- 4 days ago
Although popular in the art world, NFTs offer so much more.
The multi-million dollar NFT storm has grabbed major headlines and has caused an eruption of the online marketplace. For the average person like myself, the NFT frenzy seems a bit crazy, and it may be. However, it is marking its presence in almost every industry in today’s world. We must understand why the NFT phenomenon might not be so crazy after all.
The NFT craze is not only changing the art scene but almost every industry has big players taking the lead. Artists are using NFTs to monetize and gain recognition for their work while musicians are using NFTs to keep hold of royalties. The NBA is using NFTs to highlight basketball moments and celebrities are connecting to fans by selling their own personalized tweets.
Still unsure about what NFTs are..?
NFTs are digital tokens that exist on the Ethereum blockchain and act as proof of ownership over physical or digital assets. The value is in the uniqueness and scarcity of the asset. Each NFT representing these assets is distinctive and unduplicable. Beeple’s one of a kind artwork “Everydays: The First 5000 Days”, for example, was sold as an NFT for $68 million. The NFT of Beeple’s painting is the recognition that only one person has the ‘honor of ownership’ over that painting. There are no replications. Only that one person has the power to resell his ownership in the future if desired. Interestingly, the purchase of an NFT is often not about the content itself but it is used as an investment.
It is important to note that NFTs are not the collectible assets themselves. They are more of a receipt of purchase, indicating who now owns the items. With digital assets they often refer to a file that has a link to the collectible itself.
In addition, NFTs are not always traded through cryptocurrencies. They can be traded through fiat currency or even with specific gaming currencies; for example Monopoly, the online game, has its own currency.
It is often perceived that the world of NFTs is restricted to those who have huge sums of money. Whilst this can be the case as we read of multi million dollar sales hitting the headlines, collectibles including, gaming items and baseball trading cards are available at more modest sums of money.
NFTs in the art scene
The first major impact NFTs made is in the art scene. They created new opportunities and stability for artists that did not exist before. Every time an artist resells their work, they can receive proceeds through stipulations attached to NFTs. Not only do the NFTs provide stability for the artists themselves, they provide clear identification of ownership in a world where everyone can obtain a copy of the original piece of art. Everyone can hang a copy of the Mona Lisa in their dining room for example, but not everyone can afford to ‘own’ the original painting. A certificate that defines what the original copy is, provides clarity and honor on owning a one-of-a-kind art piece. The idea of NFTs constantly highlights and increases the value of artwork so it can trade for higher prices.
NFTs is expanding beyond the art world
After shaking up the art scene, NFTs are also gaining great popularity in the sports world. Huge sports fans pay huge sums of money to own epic moments in sports games as a way of associating closely to their teams. Sport organizations are taking advantage of their following. The NBA (National Basketball Association), is auctioning off digitally signed videos of legendary moments in games for outstanding sums of money. Nike, one of the most respected sports brands,is selling digitally certified sneakers, called ‘CryptoKicks’. Football teams have been taking advantage of NFTs to manage their players. Before selling a player to another team, there is no longer the need to track a player’s history and progress , rather NFTs, using blockchain technology, can reliably verify a transaction with the records of each player stored in the system.
NFTs also put a clear mark on what sport collector items are real or fake. According to statistics, between 50% and 80% of collectible items are fake. NFTs provide a clear transaction history which makes it easier to trace back to the original creator. Thereby, providing accessible proof to asses if an item is a counterfeit or not.
Musicians have hoped on this NFT train too. This has helped them engage with their fans and gain recognition from a wider audience. Music producer and DJ 3ALU sold his music as NFTs and managed to earn $11.6 million. Following this sale, Grimes, a Canadian musician, sold his music for $5.8 million in under half an hour.
NFTs are not just a short fad..
The potential and power of NFTs go beyond the idea of allowing easy trade and adding excitement to a world of digital collectibles. They totally change the regulations of ownership. Traditionally, transition of ownership was dependent on middle men to establish trust in a transaction and ensure that a transaction has been completed. The world of NFTs, facilitated by blockchain technology, through the use of smart computed contracts, removes the need for middle men. Instead, the system relies on the blockchain. Once approved, people cannot alter records of NFTs on this system. Smart contracts ensure that both parties fulfil their part in an agreement, therefore trading is more efficient and secure.