token in a nutshell. NFTs are crypto assets that are used to track the ownership of digital items on the blockchain. These objects could come in any shape or form. It might be a video, image, or text, such as Twitter's founder's autographed tweet.
Non-fungible tokens can be seen as cryptographic certificates that certify the integrity and authenticity of the digital properties that one possesses. NFTs are evolving in tandem with the market. It is about establishing a platform that will allow undervalued items and supplied collectors to easily digitize their art collections.
The unique feature about NFTs is that they are not replaceable. You can trade a bitcoin with another bitcoin but NFTs are one of a kind. They are exclusive, if you exchange an NFT for another NFT, you will have a completely different NFT. There are several NFT token development companies out there that provide users with NFT Token Development services. Learn more about NFT token development companies.
Origin of the NFTs:
It all began in 2017 with the release of Crypto Punks. Crypto Punks are the first NFTs released by John Watkinson and Matt Hall on American Studio Larva Labs Ethereum Blockchain. Crypto Punks is a collection of ten thousand 24×24 pixelated uniquely generated avatars. In Crypto Punks no two characters are the same, each has its own unique feature.
Later in 2017, another non-fungible token project called Crypto Kitties went viral right after it arrived. Crypto Kitties generated an investment of $12.5 million.
Key Features of Non-Fungible Tokens:
The concept of non-fungible tokens is still very new and interesting. Find out some of the interesting key features of NFTs that are listed below.
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An NFT is not exchangeable
If you exchange a dollar or a bitcoin for another dollar or a bitcoin, you will eventually have the same dollar or bitcoin. NFT, on the other hand, is digitally stored exclusive art. So if you exchange an NFT (say music) for another NFT (another music), you will have a completely different NFT.
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NFTs can lead to digital art exhibitions
NFTs can help artists to buy food and pay rent, basically to sustain themselves. Through NFTs artists can sell their work to art enthusiasts internationally. And of course, we could have digital art exhibitions also in the form of nun-fungible tokens as artists can create NFTs out of their work.
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Artists can now set up their show hassle-free
Plagiarism and forgery are among the worst nightmares of an artist. And because of this fear, artists have to undergo the hassle of legal work in setting trademarks, copyrights and chasing royalties. Fortunately, blockchain technologies leave no room for forgery. So now an artist can set up their show without too much struggle.
Risks Related to NFTs:
NFTs indeed open a door to a plethora of new opportunities. But these opportunities are also accompanied by risks. Here are some of the risks you should consider before investing in non-fungible tokens.
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Valuations- The concept of NFTs is still in its nascent stage. This is why there is no sure shot conformity that demands for digital assets will be similar or rise further in the future. Also after purchasing an NFT if you realize that there is no market for it, you will end up paying an exorbitant price for something that is no more sellable or whose worth is depreciating. For artists who create their own NFTs, there is the risk of not finding a customer respective to the digital asset.
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Shortage- The sales of NFTs are recorded using blockchain technology, which establishes ownership. There are marketplaces and platforms like Open Sea and Rarible where real NFTs are created and kept. But if one fine day, these platforms and marketplaces shut, there is no assurance if you will be able to access the material or not. And if the booming NFT industry worries the administration, there are good chances that such platforms will be shut.
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Regulation- Non-fungible tokens are not regulated and the industry works on a high level of trust. While buying an NFT you must make sure that it is a unique, one-of-a-kind piece of art with no duplicate. Otherwise, you could encounter copyright issues.
Future Scope of NFTs:
Despite the risks and hazards, the NFT market reached $100 million in July 2020. So apparently non-fungible tokens have a bright future ahead. In fact, crypto experts and enthusiasts say that NFTs will be the entry point for about 40% of new crypto users.
As for developing countries like India that have millions of traditional artisans, NFT could prove quite fruitful. The artisans can get their original work verified and artists working in digital media can protect their creations with a tokenized ‘wrapper’ as proof of their original work.
To Buy or Not to Buy
The whole concept of NFTs is relatively nascent and emerging. Mainstream artists are by and by discovering this unique cryptocurrency called non-fungible tokens. With just the right knowledge and better data, you could invest in NFTs just like regular investments.
Now whether to invest in NFTs or not is largely a personal decision. It is worth mentioning that an NFT's worth is solely determined by what someone else is prepared to pay for it. As a result, rather than fundamental, technical, or economic indicators, which traditionally impact stock prices and, at the very least, constitute the basis for investor demand, demand will drive the price.
That being said, it is advisable to consider and weigh the pros and cons before you invest. In case you decide to invest in NFTs, do your homework, be aware of the dangers (including the possibility of losing all of your money).
