NFTs (non-fungible tokens) was beginning to garner some interest before the pandemic affected the world globally two years ago. After all, out of many a trying time in our world’s history, much innovation was born. Nowadays, gamers and creatives are discovering how to use this technology in a way that benefits them.
This is because NFTs are not only digital (which means they will always be able to be traced back) but are also genuine and guarantees that ownership will be attached to whomsoever it belongs.
This means influencers and creators of content in the digital arena cannot only put their work out there but own it and get money each time something is sold, giving them more control than ever before. And because the evidence is documented on a blockchain, there can be no question of who it belongs to.
What Is An NFT (Non-Fungible Token)?
They are assets of cryptography that exist on a blockchain. Each NFT has a special code of identification and configuration file to differentiate one from the other, so they cannot be replicated. NFTs are different from other cryptocurrencies in that they cannot be exchanged or bartered for anything of equivalent value.
In the real world, they can constitute items like real estate and pieces of art. NFTs are incredibly useful because it creates a space for content and creation to be traded, bought and sold in an efficient way that makes fraudulent activity near impossible.
A Little Bit Of History
Blockchain not only makes it near impossible to cheat or hack the system, but it also is decentralized. So, instead of one group, organization or individual making the decisions, the responsibility has shifted to a network of people – making everything to do with NFTs transparent and giving the power back to the creators. It came about so that there could be a monetary system that no longer belonged to a few that benefitted from it but rather allowed all to invest and monitor it.
Many are probably familiar with the first blockchain, Bitcoin. At last, there was a global currency to fit the rapid globalization of society that was occurring – easy, convenient, and, best of all, no exchange rates. Getting cryptocurrency is similar to exchanging dollars for another currency, except you use a verified and highly protected platform like Metamask.
As digital creations are dynamic, blockchain evolved to Ethereum – another cryptocurrency with the added benefit of a platform that gives developers a chance to execute ‘smart contracts’- code that attaches itself to any digital asset and verifies it is traceable and unique. This security is part of the paradigm shift that is NFTs. They all have ‘smart contracts’ attached, and they are to be understood as the commodities you can acquire by exchanging other cryptocurrencies, usually Ethereum.
Essentially, crypto is the new ‘money’, and NFTs are what you would buy with that ‘money’.
Why Are NFTs Important?
Firstly, efficiency in the marketplace. NFTs are representative of any physical or digital work or creation, streamlining the process of artist to audience. If this global community can purchase from a global marketplace, then the need for agents or places to house the work falls away. This puts more wealth into the hands of the people who have actually done the work. Connecting with an artist directly also spurs people on to purchase more – from the artist themselves.
Secondly, the formation of new markets and investment opportunities. Democratizing things like real estate or art by dividing it up into something that has different characteristics means people could own one piece of real estate that is completely different; for instance: one division could be on the beach, and another could be in a residential area. A painting could be digitally owned by many people, increasing not only worth but income revenues.