What Is an NFT, and What Are the Perspectives of This Technology?

The Technical Aspect of the Digital Asset

Non-fungible tokens (NFTs) are units of data stored on a blockchain. NFTs are generated by triggering an algorithm of smart contracts to validate a transaction. As soon as it is done, a new record in the form of a digital signature is created. This is an NFT.

Copyright and Digital Art

This is currently the most popular aspect of NFTs. The NFTs have become the technology that solved the problem of copyright in the digital art world. By publishing their digital content to the web, the creators make it publicly available. It belongs to the public domain, and the creators can only profit from it as a means of self-promotion. Anyone can borrow digital artwork without actually owning it. In this case, proving the authorship could turn out to be quite difficult. It is necessary to provide a notarized screenshot or other documents proving that a specific person was the first to upload this NFT artwork.

Rights of Ownership to a Digital Artwork

Buyers also faced the same issue. Is it possible to prove that a digital asset belongs to a particular user? Is it possible to define the limits of their rights? In the offline world, the terms and conditions are usually specified on packaging or in a contract. On the internet, the same songs and digital images might be uploaded by hundreds of users, and it might be very difficult to determine who has violated ownership rights.

The Gaming Industry and NFTs

Gaming has long expanded beyond Tetris and Doom. Nowadays, it is a giant monetized industry where players spend their personal finance. NFTs have become a natural element of this market. In most cases, users buy NFTs, which represent game items such as unique character traits, weapons, ammunition, and even virtual real estate. The items are linked to the owner instead of the account, thus undoubtedly securing the proof of ownership.

Collectors and NFT

Collectors appreciate the new technology because their thought paradigm is different from that of most people. Many people are shocked by the fact that some fans are ready to pay millions of dollars for baseball cards or a painting. A collector, on the other hand, experiences great satisfaction from owning a particular object.

The Real Estate Market and NFT

It is not yet widely spread, but there have been some reports of users buying virtual real estate. Readers are usually shocked by the high prices thinking that this is about virtual property, but in fact, the situation is slightly different. This is not about digital houses (although they also exist in the gaming industry) but about actual real estate objects associated with non-fungible tokens. They often come at lower prices, and buyers pay in crypto.

Non-fungible Tokens in the Cinema Industry

This industry has not been captivated by the NFT craze yet, but the most forward-thinking motion picture companies and networks which have suffered during the pandemic are tapping into the world of endless possibilities of NFT. Selling personal event tickets, giving away rights to play in movies, and releasing posters for new movies are just some of the examples of this goldmine. Quentin Tarantino has already understood the rules of the game and offered previously unreleased Pulp Fiction scenes as NFT items.

The Consumer Market and NFTs

Among the latest businesses to understand the opportunities of NFTs are the consumer market giants. At first thought, it might seem that digital representations of sneakers do not have any value. However, it soon becomes obvious that people do not only value objects. They like to belong to some group and to own something unique.

NFTs of Network Attributes

Zoomers spend way more time online than apart from their devices. Their values are also deeply connected to their digital life, where users are constantly dealing with user pics, usernames, logins, domain addresses, and other things. Owning NFTs becomes quite important. This world has its own borders and its own rules that can hardly be regulated by national laws, and a non-fungible token becomes a powerful argument for defending one’s rights.

The Place of NFT in Decentralized Finance

In decentralized finance, non-fungible token assets can be used as collateral for getting a loan. The large NFT marketplace Rarible is moving towards this system, and it has already been implemented by NFTfi. Users can obtain crypto and leave an NFT with a certain value as collateral.

Why Would Anyone Buy an NFT?

  1. Collectors seek out unique digital assets to create or replenish their NFT collections.
  2. Crypto proponents explore the new concept of a non-fungible token and enjoy having their own NFTs.
  3. Fans support digital artists by purchasing their works.
  4. Gamers explore a new way of getting artifacts.
  5. Traders look for high-potential digital objects to use as collateral.

What Is an NFT Marketplace?

Platforms for minting and selling NFTs are sort of an automatic intermediary between NFT creators and buyers. They charge fees for certain actions, for example, for generating tokens, sometimes for selling them, and in certain cases, royalty fees for reselling items. Many marketplaces try not to charge fees at all, for example, Nifty Gateway, which allows users to purchase NFTs directly from an Ethereum cryptocurrency wallet. Large companies create their own projects for minting NFTs and distributing tokens in order to pay only for the blockchain fees.

Binance NFT

  • minting — 0.000001 BNB;
  • NFT trading — 1% of the value;
  • deposit and withdrawal — depending on the blockchain where the NFTs are transferred to or from.

OpenSea

Rarible

Why Do Some Experts Predict a Quick Downfall for NFT?

NFT is often called a bubble, and skeptics expect it to burst soon. However, the market exceeded all expectations last year. The record-breaking sale was certainly impressive: digital artist Beeple sold a collage for millions of dollars ($91.8, to be precise).

Storing an NFT-Related Object

One of the main drawbacks is the storage of tokenized objects. So far, NFT creators and marketplaces are responsible for its reliability. But if a blockchain network is closed, the asset disappears, and the NFT becomes useless. If a tokenized digital asset can be kept in a new storage environment, the issue will be solved.

The Environmental Issues

Most NFTs are generated on the Ethereum blockchain that operates on the energy-consuming PoW algorithm. The developers have promised to switch to the eco-friendlier PoS algorithm, but it has not happened yet. Some artists refuse to mint non-fungible tokens due to their environmental beliefs. With the appearance of “green” mining, this problem will also be solved.

Fraud

Many artists believe that NFT marketplaces do not ensure the protection of their rights on the NFT market. Anyone can download digital assets online and use them to sell NFTs. However, this problem is not limited to NFTs as a technology. In fact, creators and NFT platforms should join their forces to look for a solution.

Theft

It is difficult to steal NFTs, but tokens can be stolen if they are stored on marketplaces. Platforms strive to protect the assets of their users, but there have been security incidents.

How Can You Use NFTS in Your Business Right Now?

The most profitable way of generating and distributing many NFTs is to create your own app. All the expenses will pay off due to the absence of sale fees. To find your place in this new market, you need to come up with a good idea. You can leave the rest to ICODA. We have substantial experience in developing DeFi and NFT applications. Moreover, we will not leave you one-on-one with the market, but instead, we will create and implement a comprehensive marketing strategy. Your offer will be demonstrated to the largest audience possible, and its presentation will convince most of them of the numerous advantages they can benefit from by supporting your ideas.

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ICODA Agency

ICODA Agency

Fundraising & Community for Crypto Projects