NFT stands for the non-fungible token, and these digital assets have gained popularity in 2021 among various celebrities, pop culture personalities, artists, and influencers. It is a new trend that has emerged and deals with selling ownership of digital assets. The NFT market has almost tripled in size by the end of 2020, and at the start of 2021, it was already trending as the most controversial yet talked upon topic. Only in the first few months of 2021, the NFT spheres’ history is before everyone’s eyes. There was a virtual kitten that was sold for about $173k, it might not make much of a sense, but this is a phenomenon that is real and is taking place out there as we speak.
What is an NFT?
NFTs are the unique tokens that contain metadata of digital art, picture, painting, and such, and it exists on the blockchain which means that it can’t be exchanged or replicated in any manner. The non-fungible token is a type of cryptocurrency that just doesn’t hold any ownership of the asset. Most profoundly, it will be music, art, videos, and such data that is purely digital. At the moment, NFTs are purely being used for artistic purposes, but these can be applied to a bunch of other disciplines, such as identification and supply chain challenges.
Fungible and non-fungible
A fungible asset is something that can be interchanged or exchanged with another asset of the same caliber and properties. One such example would be a $20 note, as it carries the same value as any other $20 currency note out there.
A non-fungible asset, on the other hand, is something that just can’t be swapped, interchanged, or exchanged in any given manner or not so easily. An example to understand the concept would be the collectibles such as trading cards. Everyone is so unique and desirable by various people at different notes that one card can’t depict the value of itself and a variety of others. The same analogy can be applied to the world of art as you can’t simply trade an art/painting made by a child for something made by a renowned artist although both of these are art in their own form but the virtue of their existence and development varies and so do their value.
Therefore, the non-fungible token means that the metadata it is carrying is unique and can’t be interchanged or exchanged using normal practices with something else. These tokens serve as a non-duplicable digital certificate of ownership for any given asset out there.
Why has NFT taken on such immense popularity?
The overall values of the NFTs did increase from $42 million to about $250 million amid a solid explosion in the February of 2021. This sudden explosion in not only value but market share has certain factors behind it that need to be covered, such as out of the blue interest of NBA in NFTs and developing their own non-fungible trading cards, which are available for collection by the buyers all around the world and for that matter the expansion of the NFT did take place. The NBA did launch their own Top Shot, a crypto collectible that the buyers can collect as a non-fungible token, and for that matter, the total value generated by this venture is about $230 million. By commencing each and every token card to the blockchain, every collectible is given a dedicated certificate of authenticity and ownership.
Even the music industry has been approving the use of NFTs and has fairly adopted this practice, and there are musicians out there that are making millions of NFTs in terms of their work and throwing these off to the Blockchain systems as well where potential buyers are purchasing these along with the authentication certificate that comes along as well. The kings of Leon, a famous music group, did release their album in the form of NFTs. People who bought it off the blockchain were given a special audio-visual effect that was also provided to the audience sitting in the front row enjoying the show.
The world of art is also being deeply touched by this technology and has sold various art pieces and items in the form of NFTs over the past few years. But the digital footprint that this practice leaves behind is a bit controversial as blockchain operates on nodes of systems interconnected through the internet and burning thousands of kilowatts of electricity, leaving a solid carbon footprint behind. Other than that, NFTs are a massive hit, and they find their value in the world of art and music.
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