Since the beginning of 2021, the hype around Non-Fungible Token (NFT) hasn’t stopped growing for a second. What’s more – even experts can’t agree if NFT will revolutionize investing forever, or, in contrast — it’s an air bubble that will explode sooner rather than later.
What is NFT? How is it related to cryptocurrencies and the Blockchain technology? Is it worth the money? We’re about to find out in the next few paragraphs.
NFT in a nutshell
The abbreviation stands for “non-fungible token”. It symbolizes a digital asset/token representing real-life objects (a piece of art, music, video, etc.). NFTs basically allow us to tokenize (= buy and sell online) unique items. That’s why most celebrities and content creators just can’t have enough of it.
Who’s the inventor of NFT?
His name is Kevin McCoy, an American entrepreneur and digital artist. He created history’s first NFT on the 3rd of May 2014. It’s called “Quantum”. That was long before the hype around the crypto art market.
What is the difference between NFT and cryptocurrency?
There is a single similarity here – both are built on the same programming software.
While the euros in your pocket and all virtual money (Bitcoin, Ethereum) are “fungible”, meaning they are being traded or exchanged for one another (i.e., 1 EUR = 1 EUR; 1 ETH = 1 ETH), NFTs don’t function this way. Each of them owns a digital signature. It cannot be traded or mutually interchanged, because the items it represents have unique properties.
NFT in depth
Let’s dive into the essence! Each non-fungible token is recorded mainly on the Ethereum blockchain, but other blockchains support them, too.
Moreover, the list of unique tangible and intangible items that can be represented by an NFT is endless, including fine art, music and videos, GIFs, Michael Jordan’s designer sneakers, video games, social media posts…and even a human brain that’s being “downloaded” and turned into Artificial Intelligence.
Fun fact — Jack Dorsey, the co-founder of Twitter, managed to sell his first ever tweet as an NFT for US $3 million. Meanwhile, Paris Hilton – the ultra-rich media personality – successfully sold a picture of a cat for over $17 000 worth of ETH.
To sum up: the non-fungible tokens give you the opportunity to be an exclusive collector of unique things, but only digital. So, for instance, you don’t get an actual oil painting, but a digital file instead and absolute ownership rights because an NFT can have just one owner at a time.
As everything is recorded on a public ledger, it is possible to track the art to the owner and the initial date of publishing.
NFT’s practical usage
Based on what has been previously said, NFTs and Blockchain allow artists and digital creators to monetize their possessions. If they can no longer depend on e-com marketplaces, art galleries, and auction firms to sell their art, NFTs are a cool opportunity. They skip the middleman and make a greater profit. They will also receive an interest whenever their art is sold to someone else.
Another usage of NFT that’s gaining more and more popularity, is for secure and transparent charity fundraising. As an example, Edward Snowden, President of the NGO “Freedom of the Press Foundation”, auctioned off an NFT which raised about £3.8 million in April this year.
Should we all start purchasing non-fungible tokens?
That’s a hard one and just the time will tell. Nevertheless, one thing is sure — there is a massive boost for mainstream adoption, and loads of big players, such as Formula 1, Ubisoft, Samsung, Louis Vuitton, are also getting involved.
The telecommunication giant, Vivacom, for instance, created an AR game where the players hunt down NFTs around Central London.
Since 2021, Nike has a patent for NFT-based shoes that could be traded and transformed into physical footwear.
The bottom line – do your own research, join a couple of online expert discussions, and weigh the risk. If the whole craze around NFTs sounds adequate to you, there are limitless themed marketplaces where you can start buying (once you’ve got a setup wallet and funds).
Find out what are the best NFT wallets for 2021
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