NFTs (non-fungible token) and Ethereum are two technologies that aim to address some of the internet’s current problems. Physical properties like scarcity, uniqueness, and proof of ownership need validation as the world becomes more digital.
These digital items are only valuable when combined with their product. You can’t resell an iTunes mp3 or exchange one company’s loyalty points for a credit on another platform, even if there is a market for it. But NFTs is changing the narrative. Let’s explore further.
What You Need to Know About NTFs
There is little doubt that the NFT ecosystem’s current explorations have only scratched the surface of this thriving industry’s full potential. We are still in the formative stages of a young and developing space, with many new ideas and projects taking shape. The impact of this ecosystem on established industries has been and will continue to be profound.
The NFTs space continues to see rapid adoption and participation from influential brands, including:
The NFT ecosystem’s independence, provable authenticity, and security empower independent creatives such as artists, musicians, and filmmakers. The possibilities for creators are limitless, opening up an entirely new global environment for showing and selling their work.
There’s no doubt that the World of NFT is on the verge of mainstream adoption and will revolutionize and disrupt both new and established industries.
What Are NFTs?
Non-Fungible Tokens are easily exchangeable and individually unique digital assets stored on specific blockchains—most notably Ethereum, but also Matic, Flow, and Wax. Although the concept for NFT dates back to 2015, it wasn’t until 2017 that the first projects went live using the ERC20 standard on the Ethereum Blockchain. Over the next two years, additional NFT standards got accepted and implemented.
One of the primary distinctions between Cryptocurrencies and Non-Fungible Tokens is each NFT is utterly distinct from any other asset in identity, value, or utility. Each Non-Fungible Token comprises metadata that defines its uniqueness; these attributes may include size, artist name, and scarcity.
Not only do NFT exist in a digital space, but they can also represent any physical asset, acting as a sort of ‘digital twin’ for anything that exists in the physical world. NFTs enable the ownership and exchange of material possessions within digital marketplaces.
Actual ownership is a critical component of any NFT. As digital economies continue to thrive, NFT will play a crucial role in bringing the digital and physical worlds closer than they have ever been.
The History of NFTs
NFTs were first introduced in 2016 by blockchain projects like Age of Chains and Rare Pepes, which used Bitcoin to create blockchain trading cards. During the stormy days of 2017 and 2018, these early experiments morphed into more extensive projects, culminating in the launch of Cryptokitties (a cute cat collectible with each blockchain-based cat being unique.)
Some of the first non-fungible tokens were CryptoKitties collectibles. Each blockchain-based cat is one-of-a-kind; if you sent someone a CryptoKitty, they would send you a completely different one unless they returned the same one.
The unique information of a non-fungible token, such as a CryptoKitty, is in its smart contract and immutably recorded on the token’s blockchain. You can own them in the same way you own your car or your house through cryptographic magic.
Crytpokitties appeared to take over the Ethereum ecosystem overnight, generating tens of thousands of transactions and clogging the network as users traded adorable cats.
While Cryptokitties’ popularity has waned in recent years, NFTs’ mechanics and growth have not. A slew of new NFT platforms and marketplaces are encouraging a new generation of creators to digitize:
- Artwork
- Digital land and real estate
- Collectibles
- In-game items
Recently, we’ve seen NFTs collide with Decentralized Finance (“DeFi”) trends, resulting in entirely new artistic and financial primitives.
How do NFTs make money?
NFTs are currently all over the internet, and even the mainstream is raving about them. Jack Dorsey’s first tweet cost $2.5 million, to Crypto Punks collectibles that sold for a million dollars, and Christie Beeple’s sale of collage of artworks sold for $69 million.
A non-fungible token (or NFT) is a cryptographic token built on a blockchain representing something unique, original, indivisible, programmable, self-executable, non-exchangeable, and thus non-fungible. They created it, intending to have one-of-a-kind and digitally verifiable properties.
Digitizing authorship is causing a revolution. As we can see, NFTs are now being used to cover a wide range of topics, acting as a digital type of certificate that connects the physical and digital worlds.
You have two options for profiting from NFTs:
- As a creator
- As a collector/speculator
Most people who make ridiculous profits with NFTs right now are speculators or people who buy them and then sell them for a higher price.
Then there’s the most popular and widely used method of earning NFTs for free—for your effort and skills. More so, you can earn NFTs selling and buying games and reselling them for a profit; gaming is an enormous industry with a lot of sales.
How Can I Benefit from NFTs?
Remember that an NFT can be anything from an image, a video, an in-game item, or audio. Art and blockchain gaming is currently the most prominent industry in the NFT world, but new ones may emerge as crypto develops (and perhaps even faster in the NFT world).
For example, real-world assets like real estate can now get a token—and given that NFTs are technically impossible to forge, why wouldn’t they eventually become an acceptable form of proof that you own a specific piece of land?
Increasing Creators’ Earnings
The most common application of NFTs today is in digital content. This is because the industry is currently in a state of disarray. Platforms are sapping content creators’ profits and earning potential.
An artist who posts work on social media generates revenue for the platform, selling advertisements to the artist’s followers. In exchange, they gain exposure, but exposure does not pay the bills.
NFTs fuel a new creator economy in which you, the creator, keep ownership of your work rather than handing it over to the platforms that promote it. You ingrain ownership in the content.
When you sell your work, the money comes straight to you. If the new owner sells the NFT, they entitle the original creator to royalties. The originator’s address is part of the token’s metadata, which can’t change, and it’s guaranteed.
Creating More Memorable Ethereum Addresses
The Ethereum uses NFTs Name Service to give your Ethereum address a more memorable name, like MyWallet. This means that instead of 0x1237435789, you could request that someone send you ETH via mywallet.eth.
It works similarly to a website domain name. ENS names, like domain names, have a monetary value, determined by their length and relevance. To facilitate the transfer of ownership, ENS does not require the use of a domain registry. You can instead use an NFT marketplace to trade your ENS names.
Increasing The Gaming Potential
Game developers have shown a lot of interest in NFTs. NFTs can keep track of who owns what in-game, fuel in-game economies, and provide various other benefits to players.
In many regular games, you can purchase items to use in your game. However, if the item was an NFT, you could recoup your investment by selling it once the game is over. If that item becomes more desirable, you might even make a profit.
As issuers of the NFT, game developers earn a royalty every time they resell an item in the open market. As a result, a mutually beneficial business model develops, where players and developers profit from the indirect NFT market. Meaning that even if the developers stop supporting a game, the items you’ve collected remain yours.
In the end, the in-game items you grind for may outlast the games themselves. Your items are under your control, even if a game is no longer maintained. As a result, in-game items become digital memorabilia with a value beyond the competition. Decentraland, a virtual reality game, even allows you to purchase NFTs representing virtual land parcels that you can use however you want.
Are You Ready for an NFT Economy?
People like to collect and own things they enjoy, so collectability is such a big part of human psychology.
Scarcity and existing market valuations combine to give NFTs their value. The rarer an NFT is, the higher its market value. Do you recall how popular CryptoKitties were? The more valuable your avatar, the more money it could bring you.
Other factors, such as the artist’s reputation and the various functions that their NFT may serve, are frequently added to the mix. Consider it like traditional art appraisal, which may seem strange to non-artists. Get in touch with East End Yovth more information about NFTs