Metabase: What Is An NFT? Why Are People Going Crazy About It?
NFT, the short form for Non-fungible tokens, are unique crypto tokens that exist on the blockchain. Whereas Bitcoin or other cryptocurrencies function as a form of digital currency, NFT’s can be thought of like information tokens, and unlike other cryptocurrencies, they are not mutually interchangeable.
NFT advocates argue that NFTs provide a public certificate of authenticity and ownership. But with some of the exorbitant selling prices of NFT, as well as the marketing of NFT by some reputable (and not so reputable) companies, do NFT actually deserve the value and attention the market is giving them?
A digital certificate of authenticity
To better understand NFT, let’s first understand WHAT can be an NFT. Naysayers often point to the outlandish prices of many picture art NFT to proclaim the entire technology is a scam, ponzi scheme or money laundering racket. The truth is that an NFT is simply recorded information, whose credibility is supported by the immutable nature of blockchain technology. NFT are not just limited to pictures or art. Anything whose value is determined by its authenticity can gain from using NFT technology.
What can be an NFT?
NFTs can be anything digital. A picture, a video, a song, or even the first ever tweet on Twitter. One of the most famous NFT collections is the Bored Yacht Ape Club, which is a collection of computer generated ape pictures that have become famous for their high selling prices and usage as status symbols on social media. But let’s look at a more practical example; collectibles.
Physical collectibles and art rely on a faith based system of trust. The seller promises the authenticity of an item to prove its value, and the buyer must trust the seller. Buyers can add an extra layer of trust by having an expert grade and verify the item, but some counterfeits can fool even the experts. When you buy your favorite athlete’s autograph, and you trust the seller isn’t lying, how can you be 100% sure? NFTs solve this issue. A good example of this is autograph.io. Here you can buy Tom Brady, Tiger Woods and other athletes digital autographs and digital collectors cards, whose scarcity and value are guaranteed because of the blockchain. If an athlete mints 100 NFT autographs, then there can never be more than 100 ever made. NFT are anti-counterfeit, thus helping to improve the value of authentic items.
NFT do not have to be digital
One of the biggest misconceptions with NFT is that they are all mass generated cash grabs centered around computer generated art of little to no value. But remember, an NFT is simply unique digital information stored on the blockchain. NFT might not change the art world, but they will change how we store and secure information.
We all have documents that are considered essential to life, whose storage is trusted to centralized authorities. NFT technology can be used to create a decentralized record that cannot be transferred or altered. A new work contract, your personal medical information or your mortgage contract are just a few examples of physical contracts that can gain an extra level of security by minting it to the blockchain via an NFT. Imagine a labor dispute where your employer alters your contract. Yes, you have your own copy of the contract on paper, but outside of a stamp or signature, there is no way to verify which contract is the unaltered copy.
Of course we want to trust that our employer or bank keeps honest records, but why rely on trust when blockchain technology can create technological trust that is immutable. Not to mention the damage that can be done by hackers or data theft.
The difference between cryptocurrency and an NFT
The main difference between an NFT and cryptocurrency is economic. Crypto is seen as a store of value and are interchangeable. 1 bitcoin is always worth the same as any other bitcoin. NFTs have both economic and non-economic value. There is the underlying value of the token it is minted on, but the actual value of the digital asset stored by an NFT is fluid, determined by the market and what another buyer is willing to pay for that verified asset.
Where can I buy an NFT?
NFT can be purchased through a variety of platforms. Some of the most famous NFT marketplaces are; Opensea, MagicEden, LooksRare, and SuperRare. Here you can browse NFT for sale, purchase or place bids for NFT being sold by auction. Other vendors offer NFT directly on their own personalized marketplaces. Most NFT games will have marketplaces directly on their landing page, exclusive to their brands NFT.
NFT are here to stay
Though NFT are a polarizing new technology, they are neither a scam nor will NFT change the world. Instead, they provide a new way to use decentralized blockchain verification to create value for a variety of assets. Are you a large corporation who needs to verify goods traded in a complex supply chain? NFT can help. Are you sick of video games being the only ones who profit from in-game monetization? NFT can help. Are you a digital artist who wants to prevent your work from being stolen or sold via counterfeit? NFT can help!
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