You might have heard about Nyan Cat’s creator, Chris Torres, signing a remastered version of the popular Nyan Cat GIF up for auction on a popular crypto art platform called Foundation. It sold for 300 Ethereum, which translates to about $560,000. How may you be asking yourself what’s an NFT? How does it work? Can I buy anything with it? And if so, can I invest in it?
Definition of an NFT
The acronym NFT stands for Non-Fungible Token and is a type of crypto. The “fungible” word means that this token is not exchangeable. Though they have been in existence for a while, they have only started gaining traction because of a few things. For instance, Twitter CEO Jack Dorsey selling his first tweet, a dunk by LeBron James being auctioned, or the auction of the Nyan Cat GIF to mark its ten years in the industry.
To put it into context and ask what NFT means, you have to understand the meaning of nonfungible. For instance, you can only exchange a $20 bill with two $10 bills. You can only swap a bar of gold with a bar the same size. These items are fungible. However, a nonfungible token is a bit unique and is thus considered not mutually interchangeable. This token is like a currency unit on the blockchain but does not operate the same as other cryptocurrencies like Bitcoins are traded.
Where Are They Used?
Now that you know what’s an NFT, you might be wondering where I can use them or what I can do with them. With an NFT, you can use them to get a unique digital copy of something like the signed Nyan Cat GIF or create a sense of digital scarcity online.
With an NFT, you can use them in specific applications that may need digital items such as digital collectibles, crypto art, online gaming, etc. Early cases of the use of NFT’s were mainly in the art world and generally in the blockchain. They used them because they could provide proof of ownership and authenticity of digital art, which is difficult to verify due to the reproduction of many copies and unauthorized or unlicensed distribution of art through the internet. In the gaming world, the NFTs can signify in-game assets that are user-controlled and not made by the developer. Purchases are allowed to be sold in minor party marketplaces without seeking the go-ahead from a game developer.
Does It Mean I Cannot Use Anything Auctioned or Trade on NFT?
Once you understand what does NFT mean, you will realize that purchasers usually get what are usually considered distinctive copies of a product. This means you can still use the art or the Nyan Cat GIF. However, NFTs are designed to give you authenticity and items you cannot copy. The artist, however, might opt to keep copyright, distribution, and reproduction rights which are the same rules that apply with physical art. To put it in a more substantive context, anyone can own a copy of the Nyan Cat GIF, but only one person owns the signed copy of the GIF.
If I Can Get the Items Online, Why Waste Time on NFTs?
Well, you might have considered that NFTs might not be worth it or might not benefit you at all. However, they can come in handy in the digital world, especially in the art world. How may you ask? Well, we grouped some of the beneficiaries right here.
Benefit the Artist
In a world where piracy and unauthorized distribution are seen as an impediment to expanding the art world, NFT can come in handy for artists who are looking to make a living out of selling their work. For instance, if you come up with a cool digital piece of art, you can sell it using NFTs. Some of the tokens even have a way that enables you to get a percentage of the sales each time someone the NFT is sold or ownership changes. This ensures you enhance your popularity as well as improve your value.
Benefit the Buyer
An obvious benefit of purchasing art through NFTs gets you some fundamental usage rights, such as posting the art you have purchased online or even making it your profile picture. It also gives you a sense of bragging rights because you are the art owner and have a Blockchain entry to back it up. For collectors, they may benefit because they can wait for the art’s value to increase and sell them again at a higher price and make a killing from it.
Other Benefits of Owning NFTs Include:
- Indivisibility: NFTs cannot be broken down into many denominations. They are present in a wholly distinct form.
- Verifiability: It is effortless to store any data history of ownership on the blockchain. This means you can easily check up to see who created a piece. It is also tough to change the data later as it is challenging to replicate in any setting. This feature also allows pieces to be validated without outsourcing for services from a third party.
- Durability: Since all NFT data is stored on the blockchain through smart contracts, it is difficult to destroy, create a different form or remove NFTs. The tokens are incontrovertible, meaning that the collector, artist, or gamers wholly possess the NFT and not any company that creates them. This is incomparable to getting an album from iTunes where you do not get to own what you are buying but purchase the license.
- Transferability: NFTS, once purchased, can be sold in a particular market. Their use depends on whether they are original. They can, however, be easily transferred from one person to the other depending on who might want to use them.
- Reliability: The whole purpose of the technology of blockchain and nonfungible tokens in extension is that they are genuine, and it is difficult to create an alternate with a proper and concrete record.
Are NFTs Unique?
Technically, yes, every NFT is a unique token on the blockchain. However, there is only an authoritatively authentic version. Some NFTs, however, work like a trading card where there probably will be a hundred or one fifty numbered copies of one piece.
Will the Digital Art Be Durable Over a Long Time?
Most likely, no, Bit rot is actually a thing. Some image qualities become weaker over time; some file formats become obsolete; thus, one cannot open them, you may forget your password. However, it is just the same as art in museums which are considered pretty delicate.
The NFT market is certainly a force to reckon with when it comes to things like data ownership, especially in the art and gaming world. This means that the NFT industry will continue to expand, and platforms will continue to emerge as time goes by. The use and terms of the NFTs are slowly shifting from just games and art to decoration, online ticket sales, identification on digital sites, and other cases. Its uses will certainly expand depending on how developers and users might decide to put it into use.
Other Definitions of NFT
Besides the crypto meaning, NFT also stands for other things including:
- No Further Text: If there is no other text communication coming.
- Nutrient Film Technique: A popular and versatile hydroponics system that uses a pump to deliver fertilized water to the grow tray and a drain pipe to recycle the unused nutrient solution
- National Football Team
- National Film and Television
- Not Flown/Flying Together