Why Are NFTs So Important?
NFTs! Have you got an NFT? NFTs have suddenly emerged and are blowing up everywhere. But it's still a concept that the majority of us still don't really understand it yet and how it works. So I thought I'd go through my understanding of what an NFT is, how it works and why it's so important in today's society.
So What Is A NFT?
NFT stands for "Non-Fungible Token". Non-fungible basically means that it is a unique asset that cannot be replaced. For example "The Mona Lisa artwork" is a non-fungible asset as there is only one original artwork and cannot be replicated to the same degree. Although there are photocopies of it and imitations of it, there will only always be the one and only original version. Other examples of NFTs include in-game items like avatars, digital and non-digital collectibles, domain names, and event tickets.
But how would we identify if it is the original artwork or not? That is where NFT's come in. To the general public, we would not be able to tell the difference between the original from the imitations and thus there needs to be a way to uniquely identify them so that they are valued respectively.
How does it work?
To put it simply, NFTs exists on a blockchain (for those that want to know what the blockchain technology is, please check out: "Why Blockchain Technology is the future"). Most NFTs are part of the Ethereum (ETH) blockchain but are now starting to exists on other blockchains. I know what you're thinking, isn't Ethereum a cryptocurrency? How is an NFT on a crypto? It isn't so much that NFTs exist on the cryptocurrency, but the ETH blockchain works slightly differently as it supports NFTs through storing additional information.
An NFT is created, or “minted” from digital assets that are both tangible and intangible items, including:
- Art
- GIFs
- Videos and sports highlights
- Collectibles
- Virtual avatars and video game skins
- Sneakers
- Music
Even tweets can be NFTs now too. Who would've thought that we'd be in a world where your tweets can be sold as a NFT. Twitter co-founder Jack Dorsey sold his first ever tweet as an NFT for more than $2.9 million.
Essentially, NFTs is a digital version of a collector's item with exclusive ownership rights. With the unique data that is stored on the blockchain, it makes it easy to verify the ownership and transfer of tokens. You are also able to store specific information in it too like an artist's signature in the NFT's metadata.
What's are NFTs used for?
As mentioned earlier, one of the major benefits of "minting" or creating an NFT is that you're able to verify the ownership of the asset. Being able to claim that it is yours and that it is a "one of a kind" has it's own bragging rights. But it doesn't stop there. Being able to identify that the asset is unique unlocks millions of opportunities for the way we are able to do things.
Artists/creators are now able to monetize their work and directly interact with their audience without the need of an agent or intermediary. Everyone is probably still thinking that NFTs are for artworks and digital assets but it is so much more. It has the potential to create market efficiencies and improving business processes.
For example, your physical passports which is used to identify an individual when checking in and out of an airport. By converting the passports into NFTs (each with its own unique identification) it is possible to streamline the process and change the way we travel. Taking it one step further, if we're able to put land rights from property market into an NFT where the ownership of the land is governed by the blockchain, it would mitigate the need for lawyers or solicitors to verify certain documentation. Therefore, real estate trading, which can be a complex and tedious process, can actually be simplified by incorporating relevant metadata into each unique NFT.
These are obviously potential uses cases for NFTs, but I think we should be aware of all of the opportunities that can come from it and the value that it can bring to society regardless of which industry you are focusing on.
How to buy NFTs?
If NFTs are intriguing to you and want to own some, depending on the asset, there are multiple platforms for which you can purchase them from. You'll need to have a wallet specific to the platform that you are buying it from so STEP 1 would be to set up your wallet and purchasing some cryptocurrencies.
As NFTs are unique and scarce, there is a high demand for most of them which means that they are often released as 'drops' (like an event when batches of tickets are often released at different times). This means that there is going to be multiple buyers who want it just as bad as you when the drop starts, so make sure that your wallet is topped up and ready to spend.
If you're looking for some platforms, here is a list of some (not all) of the platforms that are currently selling NFTs:
As always, when purchasing these NFTs, make sure that you consider your financial circumstances and are not purchasing these on an impulse or based on the hype around it.
QOTB
"Business opportunities are like buses, there's always another one coming"
By Richard Branson