NFTs (Non-Fungible Tokens) – Explained

In today’s rapidly evolving world, advents in technology are being led by a mania of blockchain-powered digital assets. One such category of digital assets which has taken the market by storm followed by the market frenzy caused by Cryptocurrencies are Non-Fungible Tokens, commonly known as NFTs.

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What are NFTs?

You’ve probably heard of NFTs from time to time; perhaps via news channels, social media & most likely Twitter. They are essentially a crypto asset representing something unique & collectible using blockchain technology.

One such NFT which recently spread like wildfire was the ‘disaster girl’ meme photo which sold for a whopping $500,000!1 Yes! Literally, a meme sold for such a huge amount. Want to know how that was possible? Read till the end to find out!

A photo of disaster girl one of the NFTs that sold for $500,000

Another such NFT which rose into the limelight was made by a gamer on the Decentraland virtual land platform who decided to purchase 64 lots and simply combined them into a single estate, naming it “The Secrets of Satoshi’s Tea Garden.” This virtual land in a virtual game sold for $80,000 simply due to its desirable location and road access.

NFT’s have become more & more popular by the day among crypto users and companies alike as they have revolutionized gaming, collectibles & even the meaning of digital art (music, digital artifacts, etc.).
Before we dive any further let’s take a look at some of the characteristics of NFT’s:

Characteristics of NFTs

NFT’s are primarily digital assets which:

  • Individuals can’t counterfeit and can only have one official owner at a time. You can think of NFTs as a token number you receive when you are waiting in a queue. Each token is unique and represents a different person possessing it.
  • They are verifiable. The ownership of the NFT data can be easily traced back to its original creator, which will allows pieces to be authenticated without third-party verification, as it is based on a blockchain. Making them safe and trustable assets.
  • They are non-fungible, which means when you own an NFTs, it cannot be divided into smaller denominations like Bitcoin. What that means is unlike with Cryptocurrencies, you can’t buy certain fractions or parts of NFTs. You can either buy it whole or not at all!
  • They are non-interoperable. For example, a CryptoPunk cannot transfer as a character on the CryptoKitties game or vice versa. This concept goes for collectibles such as trading cards & all types NFTs.
  • Lastly, since they are essentially an asset, you can buy, sell, or even HODL these assets!

Blockchain technology enables these gamers, collectors & producers to become unique owners of their in-game items, assets and allows them to capitalize on that.

NFTs are For Creators Across Multiple Industries

Hordes of artists, musicians & digital artists after years of creating content and barely receiving a satisfying compensation are climbing onto the NFT bandwagon and making huge profits by selling their NFTs to a global audience. Royalties can also be programmed into digital artwork so that the creator receives a percentage of the sale profits each time their artwork is sold to a new owner!

But wait… so what are NFTs? Are they digital pictures? Music? Gaming collectibles? Or a platform?

The answer is: An NFT can represent anything. They are essentially digital assets that can be utilized to ‘represent ownership of unique items’.

What those unique items depend solely on the imagination of their creator. Any sort of digital content can be minted as an NFT.

The Future of NFTs

The future of NFTs indeed seems very promising! Technological advancements aim to improve the quality of life and reduce the costs pertaining to this increased luxury. Many new firms are launching to utilize the unique attributes of NFTs in very innovative ways to do just that!
A perfect example of this is a new firm calling themselves ‘NFTBOOKING’!

NFT Booking: The First Travel Industry Focused NFTs Marketplace - Scoopnix

They are the FIRST decentralized NFT marketplace dedicating service entirely to travel & tourism! Yes, travel! Something we all love and miss, especially in the wake of the pandemic. Their platform essentially allows you to make your reservations using NFT’s as vouchers!

Along with providing a value-added experience, NFT booking allows you to travel without any commissions! What’s more is that these reservations can easily be resold to other people and depending on the circumstances, at even higher prices!

And it doesn’t end here! An NFT booking can be more than a hotel room. It could be anything such as an experience or an outdoor activity or even a combination of all three!

Secondly, the entertainment industry also seems very interested in NFTs. Many firms have signaled plans of using NFTs as tickets for live events. Due to the advancements in crime along with technology many live events, shows & musical performances suffer the risk of counterfeited tickets.

Moreover, many major sports leagues are following in pursuit, as seen by two major participants. Firstly, Formula 1 Delta time is an official collectibles game of Formula 12. And secondly, by NBA Top Shot, which is an official platform enabling people to own memorable moments of NBA as a form of a digital collectible (NFT)3, which is being referred to as “Moments”. It is expected that the momentum will carry NFTs to many other sports in the recent future.

Why are they so valuable?

An NFT will derive its demand from a diverse set of factors. For example, if it was created by a world-class artist, it could be something useful in a game, or perhaps it’s a record composed by a renowned vocalist. There is a multitude of factors that could become the reason behind its popularity.

However, generally, these digital assets are governed by the central economic concept of supply and demand. Like all assets, supply and demand are the key components driving the price. Due to NFT’s scarce nature and high demand in the gaming sector, collectors and investors are willing to pay a massive sum of money to gain ownership rights.

Conclusion

To conclude, NFTs are definitely a game-changer. Whether they’re just a passing storm or here to stay, only time shall tell. However, the possibilities its unique attributes offer are countless and too good to pass on. It is even possible for the ownership of tangible properties, such as real estate to be an NFT. The legal contracts, rights & deeds could cease to exist and NFTs could swallow them all! Stay tuned as this exciting rollercoaster ride has just begun!

Let us know what you think, and whether this article has been helpful/not helpful. As a reminder, we are not financial advisors or life coaches. You just might see some success in the things we say don’t work or no success in the things we say do. We are always open and hopeful for friendly discussion or constructive criticism and can’t wait to hear your thoughts on this article!


Helpful Links (superscript number references, also known as sources)
  1. The World Knows Her as ‘Disaster Girl.’ She Just Made $500,000 Off the Meme.https://www.nytimes.com/2021/04/29/arts/disaster-girl-meme-nft.html
  2. F1 DeltaTime NFT Game Collectibleshttps://www.f1deltatime.com/
  3. NBA Top Shot Memorabl Moment NFTs https://nbatopshot.com/
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