The Potential of Non-Fungible Tokens (NFTs)
Founder and CEO of Twitter Jack Dorsey sold his first tweet ("just setting up my twttr") for $2.5 million. You're not alone if you wonder how people can sell tweets that everyone can access for free on the internet.
With the latest cryptocurrency trend, you can now buy or sell intangible items like tweets, GIFs, videos, and digital art. These items can be bought and sold as "non-fungible tokens" or NFTs. Blockchains are used to store NFTs. Blockchains give digital assets a unique identity, making them non-interchangeable. Among the real-world assets that can be converted into NFTs are paintings, games, music albums, sports cards, and memes.
Artist Tim Fowler is selling some of his work as non-fungible tokens. Pic: Sango/MetaZoo Gallery
What is a Non-Fungible Token anyways?
Fungible assets are those that can be exchanged for something that is very close in nature to them. For example, cash is fungible. A dollar bill is no different from another: You can still purchase the same things with it if you trade it with your friend. Generally, houses are non-fungible; if someone decides to buy a home, their realtor can't substitute another property at the closing. A token is "evidence of ownership." Among examples of tokens are a car title, a concert ticket, shares of stock, and a deed to a house.
To summarize, a non-fungible token (NFT) is a means of proving ownership of something digitally. The blockchain technology that is behind Bitcoin protects NFT from duplicates and thefts.
What’s the role of Non-Fungible Token (NFTs)?
These NFTs provide authenticity to digital items, like artwork and tweets. An NFT is essentially a work in which the creator creates and sells it, conferring ownership to anyone that purchases it. Despite the fact that the image of your painting may still be freely available on the internet, the owner of your painting now has the honor of "owning" your work.
NFTs are creating new investment opportunities
On websites that have been created specifically for this purpose, a heated investment market is influenced by the potential for profit from the resale of NFTs. In 2020, NFT sales topped $250 million, quadrupling in volume from 2019 (Nasdaq, 2020).
Joining the bandwagon, Bollywood legend Mr. Amitabh Bachchan introduced his own NFT (Non-fungible Tokens) which will feature limited and unique artworks based on his life and career. As part of the NFTs, the megastar will also perform poems from Madhushala, a collection of poetry by his father Harivansh Rai Bachchan. In addition, he will share anecdotes about his life and career.
Current downside of NFTs
Even though NFTs do not include ownership of copyrighted works, they are selling like hotcakes. NFTs can be sold to another collector, but you cannot, for example, put the art on a mug and sell that. For instance, buying an original, limited-edition baseball card is similar to buying a print, but you don't own the image.
Concluding thoughts on NFTs
Digital media, which can be copied and accessed by anyone, does not carry the same level of value as physical objects like artworks and collectible cards. The NFT changes that, allowing digital items to have value as well. As a result, they're great for digital creators, since they give them a way to make money from their artwork (which was previously impossible in an age of endless, free reproduction).