Non-Fungible Tokens (NFTs)

Published Date:10/10/2021

Published by: Jawad Ahmed Khan

Article no:49

Non-Fungible Tokens:

Non-fungible Tokens or NFTs are assets that can never be replaced by any other thing. They are very unique and one of their type. For example, the first video on YouTube. There may be millions of videos on YouTube but no other video can be the first video and, in this way, we can it as a unique and digital NTF. Similarly, the first post on social media platforms like Facebook or Instagram. The first tweet made by the owner, Jack Dorsey, “Just setting up my twttr”. It was published in 2006 and was easily viewable by anyone having internet access. But, with the popularity of the Ethereum blockchain, those five words got their real value, and this year, it was sold for 1630.58 ether which was about $2.9 million at that time.  And a piece of writing of The NY Times, the last word Irony, sold for nearly 350 ether, or about $975,000 if converted into dollars today. People prefer digital NFTs over physical assets.an original Picasso or even a piece of property, the buyers prefer a non-physical certificate of authenticity that can never be changed. Anyone can view a photo of Beeple college or laugh at expense of Brian or read an NYT article by Kevin but only a unique entity or person can boast the ownership of the unique characters living on the Ethereum blockchain that represent the genesis of each creation being acquired.

This uniqueness makes NFTs non-fungible. These digital assets can be traded to other cryptos. Some NFTs can be copied. For example, the tweet of Jack Dorsey. Anyone can copy those words but that one original remain unique and unreplaceable.

Features of NFTs:

·         The value of NFTs is based on what people are willing to pay.

·         The security feature is that unique data is added to digital work.

·         They can be purchased, sold, and traded to anyone but after a series of verification from the blockchain network.

Investing in NFTs:

One of the major risks in investing in NFTs is that like real estate or fine art, NFTs may lose their value, or may people stop buying them, or may it lose their popularity. There may be a boast in their value if people demand them. If an NFT lost its worth or people stop buying it, the token holder remains stuck in NFTs.

Environmental impact of NFTs:

NFTs have a great impact on the environment. An NFT transaction needs to be verified by the blockchain network which needs an enormous amount of energy to validate the encryption. The creation of an average NFT has a carob footprint of 200kg which is almost equal to driving 500 miles of a typical American gas-powered car. So, it gives an idea about the amount of energy required.

Common NFTs:

There are many digital assets that can be titled and treated as NFTs. Some common NFTs are discussed here:

Digital art:

Digital artwork is considered together with the first NFTs due to the ability of blockchain to assure the unique signature and ownership of NFTs. The artwork of Mike Winkelmann named “Everyday-first 5000 days”, also known as Beeple, was sold for $69.3 million in 2021.

Ticketing:

Tickets of some specific events are also a use case for NFTs. This is dependent upon the intimate relationship between the artist and fans.

Gaming:

The in-game assets can also be used as NFTs. The digital plots of land which are controlled by players instead of game developers can be used as NFTs.

Collectibles:

NFTs can also be digital collectibles e.g. physical cards collection in a totally digital form. In February 2021, LeBron James slam Dunk card was sold for $280,000 on the NBA top shot platform.

Music:

Blockchain networks have enabled musicians to produce and publish their work in the form of non-fungible tokens. It has given an opportunity to musicians and artists to monetize and encourage them to work and get paid for their work.

Memes:

Memes are one of the famous use cases for NFTs. Many memes have been sold online this way. The most famous dog meme generated a new cryptocurrency called Dogecoin.

Sports:

NFTs have also been used in sports. In 2019, NBA player Spencer Dinwiddie tokenized his contract so that others can invest in it.

Ending thoughts

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https://www.ledgerinsights.com/ftx-dolphin-partner-for-nft-marketplace/