Although they have been around since 2014, NFTs (non-fungible tokens) are gaining unprecedented notoriety and headlines. This is because they are becoming an increasingly popular way to buy and sell digital artwork and digital collectibles.
NFTs are unique digital codes built on the same blockchain technology infrastructure as cryptocurrencies like Ethereum and Bitcoin. However, they have one major difference: NFTs are completely unique. They are designed to establish ownership of digital assets that can be bought and sold using cryptocurrencies. Usually, the cryptocurrency is Ethereum(Ether or ETH). However, there is not necessarily a physical asset that represents them to the real world.
Unlike physical assets that are more unique, digital files can be easily reproduced and shared freely and endlessly on the internet. NFTs create scarcity of any digital file and turn it into a digital asset. This is then easy to trade on primary markets or any digital secondary market.
Tweets, digital real estate, and 3D objects from virtual worlds can also have monetary or financial value. Twitter co-founder Jack Dorsey sold as NFT his first tweet for $2.9 million. Mars House, a 'digital house' designed by Toronto digital artist Krista Kim, sold for $500,000. This NFT artwork was described by the NFT SuperRare digital art marketplace as the 'world's first digital house'.
Another example of more notable NFT digital tokens is the digital art piece Everydays. The First 5000 Days by digital artist Mike Winklemann, better known as "Beeple." This was sold at Christie's auction house for a record $69.3 million, thus making it the most expensive NFT sold so far.
Although most NFTs are part of the Ethereum blockchain, they are not cryptocurrencies. NFT stands for non-fungible token. Non-fungible is a term used in economics to describe assets or things that are not exchangeable for other items. This is because they have metadata or unique properties and attributes.
Fungible items or assets can be exchanged for other items or assets because their value defines them, not their unique properties. For example, ETH, BTC or dollars are fungible assets because 1 ETH / 1 BTC /$1 USD is exchangeable for another 1 ETH / 1 BTC /$1 USD.
Through decentralizing contracts, most NFTs are on the Ethereum network in the ERC-721 and ERC-1155 standards. What makes NFT a unique token is a digital object linking to the NFT token. This can be digital art, an image, a short video or short film, a tweet, or an MP3 song uploaded to a marketplace. Thus, allowing the NFT to be bought and sold with Ether (ETH), the native cryptocurrency of the Ethereum network.
Bitcoin is designed to be a decentralized peer-to-peer (P2P) online payment system. It operates without a central authority or bank to validate transactions. Whereas NFTs or non-fungible tokens are unique digital assets that represent ownership of digital items, such as digital artwork or digital collectible cards. They are not fungible, which means that you cannot exchange a non-fungible asset or non-fungible token (NFT) for another NFT token as you would with Bitcoin (BTC) and other cryptocurrencies.
NFTs are different. Each NFT token has a digital signature that makes it impossible to exchange it for another NFT. Jack Dorsey's first tweet sold as an NFT for example, is not the same as one of the works in Beeple's Everydays series, simply because both are NFTs.
NFTs are units of code stored in a digital ledger using blockchain technology. This establishes proof of ownership of digital assets. Just as physical art is historically viewed as an investment or property of value, so now are non-fungible tokens (NFTs).
NFTs are digital tokens that we can use to represent ownership of tangible and intangible items, such as a real world object or a digital world object. They allow us to symbolize things like art, photography, images, video, music, collectibles, and even real estate. Non-fungible tokens can only have one official owner at a time, and most non-fungible tokens are protected by the Ethereum blockchain. No one can edit, modify or change the ownership record of an existing NFT.
An NFT or non-fungible token can be created or "minted" from digital objects that represent collectible items, including:
Although most NFT tokens are held on the Ethereum blockchain, other blockchains such as Flow, WAX, Tezos, Solana, and Binance Smart Chain also support them, through their protocols and smart contracts.
This usually comes only with a license to commercially use (buy and sell on the secondary market) the digital asset to which the token points, but this does not confer the right to own the intellectual property or copyright ownership of the artist or creator of the NFT.
When someone buys an NFT, what they actually own is just a hash code showing ownership of the digital token associated with the particular digital asset or file. For example, people can continue to download Nyan Cat and use it on social media or in other graphic design work if they want, but they will not own or own the token. This means that only the person who bought for $590,000 the token associated with the Nyan Cat animated GIF on the NFT Foundation marketplace owns the piece of art with a financial value, and can sell the token in the future at a higher price.
To make this clearer: think of owning NFTs as owning an original piece of Van Gogh: Sure, you have the art piece that Vincent van Gogh himself painted, but there are countless prints or copies of it in other people's offices and homes and even digital versions scattered around the internet. The big difference is that it is basically difficult or impossible to claim ownership of a piece of digital art, since it can be shared in unlimited ways on the internet, while Van Gogh's original physical painting is unequivocally the original painting.
Coinbase will soon launch a marketplace for buying NFTs and selling digital collectibles.
The largest US cryptocurrency exchange is planning to launch an NFT marketplace. This will allow users to mint, collect, hold, buy and sell or trade NFTs.
Coinbase NFT, Coinbase's new NFT market, would include "social features." It will focus entirely on the creator economy. Which is a term to describe the world of content creators or people who make money by posting videos and other content online.
For now, you cannot buy NFT or start your NFT collection on Coinbase. But, you can sign up for a waiting list for early access to the feature.
However, you can use the Coinbase Wallet to buy NFTs. Coinbase Wallet is a wallet that you can use to buy and store +500 tokens. Either fungible tokens like Bitcoin and Ethereum or NFT collections.
There are thousands and thousands of NFT marketplaces, websites, and platforms to buy and sell NFTs. Opensea NFT is currently the largest marketplace for NFTs. At OpenSea a variety of NFT art, domain names and collectible items are available for sale.
WePlay Collectibles is a project of NFTs that aims to create a community. It helps to unite true eSports fans and talent, as well as artists and digital art enthusiasts.
WePlay Collectibles are also available on OpenSea NFT. They are primarily for people who want to be a part of eSports events. They can show that they like players and talent in a different way, beyond merchandising. Now WePlay Collectibles has become part of a platform, where you can buy items with NFT technology. Not only physical and digital eSports memorabilia items related to a specific tournament but also works related to contemporary art.
On the other hand, if you want to sell an NFT of your artwork, you have numerous options. Popular marketplaces for NFTs include FTX, Rarible, Nifty Gateway, SuperWare, OpenSea, and Foundation. FTX specifically was valued at $32 billion in a funding round earlier this year. It can be downloaded for free on both the Apple App Store and the Google Play Store.
As with physical collectibles or physical assets, such as baseball cards and trading cards, there is also a market for NFTs. It is the art world that is currently most exploring the potential of NFT tokens. The value of an NFT comes from its uniqueness. Thus, it allows digital artists, NFT creators, or NFT artists to profit from their artwork.
The main controversy of NFTs comes because of the environmental impact and carbon footprint. This is due to the excessive energy consumption of proof-of-work (PoW) based blockchains. Especially as they are often powered by fossil fuels.
Most of the creation of blockchain digital assets such as NFTs, are built with proof-of-work (PoW) systems. Ethereum and Bitcoin use the PoW system. To keep users' financial records secure, these blockchains need large computing power. Using more computing power means more energy consumption.
Since most of these assets are based on Ethereum, the concern is even greater from environmental activists. But the migration of the Ethereum blockchain from proof of work (PoW) to proof of stake (PoS), means that the network will be 99. 9% more environmentally friendly than many existing industries. PoS (proof of stake) means that the Ethereum blockchain will no longer need miners to protect the network. More miners means more people using their computing resources to protect the network, and are rewarded with ETH tokens. Instead, ETH token holders can stake their tokens and gain liquidity.