What are NFTs?
You’ve probably heard of the Bored Ape Yacht Club with listings coming up to hundreds of Ethereum, Beeple’s $69 million collection being sold at the prestigious Christie’s auction house, or news about Southeast Asian countries being consumed by blockchain games like Axie Infinity. What do they all have in common? NFTs.
What are NFTs?
NFTs, or non-fungible tokens, are files minted at the blockchain. Once on the blockchain, these files are provided with a unique identity code and metadata that give owners the ability to verify ownership. Every file uploaded to a blockchain is unique and inimitable. Through a marketplace, these files can be transferred from one wallet to another.
NFTs can be a wide range of files like JPEGS, GIFS, MP3s, text, and even videos! Their flexibility is a big reason why it is a great medium for all kinds of artist to showcase their work.
NFT art
Unlike traditional mediums of art where fraud and ownership are sometimes tricky to distinguish, NFTs simplify uniqueness and ownership. Since minted assets have unique identification codes and metadata, buyers are secured in knowing the legitimacy of their purchases.
More and more people are choosing to mint their artworks as NFTs because of the ability get royalty from the art they create. In traditional art, artists would only be earning from the initial sale unless a contract that includes royalties for use are provided in the transaction (which a lot of people don’t bother with). Art is traditionally viewed as a “for me” purchase and not as a purchase for profit.
Secondary sales of NFTs have royalties with percentages differing within marketplaces. Because NFTs are integrated within a platform, artists benefit from resell value of their minted projects continuously. Moreover, artists profit from all sales of their art, whether it was bought from them or from a previous collector.
NFT games
NFT in games has gained a lot of traction and support. Games always involve assets to be owned by players; some can be traded in-game and most are restricted to one account. NFT games are opening up the possibility of a secondary market, enabling players to trade assets outside of the games.
NFT games also have tokens gained through gameplay, enabling players to “earn”. These tokens are usually used to create or buy assets in-game or serve as a governance token, allowing players to have a say in how the game development progresses. Furthermore, players can freely trade these tokens outside the game in exchange for cryptocurrency.
NFTs are just starting to be adopted. There is still a lot of utility that can be innovated and created using it as a medium. Outside of art, it can be potentially used as placeholder for physical assets, with the benefit of easier and secure transactions through the blockchain.
For now, everything is speculative. It is always advised to do your research when investing in NFT projects. The only guarantee is: it is here to stay but for what purpose and to what extent, are solely decided by us, the community that drives and maintains it.
