What are Non-Fungible Tokens (NFTs)?
With technology making leaps and bounds at an unprecedented pace, it was not going to be long before opportunities to invest in all things digital utilizing the Blockchain (also the platform to trade Crypto Currencies), was inevitably going to happen. Let me introduce Non-Fungible Tokens (NFTs).
Blockchain technology and Non-Fungible Tokens (NFTs) are indeed revolutionizing the art market. Amongst others. By leveraging these technologies, artists can bypass traditional intermediaries, directly reaching their audience and retaining a greater share of the profits when selling their creations. The ability to embed royalties within NFTs ensures that creators can benefit from their work's future appreciation, a significant shift from the conventional art sales model where artists typically do not profit from subsequent resales.
NFTs are a specific kind of Cryptoasset, a digital asset that is securely stored on the Blockchain. Unlike “fungible” assets like Bitcoin or dollar bills, where each unit is identical and interchangeable, Each NFT is unique. Let me explain what they are all about:
Definition: An NFT is a digital asset that can represent various things, such as art, music, in-game items, videos, and more.
Uniqueness: Each NFT is one of a kind or part of a very limited run. It has a unique identifying code associated with it.
Blockchain: NFTs are recorded on a blockchain (usually Ethereum) to certify ownership and authenticity. They cannot be copied, substituted, or subdivided.
Ownership and Authentication: Owning an NFT means owning the original item. It also provides built-in authentication, serving as proof of ownership.
Market Value: NFTs have gained notoriety due to their use in buying and selling digital artwork. In 2021, the NFT market was worth a staggering $41 billion, approaching the total value of the entire global fine art market.
NFTs create digital scarcity, which sets them apart from most digital creations that are usually infinite in supply. People are willing to spend millions because owning an NFT grants them unique bragging rights and verifiable ownership.
Is it time to stop investing in traditional forms of fine art? Not yet, the value of specific pieces by famous artists will far out value and existing NFTs, but the market for NFTs is more accessible both for artists and content creators alongside the general population. Lots of celebrities, football clubs and more have also jumped on the bandwagon. Is it a sound investment? The market is relatively new, so who knows what the future holds, but there is definitely the scope for profit to be made.