Marcel's guide to NFTs
NFTs seem to be everywhere, with people like Gary Vaynerchuk, Mark Cuban and artists
like Grimes getting behind the wheel and driving the hype.
But, what are NFTs? NFT stands for non-fungible token.
In economics, a fungible token is something that can be traded interchangeably, meaning it
can be traded with another thing and still retain its value. For example, a $10 bill can be
changed to two $5 bills, and they will have the same value.
A non-fungible token, on the other hand, is one that is unique and cannot be interchanged; it is impossible for two identical tokens to be the same or to have a value system comparable to the cash example. For example, the Mona Lisa is a one of a kind painting. It cannot be exchanged with another Mona Lisa. There’s only one Mona Lisa and that’s at the Louvre.
NFTs take the same concept of non-fungible assets and bring them to the crypto world. NFTs are digital assets that are non-fungible, and their ownership information is stored on the blockchain. It is like a certificate of ownership for a digital or physical asset.
How do NFTs work?
NFTs are basically made up of two parts. The first part is the asset which can be anything, a digital painting, song, a book, physical art or any other piece that has some value. The
second part of the NFT is the certificate of ownership, which is basically the thing you get to own. Both of these things combined make up an NFT. The certificate of ownership is stored on the blockchain, thus making it verifiable and transferable. As the token sits on the
blockchain no replication can occur. Most of the NFTs are powered by smart contracts on the Ethereum network, which makes them easily programmable and transferable.
When you are buying an NFT, you are buying a certificate of ownership, so if the digital
asset itself is not unique, the ownership of the asset is unique. It’s this distinction that has
generated both headline-grabbing sales and no small party of the controversy around NFTs.
Some famous NFTs
The NFT concept can be extended to any type of asset, physical or digital. However, digital
art is one of the fields that has dominated the space.
Musician Grimes sold some of her digital art for more than $6 million in 2021. The first tweet ever done on Twitter was sold for $2.5 million as an NFT as well. 3Lau, a producer and rapper, sold 33 NFTs of his work with some selling for millions of dollars. Beeple, a digital artist based out of the United States, sold a collection of his digital art for $69 million, making him the third highest selling living artist in a matter of months.
In the fashion space, NFTs are rapidly picking up with brands like Gucci showing interest in launching their own NFT. An event by the name of Crypto Fashion week was held in March. Hundreds of fashion NFTs by renowned brands were shown. Michael Arrington, the founder of TechCrunch and a crypto investor, is selling an apartment in Kiev using a non-fungible token (NFT).
Arrington bought the Ukraine apartment in 2017 using the real estate company Propy, which used Ethereum and smart contracts to complete the transaction. Propy will auction the same property as a real estate-backed NFT, demonstrating how the sector has grown in the intervening four years.
What I believe for NFTs in the future
NFTs have gone from an unknown phenomenon to mainstream in the span of a year, and
their popularity is not fading away any time soon. The NFT space promises a good future for artists and blockchain enthusiasts alike. The NFT rush has given artists a way to monetize their artworks in a way that was not possible before. It has also disrupted a $100 billion dollar arts industry that remained untouched by technology for a long time.
I believe that DeFi companies in general have a lot of potential, and that NFTs might be a
solution for mortgages and other financial contracts in the future. I'd even go so far as to say that in the future, NFTs may be a solution for mortgages and other financial transactions.
And it’s already happening. The property market is using NFTs as their next bet. With big names behind the concept, it can be said that NFTs might become one of the biggest trends in blockchain and crypto in the future.