With the meteoric rise of cryptocurrencies and decentralized finance technologies worldwide, there has been a considerable amount of innovation in the blockchain technology space. This has also led to many new terms, such as the Metaverse and ICOs, but one such buzzword stands out in particular, NFTs or NFT art. If you’re asking, what is NFT? Here’s your answer!
NFTs took over the world by storm as the next new thing or the next big thing in this time of crazy and short-lived trends. NFTs have been bought and sold continuously since last year, more after the cryptocurrency bull run rally in the early months of 2021. Most importantly, many of these NFTs are being sold at skyrocketing prices, making NFT a sector of its own within the blockchain world.
But the real question is, “Are NFTs just a quick fad passing us by, or is it on its way to becoming a part of the future reality?
What is NFT, and why is it trending?
NFTs or non-fungible tokens can most simply be understood as a digital entity or a file coded onto a blockchain. This method gives that NFT a unique code or a signature that confirms its originality or authenticity from its replicas. You could think of it as a digital item that can be created based on a unique digital file such as a song or an image file or a physical object such as an autographed poster or a baseball card.
This makes an NFT unique from any other digital file available online, with proof of authenticity, and makes it easy to track, trade, and check ownership of.
What makes them valuable?
Imagine you found an old limited edition comic from the ’50s that belonged to your grandfather. What would you do? You’d take it to a valuator who’d value is based on its demand and other factors. If it is a valuable collectible, it immediately shoots up in value and is then auctioned to the highest bidder, despite being a simple old comic. Similarly, there are a lot of unique, special items online that can’t be replicated. For example, an NFT of the poster of one of the codes written by Tim Berners Lee, the father of the internet.
Fad or future?
Almost every conversation about NFTs and NFT art includes the tulip bubble phenomenon, which may lead you to believe it is another such bubble based on erratic demand and supply mania. But there’s a lot more to it. But the real logic lies in the fact that NFTs are the first-ever real breakaway product of the cryptocurrency world. Meaning that their value is not directly linked to or affected by the price of any given cryptocurrency. This makes a highly plausible argument that NFTs can hold their value pretty well, whether the bitcoin price is booming or sinking.
Do NFTs serve a real purpose?
While the NFT world is still in its initial development phase, and there’s still a long road ahead, the answer could be a yes. As you have already seen, NFT art is one of the most trending actionable, and you can buy many on an NFT marketplace like Opensea, so raising money through them becomes a great use case.
But there’s a lot more to NFTs regarding real use case possibilities. Let’s take a quick look:
Heard of Axie Infinity? A leader in the blockchain and cryptocurrency-based gaming world that has given a bullish push start to the crypto play to earn economy. Play to earn was a fringe at best before it, but Axie, an NFT-based gaming player, has brought it on the frontlines of the gaming world, bringing a start to the whole NFT games trend-based economy subset, projected to boom in the future years.
The fashion industry has always been big on trends and never fails to capitalize on such trend booms. Fashion houses are already blending crypto and NFTs into physical apparel, and the overwhelming response is proof of success. A household name in luxury brands, Dolce & Gabbana, has already dipped its toes in the NFT waters with its 9-piece NFT collection “Collezione Genesi,” which went for USD5.6 million. Many other trendy apparel brands have sold out NFT-based collections with raging success, and the collaborations seem to be just at the beginning.
DeFi tech and financing
What would you do if you almost went broke bidding for a super rare car signed by a celebrity? You take it to the bank and take out a small loan and pay it back later, right? With the soaring value of NFTs, they are now being treated similar to physical high ticket collectibles such as a Rembrandt painting. You can hand over your million-dollar NFT to an NFT financier as collateral, and if you default, smart contracts can transfer it to the financier in minutes!
Imagine a concert with tickets as NFTs. The benefits are many and simple. You pay with crypto or fiat to get a ticket NFT.
- The ticket becomes super easy to verify and validate
- You get a unique artwork to keep the ticket as a memory
- Use the same NFT to pay for food and drinks at the concert
- The money collected from the NFT automatically pays off all the staff and performers
- If the performers’ popularity goes on a bull run, who knows? You can even sell the ticket NFT on an NFT marketplace to make more money!
No end to possibilities!
The possibilities are limitless. There’s the NFT-based Metaverse and virtual land and digital identity! All these use cases are just a very few of what’s popping up in people’s minds in the crypto innovation space. What’s more to come? Only time will tell. But one thing’s for sure over the next few years, NFTs will take over the world by storm.
Will you wait and watch? Or pony up some money to buy an NFT yourself? Or design one and sell it for a million bucks? It’s all up to you.