The emergence of intangible tokens, or NFTs, has been one of the most interesting developments in the cryptocurrency space in recent times. Although NFTs have been around since 2014, only in the last few years have they become popular and taken over the art and gaming world, especially after some NFTs were sold at astronomical prices. So what’s causing all this Simply put, NFTs are like physical art in that they are collectible assets, but only in a digital format. While one could argue that such files can easily be downloaded or copied from the Internet, why would anyone spend millions of dollars to acquire them? The whole point is that NFTs allow the buyer to become the owner of the original item.
NFTs are unique – they cannot be exchanged on a one-for-one basis, again similar to physical art. A banknote autographed by a celebrity, unlike a $100 bill, is not interchangeable, as in this case the banknote becomes unique and has a higher value. The banknote can then be converted to NFT and sold.
How does NFT work?
An NFT can be created or coined from any digital object, tangible or intangible, including art, GIFs, video/sports moments, collectibles, virtual avatars/skins for video games, music and even tweets. NFTs function, like cryptocurrencies, based on blockchain, a process that acts as a distributed public ledger that records transactions. Blockchain makes it easy to validate NFT ownership by granting exclusive rights to the owner.
Thus, an original file, be it a JPG, MP3, GIF or any other, is an NFT that identifies its ownership and can be bought and sold like any other art form whose price is mostly determined by market demand.
What are NFTs used for?
NFTs provide artists and content creators a unique opportunity to monetize their work by selling their art directly to the consumer. By foregoing their dependence on art galleries and auctions, artists can have a chance to keep more profits. In addition, artists can program royalties to receive a percentage of sales when their work is sold in the future.
• NFTs also create new opportunities in in-game purchases in video games.
• In addition, NFTs are being used by brands as an attractive source of revenue.
• Musicians also sell the rights and originals of their works, as well as short video clips of their music, as NFTs.