NFTs 101

From gaming to art collectables, NFTs are being greatly talked about and are certainly a rage nowadays. Here is everything you must know about NFTs, in the briefest manner possible, so that you don’t get left behind in the ever evolving world of cryptocurrencies and blockchain technologies.

NFT is an abbreviation for Non-Fungible Tokens. In order to understand what an NFT is, let us first go through the concept of fungibility.

Fungibility and NFTs

Fungibility is the property of an asset that allows it to be exchanged with a similar asset without sacrificing its value. To understand it better let us take the example of cryptocurrencies. Cryptocurrencies are fungible tokens, that is, they can be exchanged with a similar asset of the same value. If you have one BTC, you can exchange it with another BTC or in fact with any other n-number of cryptocurrencies that amount to equivalent value. So if you borrow one BTC from someone, you don’t have to return them the exact same BTC, you can instead return them the equivalent amount in any other cryptocurrency as well.

So a Non-Fungible Token is…

Well, non-fungible and cannot be exchanged with any other token of a similar value, so if you lend your NFT to someone, they will have to return you the very same thing that you lended them, they cannot return you another NFT of the same value.

NFTs are powered using the concept of blockchain and are usually built upon Ethereum’s ERC-721 protocol. However, recently the utilization of protocols from other blockchain networks can be seen as well. The information regarding each unique NFT is stored in an immutable ledger on the blockchain.

What makes an NFT precious?

NFTs are considered to be valuable because they are scarce. Although the artists or developers can create any amount of non-fungible tokens, they usually limit the number of tokens, in order to increase the scarcity and hence the value. They are usually indivisible into smaller units and are hence sold as a whole unit at once and hence, NFTs are usually sold in exclusive online marketplaces.

The most significant characteristic of all, is the uniqueness. The information regarding each unique NFT is stored in an immutable ledger on the blockchain, which is also a proof of it’s genuinity. Hence no one can create counterfeits of an existing NFT as all its properties and related information are already existing on the blockchain, in a static ledger, hence certifying that it is one of its kind.

Where all are NFTs being adopted?

Digital Assets and Collectables

The adoption of NFTs in the world of digital media has propelled them to mainstream popularity, and now, they are adopted into almost all forms of digital media and content be it music, gaming, art, memes and even photos. NFTs are the crypto world’s answer to collectable paintings and artworks. The total market size of NFT artworks and collectables alone was $490 million in April 2021.

The purpose behind converting them into NFTs is to handle both classic and contemporary concerns of origin and authenticity, as well as piracy, copyright infringement, and intellectual property rights. By making any form of media an NFT, an immutable and unique ledger is created and associated with the piece of work on the blockchain, which makes it a unique entity that has been registered under the name of the artist or owner and hence they can claim infringement of copyright and property rights, if someone tries to profit by creating counterfeits. Hence getting artists the due credit and profits from their digital creations. Earning royalties and profits from the widely circulated memes or images that get used without proper accreditation is one of the advantages digital artists gain through NFTs.

Some popular media NFTs are

1. Beeple’s photo collection “Everydays: The First 5000 Days”.
2. Grimes’ collection of ten digital assets, titled “WarNymph”.
3. Nyan Cat GIF, released on its tenth anniversary.
4. Jack Dorsey’s first ever Tweet.
5. Top Shot is an NFT marketplace where basketball fans can buy, sell, and trade NBA moments.

But the discussion of digital media asset NFTs cannot be considered complete without the mention of CryptoKitties, a popular game on the ETH-powered decentralised protocol allowing the collection, purchase, sale and breeding of virtual cats. This game perfectly captures the essence of gaming and NFTs.

Crypto art, as a collective, is truly revolutionary as people of any colour, nationality, faith, gender, or identity can engage in crypto art. It is accessible over the internet, may be purchased and seen from anywhere, and is unhindered by art dealers, censors, or intermediaries.

One unique implementation of NFTs is detection and prevention of identity fraud. Academic qualifications, medical information, and even our physical looks are examples of items that may be digitised to represent identity.

Concluding, it can be said that NFTs with their innovative concept can certainly be the future of copyright and property rights protection. With the overall worth of the NFT market greater than $2.5 billion, NFTs will continue to evolve and revolutionise and see their implementation in various new fields.

If you’re interested to read more on these technologies, you can check out Kryptopedia.