Non Fungible Tokens (NFT) are the new rage in Cryptocurrency

NFT: The New Rage in Cryptocurrency
At a Glance

Though Non Fungible Tokens (NFT) have been around for a few years now, it is only now that they are finding applications in various new fields, including cryptocurrency. Cryptocurrency has been in use for some time now, but with the rising popularity of NFTs, the crypto-world is witnessing a renaissance of sorts. To know more about the different applications of NFTs and how they are leading the cryptocurrency revolution read on!

Bitcoin is a very exciting development; it might lead to a world currency. I think over the next decade; it will grow to become one of the most important ways to pay for things and transfer assets.

Kim Dotcom, CEO, MegaUpload

Beeple just sold one of his creations to the tune of $6.6 million through non-fungible tokens, and a re-created GIF of Nyan Cat went out for 300 ethereum, or $600,000. So what is happening? Ever since its inception, blockchain technology has captured the imagination of millions worldwide. After cryptocurrency, NFTs are touted to be the next big application of blockchain technology. NFTs, or Non-Fungible Tokens, are a new type of digital asset that cannot be duplicated and are recorded on a digital ledger. But why millions of users worldwide are going gaga over NFTs? What difference are they going to make to blockchain technology? Let us start with the basics.

What are NFTs?

The term fungible refers to something that can be easily interchangeable. As the name Non-Fungible Tokens suggests, we can easily understand that we are talking about a type of token that cannot be replaced by another similar token.

A Non-Fungible Token (NFT) is a new type of digital asset that represents something unique.  It has an individual characteristic that sets it apart, and this uniqueness helps it generate value. It can be used to represent both tangible and intangible items. Now, whether it be arts or sports memorabilia, people across the world are spending millions of dollars on obtaining the ’ownership’ of various types of ‘digital assets.’

The proponents of NFTs say that these tokens will help the creators of digital content get the right value for their work. On the other side, the critics tout it as another speculative crypto frenzy that will eventually fizzle out. Let us look at the various aspects of NFTs and how the future might turn out to be.

Bitcoin and NFTs: Competitive or Complementary

On the other hand, assets like Bitcoin are fungible. They are all the same and are completely interchangeable. Meaning, two individuals holding a Bitcoin can easily exchange them. As both the Bitcoins here are a replica of each other and hold the same value. However, unlike most cryptocurrencies, no two NFT’s are identical, even if they exist on the same platform. This means that they cannot be directly exchanged with one another. They are like pieces of art with unique characteristics. In simple words, Bitcoins are just digital assets while NFT’s are unique digital assets, with each token representing a unique digital value.

Like Bitcoin, ownership of NFT’s gets recorded on the blockchain. When you transfer a

Bitcoin to someone, a ledger entry is made. Similarly, when you transfer an NFT, the code representing the NFT also gets transferred on the blockchain. When an NFT is created, it is immediately time-stamped and put on the blockchain. This makes digital ownership amazingly simple and easy to identify. For example, if you hold a virtual piece of art, you can easily create a Non Fungible token to tokenize your artwork. This NFT now owned by you reflects your ownership of the artwork. This is non-interchangeable simply because your artwork is unique and is stored on the blockchain as your property.

History of NFT

History suggests that NFT’s have been around for a couple of years now. Colored Coins were perhaps the first example of NFT’s. The next hint of NFT’s was seen in the Counterparty, which had numerous projects and assets, including trading card games and meme trading. Later, in 2017 John Watkinson and Matt Hall created unique characters which were generated on Etherium blockchain. These characters were limited to 10,000, and no two characters were the same. They called this project Cryptopunks. Cryptokitties in October 2017 had NFT’s hit the mainstream. Cryptokitties brought virtual cats on the blockchain. It was a blockchain-based virtual game that allowed players to adopt, raise and trade virtual cats.

But it was not until very recently that the market began to take off again. Graphic designers, 3D designers, and music producers find new platforms to showcase their work, and investors are looking for new places to allocate their capital. The crypto art movement has given power back to the creatives. About 40% of humans collect things like shoes, artwork, wine, etc. A whole bunch of psychological reasons can explain why. Some people need to add to the collection or even just for investment purposes. But we could only collect things in the real world because digital collectibles were too easy to copy.

NFT: Revolutionizing the Cryptocurrency world

Today’s blockchain allows us to make digital collectibles with a record of who owns what so that you cannot copy. Meaning, there could be many replicas of the same digital art, but only one holds value. This is having the normal people participate in the crypto market.  NBA Top Shop, for example, makes it extremely easy to show off moments. Everyone has a page, and you can post your collectibles which anyone can view.

Logan Paul recently started normalizing NFT’s. He gathered more than $5 million by selling Pokemon-inspired NFT’s of himself for one ether each. This process made 6 million followers of his awareness of this platform. Anthony Pompliano, the co-founder of Morgon Creek digital assets, put “The Innovator’s Dinner” on auction for a whole 639 ether, which accounts for more than $1 million. This was an interpretation of Da Vinci’s “The Last Supper” in which Jesus Christ and his apostles are substituted by the luminaries of industry and pop culture such as Beyonce, Steve Jobs with a drunk Michael Jordon in the background.

Musician Mike Shinoda of Linkin Park and Fort Minor has released NFT’s of his new single,  “Happy Endings.” Canadian Musician Claire Boucher sold $6million worth of digital artwork very recently. A total of 10 artworks were put up on auction. ‘Death of the Old’, a video bagged the highest price at $389,000. 700 copies of two short videos, namely ‘Earth’ and ‘Mars’, were sold for $5.18 million. All these pieces were sold in NFT’s. Here, even though the buyer does not physically possess Boucher’s digital art, he/she has proprietary rights to that particular piece of art. The blockchain network ratifies this. When the NFT is bought, the buyer also gets a license which allows him/her to put them on social media, a digital marketplace, a game world, or even a virtual museum.

NFT: A Promising Future Ahead

NFT’s have most importantly benefited digital artists. It finally allows them to profit from their work by making the public good into private property. It is easy to validate a GIF or an artwork or even just a meme. They have also led to new collectors finding ways to collect their favorite artists and brands.

NFT’s have explored the creative side of cryptocurrencies and investment. The power has subtly shifted to creatives. This is not only fun to play but is even accessible to new users. Gen Z especially has been gaga over the NFT’s lately. As and when popular artists and renowned musicians drop their work on NFT, they draw the attention of millions of their followers to NFT popularizing crypto art. This is leaving people in intrigue to discover this growing wave of scarce digital content. It offers an Instagram-like experience, and the music-specific NFT is on its way to build a digital record store.

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