NFTs means Non-fungible tokens (NFTs) seem to have sprung out of nowhere this year. Digital assets – art and music and even spicy tacos and toilet paper or a sneaker are selling for some millions of dollars. But wait? What? Yes, if you are working in the tech business in any capacity, the chances are that you have heard the buzzword “NFT” used around in the recent past.
But do NFTs deserve such value in the cryptocurrency market – or just the hype? Some experts think it’s a bubble poised to burst, like the 1990 dot-com craze or Beanie Babies toy craze of 1995. Others believe NFTs are the must-have that brings an upward trend in tech industries.
What are NFTs?
Look at it this way – think of NFT like a concert ticket. The ticket has all the details, such as the name and date of the event. One can verify the ticket as it tracks back to you. Your ticket is unique – no one can use it. It belongs to you and works for you until you wish to sell the ticket to some by transferring the ownership. NFTs work the same way.
The Rise and Current Journey of NFTs
NFT is claiming ownership by buying digital assets like art, music, images, in-game, and videos. They are purchased and sold online, constantly like cryptocurrency, using blockchain technology.
Cryptos have been around since 2014, NFTs are gaining a reputation in the recent past as buying and selling digital artwork has become more popular. According to the report, a vast $299 million has been sold on NFTs.
Most digital creations are continuously infinite in supply. If it is an asset of a traditional value, cutting the supply would raise the value. But NFTs are one of their kind that there is no replacement for a given asset.
In the early days of the NFTs, one can say that digital creations exist in some form elsewhere. For example, famous video clips of NBA games or securitized digital art are available floating on Instagram.
‘Beeple’ is an excellent example of the digital art to create NFT moments that sold for $69.3 million. Anyone can view ‘Beeple’ or the entire composite online for free. But why do people need to spend millions to buy such items when one can easily download them? The only reason is NFT allows the buyer to own the item that validates ownership. It’s more than the digital item itself that collectors value digital rights more than anything else.
How is NFT Different from other Cryptocurrency?
NFT – Non-Fungible Token – The underlying technology is mostly the same for other cryptocurrencies, like Bitcoin or Ethereum, but that’s the only similarity with NFTs.
“Fungible” acts like physical money that can be exchanged or traded for one another for equal values – not more, not less. One Bitcoin is worth another Bitcoin. Blockchain programming powers such transactions. NFTs can only be bought and sold. You cannot exchange NFTs for equivalent value or with other NFTs.
Enterprises that can Use NFTs
NFTs are not just for the art collectors who can make money with NFTs. It also has substantial implications for businesses. Access and proof are the two crucial aspects NFTs can bring into business as many industries see it as an opportunity.
Industries can do more with NFTs as businesses can give their customers the luxury of access control, ownership, money transfers, and origin. Anyone with unique stuff can digitalize but need to show ownership proof into an NFT.
Let’s see how the shipping industry can make use of NFTs. Traditionally, a bill of lading is couriered to the importer to take ownership of the goods. The bill of lading is converted into an NFT using Blockchain. The technology verifies the ownership of the digital document. It is difficult to discover the origin of digital assets without such technology. Hence NFTs become a valuable asset.
This case scenario works for many businesses that need to issue proof of ownership of documents/products. Cryptocurrency is made possible due to Blockchain technology. We all know how Blockchain works – a distributed public ledger that records transactions, and NFTs exist on a public ledger.
Commodities, licensing, supply chain, manufacturing, identity management, real estate, insurance, energy, voting, events, movie and music industry can benefit from NFTs. As of now, NFTs exist in art, GIFs, videos and sports highlights, collectibles, video game avatars, game skins, virtual sneakers, and music. Even a tweet Yes, -Twitter founder Jack Dorsey’s first tweet sold as an NFT for $2.9 million.
Upcoming Trends in NFT
Distribution of ownership control to the creators and fans is impossible in the current social media setups. Owners of digital creation can monetize, have decentralized control using NFTs in next-generation social network platforms. Using NFTs, creators can convert their content into exclusive digital collectibles. Fans and followers can buy, sell, and trade these in NFTs marketplace like the world coin index.
The internet has made musicians struggle to generate profit. Digital streaming platforms give paltry royalties to individual artists but are never a viable means to revenue. The artists have to rely on live performances to generate income.
But the recent NFT of Mike Shinoda’s One-Hundredth Stream sold for $30,000 on the crypto marketplace Zora. It was experimental, but the income is more than a month’s worth streaming. These are cheering signs for artists. More exciting and innovative NFTs are bound to explode soon.
Luxury Good Trading
NFT may reshape how the luxury market functions. It helps in ever-ending counterfeiting problems, faith and ease of doing business, and the cost of transactions. A luxury watchmaker has already set up Ethereum Blockchain to track the origin of their watches.
CryptoKitties, Decentraland, and Axie Infinity have been in the NFT revolution from the beginning, with a single CryptoKitty – one-of-its-kind cat collectibles purchased as an NFT for $170,000 in 2018. With NFTs introduced in gaming technology, players can collect and trade virtual collectibles such as assets and virtual avatars.
Gucci sold digital sneakers for $12 a pair but you cannot wear them. But you could wear them within an AR(Augmented Reality) environment. The fashion industry represents a huge opportunity to use NFT to sell their unique clothing and accessories across digital ecosystems.
Effect on Enterprises
The practical use of NTF is still limited, and it is new. But the recent trends tell us that people are willing to spend and own digital content. These are good indicators that NFTs are here to stay.
The digital world expects a reconstruction soon as non-fungible tokens opened up new horizons for customers to have more special purchases. Most technologies started as a craze, and NFTs are not immune to it. Enterprises are looking at transparency linked with security with a powerful underlying technology to trust, NFTs are here to break the limitations of the present system. It could be the best cryptocurrency to invest in 2021.
Create more memorable moments for your customers using NFTs. Use NFTs as your market strategy to have active interaction, engagement, lead generation to target your audience. The technology may still be new, but brands need to pay closer attention to leveraging NFTs to create ad campaigns. Collaborate with NFT creators to significantly impact your profitability statement.
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