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With cryptocurrency having its heyday over the past few years and the increased attention it has brought the blockchain, it is no surprise that another trend has arisen.
NFTs. or non-fungible tokens, have been all the rage as of late… but what exactly is this trend ? And is it something that might apply to businesses?
Let’s dive in and define what an its functionally is, for starters.
Investopedia offers a simple definition of NFTs, calling them “cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other.”
So, while a cryptocurrency has a consistent value in relation to others of itself—one Bitcoin equals one Bitcoin, seven Dogecoin equals seven Dogecoin—each one is unique and irreplaceable.
As a result, they have been adopted as receipts, of sorts, for big-ticket transactions in the real world, largely in art and real estate. Basically, the NFT serves as a certificate of ownership,
recorded and tracked through the blockchain.
However, another use of NFTs has also come up: upscale digital collectibles and event tickets. Jack Dorsey, the founder of Twitter, turned the first tweet ever posted (“just setting up my twttr”) into an non-fungible-token.
The NBA has created some depicting show-stopping moments during games, and many other online collectible tokens have popped up.
If you’ve ever heard of Cryptokitties or the Bored Ape Yacht Club, you’ve heard of NFTs.
Nearly all of the above collectibles have been exchanged for the equivalent of millions of dollars.
A Cryptokitty referred to as “Dragon” was sold for 600 ETH (or Ethereum, the cryptocurrency of the Ethereum blockchain), which at the time equaled around $1.3 million.
Considering the issues with the blockchain, particularly in terms of power consumption and the impact on the environment, this all makes the idea of an NFT seem a bit silly—not to mention the recent price crash that the market saw recently.
However, there are other use cases that are important to keep in mind.
The core notion is that blockchains are a mechanism to store data without having to rely on any one organization or institution to keep things secure and accurate.
As we’ve said, NFTs are primarily proofs of ownership, so instead of just unique pictures of monkeys or cats, they can be used to attribute real estate, concert tickets or even physical art to its owner—and using them for this purpose offers a few other benefits.
On top of eliminating the middleman from transactions and keeping all exchanges transparent, they definitely make it easier for multiple people to share ownership.
They also have potential as a means of supply chain management through tracking individual goods, or as a means of identity management.
So, despite what popular culture may be focused on, NFTs are more than just silly collectibles. Whether or not their use cases become widespread in businesses, we’ll just have to wait and see.
Sadly the answer isn’t that straightforward. You can buy a bunch of cheap NFTs for less than $50, or you could buy a token worth thousands, possible millions of dollars.
Nfts are currently treated more like artwork, so giving them a concrete value is difficult. If you see and like one, you can simply buy it for yourself.
On the other hand if you choose it for investment purposes, you should make an effort to keep track of how the marketplace is behaving and the performance of similar tokens to avoid financial losses.
You can hop onto an NFT Marketplace such as https://opensea.io/ and https://rarible.com/ , They have hundreds of works of art to choose from.
