NFT's: The Untapped Phenomenon
What are NFTs, how are they different from cryptocurrency and why are they gaining traction in the digital domain?
5 min read
You've probably heard the words NFT or Blockchain being used recently and you must be wondering what they are and why they are incredibly prominent these days! These technologies are gaining traction and they are an integral part of Web 3.0 and NFTs, in particular, have solidified themselves as a huge part of the crypto world. Although the concept of non-fungible tokens is very unique, not many are aware of it. Let’s take a look at NFTs in detail and explore why they are gaining the kind of raging popularity that they have in today’s tech world through this article.
What is an NFT? Non fungible tokens explained!
Cryptocurrency, which includes bitcoin, is one of Blockchain's implementations that have gained traction and similarly NFTs are its next implementation which is based on cryptocurrency dealings. NFTs come with the advantage of being able to purchase and sell unique and expensive items which are rare, and one-of-a-kind. Putting it simply, the concept of NFTs and the way they are exchanged is pretty straightforward and they are unique to the concept of the ever-growing metaverse.
Let’s understand this better through an example! The value of 100 bucks is the same as the value of two 50 bucks but however, there is only one portrait of the Mona Lisa in existence. Despite the fact that you can duplicate the artwork, there will only be one Mona Lisa that is truly original. NFTs were created to gather such resources which are one-of-a-kind and have intrinsic ownership value and determine who truly owns them.
How do NFTs work?
Let's say I have a piece of artwork, and I assign a token to it. This turns the token into a certificate of ownership which indicates that whoever owns it is the legitimate owner of the property. It might be any kind of 'property’ such as a song, a signature, artwork, or even a painting that has been created using MS Paint. This token is now kept in the Blockchain ledger and Blockchain technology acts in a decentralized manner to store it. It may have various copies which can be viewed on multiple computers all over the world but this assigned token indicates who truly owns the piece.
NFTs VS Cryptocurrency: What’s the difference?
A major advantage of NFTs is that it makes peer-to-peer transactions possible which essentially means that the ownership certificate can be transferred from one person to another. So, in a nutshell, the way that it is exchanged is quite similar to cryptocurrency with the only difference being that the amount of cryptocurrency held by each account is listed in a ledger. Meanwhile, the owner of the token and the person linked with the NFT would be listed in the aforementioned ledger as well as to the token which was allocated.
What drives it to thrive?
We used to have a server that acts as the middleman to make a deal on the previous version of the web, but that is no longer the case. People can now trade NFTs directly with one another using cryptocurrency. It is currently a component of Ethereum, but a separate Blockchain for NFT is being developed and will be accessible shortly.
NFT is making the world go crazy!
The most intriguing aspect about NFTs is that individuals are buying various paintings and digital works. In fact, the ownership of Twitter's first tweet was sold by Jack Dorsey, the company's founder, for a whopping amount. Many people are now purchasing and selling their artworks with other people in a generic way which makes this kind of barter system quite appealing.
NFT and its impact on nature
NFTs and their cryptocurrency counterparts use a lot of energy which has a negative impact on the environment. Bitcoin 'mining' already emits 38 million tonnes of CO2 per year which is more than Slovakia's carbon footprint. For example, let us consider the way Ethereum is mined as a cryptocurrency; it uses a tremendous amount of energy. This produces a significant amount of carbon emissions and has a significant carbon footprint which is something we must consider and try to change going ahead.
Facts about NFTs
Here are some interesting snippets about NFTs:
In 2021, a digital artist named Beeple Crap had his work auctioned for $69 million. In 2011, someone bought an old cat meme for $0.5 million. "CryptoPunk 7804," was sold for around $7.6 million.
Many individuals believe that NFTs are a great tactic to invest in but it is too early in my opinion. Having said that, buying or selling NFTs is exciting and it is something that you should experience once in your lifetime. It's a one-of-a-kind technology that is present in a whole new world which is digital! Blockchain will revolutionize the world in the future because we now have a method by which we can preserve authenticity and ownership without any dispute. Imagine a future where there will never be a disagreement over a house or property because technology now allows you to define a hundred percent ownership for the rest of your life and that is just what NFTs offer!
I hope this article has helped you understand the basics of NFTs and their importance in the digital future. It's now time to step up and learn how to buy and sell NFT with ease, which is what my next article will bring to you!
Hope to see you there!