An NFT, or non-fungible token, is a unique digital asset that isn’t replaceable with something else.
For example, a Bitcoin is fungible – meaning a trade for another Bitcoin can occur, and you would have the same thing. An NFT is a one-of-a-kind – you cannot exchange for a replica once you trade it.
NFTs are also seen as another form of storing data on the blockchain.
What is Considered an NFT?
NFTs can be anything digital, like art, music and movies. They are also being used to link something digital with real-world assets. For example, owning an NFT would be similar to owning a negative for a photograph. It effectively gives and proves ownership of the creation.
One popular argument against NFTs is that anyone can save a digital copy of the file. A simple right-click, save as and, you’re now the proud owner of this NFT, right?
This doesn’t differ that much from the art world today. Anyone can have a print of the Mona Lisa in their living room. Only one person can own the original. Purchasing an NFT gives that buyer the right to the original and sell it when the time comes.
Some people have struggled to understand that digital art can be worth millions of dollars. Beeple, an early digital artist, sold an NFT for $69 million at Christie’s Auctions. Canadian musician, Grimes, sold a 50-second video for $390,000.
The return these artists obtained only proves NFT sceptics wrong.
History of NFTs
Implications of NFTs have only just started, with Open Sea posting over USD$3 billion in the total volume of transactions in August.
Arguably, NFTs are still in the early adoption phase despite being around for the last few years.
Cryptokitties, launched in 2017, allowed players to virtually adopt, breed and trade virtual cats on a blockchain.
Cryptopunks, also launched in 2017, have recently been incredibly successful, initially releasing 10,000 variations for free in 2017 with price floors now at 100+ ETH.
Future Implications of NFTs
You’ve probably come across multiple NFT projects listed on various marketplaces that are focused on connecting a real-world asset to NFTs relating to real estate, supply chain or art… It’s only the beginning.
In an exciting collaboration, video games are incorporating NFTS more and more. Axie Infinity, inspired by Pokemon and launched in 2018 by developers from Vietnam, saw exponential growth in its user base, with over 1 million active users today and over USD$1 billion in sales. Users can battle other players and breed and trade their monsters with other players to make a profit.
Star Atlas, a more recent listed project with the game still in development, has multiple NFTs trading in secondary markets to drive user engagement and community growth ahead of its release.
The foundations of the game are built on EVE Online and World of Warcraft concepts, introducing virtual economies where players can trade resources and items.
The crypto and gaming connection can draw large audiences from the video game world to the cryptoverse as virtual economies can potentially become monetized for real-world wealth.
NFTs, Brands and Celebrities
In recent times, NFTs are gaining traction in the eyes of the public. Household companies and big celebrities are riding the wave and taking advantage of this market in its early stages.
Nike
Nike Inc. is seeking to trademark its brands for virtual goods in the U.S. The sportswear giant has filed several requests with the U.S Patent and Trademark Office to protect its mark in categories that include ‘downloadable virtual goods’ for retail stores and entertainment.
These virtual goods include the likes of headwear, eyewear, bags, backpacks and sports equipment under the Nike and Jordan brands, with identifiers like the Swoosh, Jumpman and the ‘Just Do It’ tagline.
Shaq
After breaking into the NFT scene, four-time NBA champion Shaquille O’Neal partnered with Ethernity Chain to release a collection of NFTs.
The collection featured five NFTs depicting scenes from three of the teams O’Neal played for; the Los Angeles Lakers, the Orlando Magic and the Miami Heat.
Along with the NFTs, buyers were entered into a draw to win a pair of custom size 22 shoes, a personal video call with O’Neal and a dinner table at his music festival.
Opportunities to innovate are endless with NFTs and what we have seen is merely the beginning.
While the notion of NFTs is still confusing to some, it’s just another platform and media type for everyone to enjoy art, popular culture and memes.
