Non-fungible tokens (NFTs) are pieces of digital assets that are carried on the blockchain network. This is the same network that underpins cryptocurrencies such as Bitcoin, Ethereum and others. NFTs are however different from cryptocurrencies in that they cannot be exchanged with other items of the same value. Game items, pictures, art, music, and movies are popular NFT collectible items. Since 2014 when NFTs first hit the market, they have been rising in popularity, especially after covering items that are rare and collectible.
However, unlike other arts on the market, the owner of NFT is not necessarily the copyright holder. This right is reserved for the original creator of the digital asset. In fact, the copyright holder is entitled to a loyalty every time his piece is resold. The information about this is stored with the token on the blockchain.
Features of NFTs
As we mentioned above, NFTs are collectible items whose original copy has been kept secure in a blockchain. Below, we will explore the main features of NFTs
- Uniqueness. Each NFT has unique attributes that are very different from the other. The attribute on each NFT must be included in the token information. However, it is important to note that copies of NFT available online will carry identical features as those of the original piece.
- Fraud resistant. The way NFTs are designed to operate makes them fraud proof. This means that it is very hard to get duped when buying NFTs online. Also, the transaction takes place over a network of computers and that is what makes it hard for fraudulent people to have their way with these tokens.
- Scarce resource. When it comes to NFTs, the original file is stored in a blockchain. However, it is important to note that the certificate of ownership is available over many different networks. With such information, it is easy to identify the owner of the NFT.
- Indivisibility. Unlike other cryptocurrencies in the market, it is not possible to break down NFTs into smaller units. Similarly, you cannot buy a unit of NFT as it is sold as a unit.
- Clear ownership. The ownership of NFT is very clear. Whoever owns the token owns the NFT.
Why NFTs are so important
As we mentioned above, NFTs are derived from the idea of cryptocurrencies. Technology has created a platform for people to tokenize digital items. This framework allows people to sell, buy, and prove ownership of NFTs on the same platform. The good thing is that this information is available to everyone.
NFTs also come as a digital representation of physical assets. To appreciate what NFTs are all about, you need to appreciate the value that they bring to users. Read on to understand the benefits of NFTs.
Enhanced security to all user
There are many risks that are associated with trading in artwork. Many people have been duped when purchasing artwork in the regular market. Web 3.0 offers a variety of new opportunities to users. One of them is NFT domains which allow users to verify the ownership of an artwork even before they make a purchasing decision. The blockchain network also allows users to transact on NFTs with safety and confidence. And although NFTs can be copied and duplicated on the internet, there only exists one original copy.
Many artworks are prone to fading, weathering, censorship, and even decay. But fortunately, digital files stored on the blockchain network are protected from all these elements. In addition, the NFTs framework allows people to move assets of immense value across the globe.
Open and authentic transactions
When dealing with an art object online, there is no way of verifying whether the copy is genuine or not. Fortunately, NFT has provided a reliable platform that allows people to add attributes on ownership and authenticity of a digital item. Also, the platform allows users to verify NFT transactions to ensure authenticity and scarcity.
The verifiable transactions also allow users to follow up on different editions of an NFT. For example, the popular NFT capsule house has four different editions. Fortunately, the NFT platform allows people to make a follow up on each tier of the capsule house.
Accessibility
Since the onset of the coronavirus pandemic, the world has started embracing the idea of working remotely. This trend is encouraging people to go digital whereby instead of putting their art on a wall, they can share it digitally by posting it on a crypto wallet. This allows users to view the work on their computers and smartphones as both 2D and 3D images.
Creators can earn royalties and bonuses
The NFT framework also allows the original creators of the digital item to earn royalties and bonuses from the sale of their creations. But unlike in the physical market where the real owner of a piece is susceptible to exploitation by brokers and agents, the NFT platform ensures that the original creator is protected. You will always find information on the amount of money that should be given to the creator in the form of royalty, every time the NFT is resold. The good thing is that the payment is apportioned automatically.
Many artists and creators today love NFTs because of this benefit. In fact, the NFT system has become a blessing to them since they can now generate a passive income from their work. A perfect example is Jack Dorsey’s first ever tweet that was sold for $2.9 million as an NFT (source: complex.com). This earned Dorsey a decent royalty.
Easily composable
Another benefit of NFT is that they are easy to compose. With this advantage, creators are able to develop and improve on the already existing pieces. For example, if a creator comes up with very successful NFT items, another creator can introduce accessories for the same. This creates more opportunities for other creators.
Easy proof of ownership
NFTs allow one to trace the ownership of a digital asset to a single entity. With this, people have an easy way to authenticate pieces of art online. An important thing to note is that unlike cryptocurrencies, NFTs cannot be broken up into smaller pieces and thus, cannot have multiple owners.
The easy proof of ownership ensures that buyers will not be duped when buying NFTs. This is because they have a reliable way to prove ownership of NFT. And although you may find copies of NFT online, you can never be the owner unless you purchase the original NFT copy. A perfect example is the famous Monalisa painting. Although there are many copies of the painting in existence today, there is only one original Monalisa piece.
When you acquire an NFT, you get full control over its value. This means that the platform has changed the way you own, control, and manage digital assets in the global environment.
Conclusion
The NFT platform has transformed the way people exchange digital assets. With this platform, musicians, artists, painters, designers, and athletes have more ways of earning an income. However, it is important for one to learn how NFTs work so that they can reap the maximum benefit from them. NFT items on the market have earned creators millions of dollars from their work (source: theverge.com). With this, NFTs have expanded the market for artists, musicians, and sportsmen alike.