What are NFTs and Why are They Suddenly Popular?

There has been a recent surge in the number of people talking about NTFs. People know NTFs as non-fungible tokens. The NTFs aim to check our concept of culture in our society today. Imagine having digital assets which can be sold, like some artwork from the 16th century, but in digital form. They go for as high as a million dollars. But are they worth the valuation? Various opinions exist about it. Some believe it is a game-changer in the crypto world.

What is NFT?

NTF refers to the digital asset representation of objects found in the physical world. These objects could include artwork, games, videos, etc. People bargain for these objects and they sell them online. They carry out these transactions through the use of cryptocurrency. The technology is similar to most cryptos. So, in this sense, they are similar.

The Rise of NFTs

Scientists created the first form of NFTs in 2014. Since then, they have released different variants. It has increased in popularity because it has become the go-to option for sales of digital content.

You might ask yourself the question, “Why would I want to buy a digital art everyone has access to on the internet?”. Because you have a copy of a famous painting (let’s say the Monalisa), it does not give you ownership of the original. One function of NFTs is that they help in tracing the digital ownership of digital objects.

For instance, a digital artist, Mike Winklemann, aka Beeple, made an image of 5000 images popularly known as “EVERYDAYS: The first 5000 days”. They sold it for over 60 million dollars. Anyone can view the image that they sold. But because of the NFT technology, the buyer can claim ownership of the digital image.

NFT vs Cryptocurrency

NFT and cryptocurrency is both run on the blockchain network. This is the only similarity

People often describe cryptocurrencies as fungible because they can be exchanged for one another. One of the reasons crypto is the go-to option for trading on the blockchain network is because of its fungible status.

NFTs are different in this regard. Each NFT on the network has a digital signature that marks it as different from another one in terms of value. So one cannot exchange them. For instance, the NFT value of “EVERYDAYS: The First 5000 Days” would be different from the price of the NFTs of another digital painting.

What are NFTs Used For?

The combination of blockchain technology and NFTs allows creatives a way to make money from their skillset. For instance, an artist does not have to wait before he can sell his artwork at an auction or gallery. It can be sold to a collector as an NTF. By doing this, they have eliminated the middleman, which means they now have access to a higher amount of profit.

One advantage of this is that the artist can include a royalty encoding in the NFT in the case of future sales, which would not be possible in sales by auction.

With all said above, the performance of NFTs in the near future is one to look out for as they are currently seen as the next big thing.

For more information, see World News Times.