NFTs – Virtual World, Virtual Currency, Virtual Art, Real Value!When the market sentiment was swinging wildly in favor of the crypto community back in 2014, people ...
When the market sentiment was swinging wildly in favor of the crypto community back in 2014, people started speculating whether this cryptocurrency will ever get used in the virtual world?
Eventually, they figured out the way.
NFTs (Non-Fungible Tokens)
Unique, distinguishable tokens with proof of ownership stored over a blockchain, usually Ethereum!
Fungibility means that one piece of a financial instrument is identical to another instrument of the same kind & same value and can be used interchangeably.
Just like a currency note of $100 getting exchanged between Harry Potter and Ron Weasley in the muggle world
But their wands and broomsticks cannot be exchanged in the wizarding world because they are non-fungible.
So, it depends on the creator to make only one Nimbus-2000 or hundreds.
And in the blockchain world, they will all be stored in a verifiable time-stamped fashion. To put it plainly, the scarcity & popularity of NFTs drive their value upward.
You can sell and breed virtual kittens like Cryptokitties, list tweets for sale, Pokémon cards, digital art, song, videos, and whatnot? (Original www code is now minted as an NFT too, just putting it here for no good reason!)
No doubt, most of these files are available on the internet, and you can just go and copy-paste or download them, but owning the real thing is very much ethical while also providing a sense of ownership, not of a user.
So, if you are to own an NFT created from the collage of pictures captured by Nasa’s Perseverance Rover, then you might not actually own a piece of Mars, Rover, or Nasa for a fact, but you will surely earn yourself a place in the history.
To put it more bluntly — an NFT gif of a fungible token DOGE has been recently sold for just a shy of a million dollars, and an NFT of the iconic DOGE: The Shiba Inu Dog had been sold for a whopping (1696.9 ETH), roughly $4 million at that time.
So, as you can see, it is time that the power rests with the creators again, not the platform.
With NFTs, creators don’t have to post their content on stupid platforms such as Instagram and pride themselves with the audience in revenue, not real money.
Also, agencies, middlemen, and so-called custodians of art (Galleries) can all take a backseat as they don’t call the shots anymore. So no longer withheld payments for 90 days and follow-ups! Also, creators can earn loyalty whenever their work gets traded on the blockchain. So their incomes need not be limited to the initial sale.
With NFTs, get paid to do what you love, instantly.
NFTs get stored on the same blockchain that fungible tokens do, only the coding standard is different; for the Ethereum Smart Chain, it is ERC-721, for the Binance Smart Chain, it is BEP-721, for the TRON Blockchain, it is TRC-721. And for fungible tokens, it is usually ERC-20 (Like ETH) and replicas.
The coding standards ERC-721 and ERC-1155 are built as the successors and superior to the ERC-20 standard and can store more information than the latter.
Also, there can be a scenario in a game or something, wherein some of the collectibles in the game are fungible tokens like in-app coins & arrows, and other collectibles are non-fungible, like avatars & swords, then usually ERC-1155 and BEP-1155 protocols get invoked.
Naysayers always say that why put so much money into something that will only stay virtually and is susceptible to hacks, then let me remind them that their fav painting can get stolen too and the money that they pride sitting as a number in their net banking page also gets stored in a centralized bank, wherein thefts, bad loans, and other scenarios always find a way.
So, in my opinion, you should pay for an NFT, just like you pay to watch a film whose pirated download link is available on Telegram hours after its release. That’s how you incentivize the creators and pay your respect, not by downloading and passing it as one’s own or bragging in front of your friends for the meticulously smart heist that you were somehow able to pull off.
No matter how regular it has become and whether we give credits or not, it’s still not right.
If you like something, then pay for it; as simple as that!
Also, the original paintings of Picasso are worth millions, whereas its replicas are worth peanuts. So yeah, ownership matters; consumption, ahh, not so much!
Let us now look at how Artists and buyers are interacting with NFTs -
Let us assume that there is a brilliant avatar that you have created, now put it up for sale along with the royalty percentage that you want for the event that this piece of art changes hands; the platform such as OpenSea, Rarible will take a small fee, i.e., 2.5%, and boom, you hit the jackpot. No beating around the bush.
I’m a buyer
Own a verifiable piece of work, use it or trade it for a better price in whatever fashion you deem fit. And most importantly, pass it off as your own.
Remember, it depends on the creator to mint a standalone work or a bunch of these in one shot; afterward, even they won’t be able to mint the same again and list the same for grab.
The major challenges that NFTs currently face are lack of awareness and intrinsic value proposition, which we have associated with commodities, courtesy, our years of futile academic credentials.
People still raise eyebrows when someone pays some dollars for a piece of a picture on Getty Images, so imagine the frustration they will have when that goes for millions on the blockchain.
Hence, the easiest comeback is that NFTs are for ultra-rich who are putting up a price on something, which is practically not visible to the naked eye.
Bitcoin faced the same criticism, and look where we are now; a trillion-dollar crypto ecosystem.
Nevertheless, some are even making NFTs of something, which they don’t even own as the artist is blockchain-challenged, unaware, or doesn’t care.
E.g., Making an NFT of a small section of a YouTube video without obtaining permission from its creator; when the section gets sold on the blockchain platform, the original creator would not be able to know why a certain someone owns a part of his video, without ever giving him any money.
Hence, make sure that the seller owns the piece of NFT and original creation by performing basic background research before clicking on purchase.
So far, we have learned that NFTs can be anything, from digital land to artifacts, from crypto kitties to newspaper articles, from tweets to music videos, and more.
However, one problem is persistent; NFTs come down hard on the environment, be it high electricity uses or significant greenhouse gas emissions, which is why many people are still hesitant to use them.
Developers are trying to fix that with each passing day; let us see the amount of success that they get.
Also, bit rot (Code becoming obsolete and hardware and software cannot interact with that), blockchains & websites going down and forgetfulness related to private keys, and many other factors come into play, so all I can say is that there is a lot of scope for evolution in the NFT space for now.
However, an important fact to consider here is that physical commodities face wear & tear issues and n-number of times, transportation issues too; here, it’s all done using a bunch of clicks here and there.
Also, there are attempts by several big players to link NFTs to physical objects to establish provenance records.
Nike’s CryptoKicks running on blockchain and Infinite by Suku using the Hedera Hashgraph Network are pioneering examples of innovation in that space.
Irrespective of whether the NFT gets deployed on the Ethereum Blockchain or Hedera Network for that matter, it can be traded on an exchange using the supported cryptocurrencies, not only with native currencies like ETH and HBar.
As of now, it’s best to buy an NFT using a non-custodial wallet such as MetaMask and let the bids pour in.