What is NFT & does it have a future?

WhiteBIT
Published 09 July 2021

Have you ever thought of a possibility to purchase the scene of capturing the “sticky bandits” from Home Alone? Or, for example, buy Ross’s phrase “We were on a break!” from the legendary TV series Friends? Thanks to blockchain technologies, it has become a reality, and such a purchase can, in fact, be made with NFT tokens.

NFT is a relatively new phenomenon, and not everyone can understand its essence. This is not a coin or an ordinary token issued by developers.

A non-fungible token is a unique asset that cannot be replaced with a token of the same kind. Tokens live in the blockchain environment, where they are recorded in its ledger. One Bitcoin can be replaced by another Bitcoin, just like one dollar can be exchanged for any other dollar bill, and it will not cause changes. It is the irreplaceability of NFT that distinguishes it from other tokens.

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Where are they applicable?

NFT adds a unique item or phenomenon to the blockchain ledger. Take, for example, Tarantino’s Pulp Fiction and any Jarmusch film. These are two different brainchildren, which cannot be replaced with each other, so they will be introduced into the blockchain with two different NFT tokens.

Thus, NFT is a digital certificate storing all vital information about an object, its creator, owners, and operations associated with this object on the blockchain network.

Vivid examples of using NFT

In practice, NFT tokens have been actively used only recently. The first known example was the application of such technology in the CryptoKitties game in 2017, where it was possible to breed, exchange, sell and buy unique kittens.

More illustrative is the use of NFT in the art world. Selling NFT tokens for songs, paintings, albums, and any other intellectual products has rapidly come into fashion in the past few years. In March this year, a digital artist Beeple managed to display and sell his work “Everyday’s: The First 5000 Days” as NFT at the world-famous Christie’s auction for a record $69 million. It made him one of the top three richest living artists, which is considered the most expensive NFT in May 2021.

 

Elon Musk did not lag behind technological innovations either and even intended to sell his song about NFT at the Valuables auction, but, in the end, changed his mind and removed the object from the auction the next day after the announcement. Musk’s girlfriend Grimes acted more decisively and sold her drawings in NFT for a total amount of $5.8 million.

 

If it is relatively clear with items like songs and pictures, is it possible to sell something more abstract? How about the most successful NBA shots? In other words, anyone who wants to feel involved in the world of American basketball can own a moment from the game, the so-called NBA Top Shots. It is somewhat like collecting football cards with players; the only difference is that one specific “moment” can only belong to one person. So LeBron James sold one of his spectacular NFT video shots for $208,000.

Another interesting example of using NFT in an even more abstract format is the sale of the first tweet of Jack Dorsey, one of the founders of Twitter. The short message “Just setting up my twttr” can still be found on Dorsey’s Twitter page, which eventually went under the hammer for $2.9 million.

 

What can you do with items purchased with NFT?

Collect and take pride in the fact that you are mentioned as the owner of this object on the blockchain network. Hence, NFT tokens get criticized for not giving their holders full ownership rights. The abovementioned shot by LeBron James remains captured on videos available to the public, and anyone can enjoy the moment for free despite the fact of it being sold as NFT.

What is then the point of buying NFT? It gives a feeling of exclusivity and engagement with something significant, as the name of the NFT buyer gets necessarily recorded in the blockchain. Practices like these are especially popular with collectors, art people, and fans of certain phenomena who want to be closer to the object of admiration. In addition, buying something for ETH can always be considered an investment. Its rate, as the rate of any other cryptocurrency, changes, and it can be profitable in the future.

The future of NFT

The slump of Bitcoin in May 2021 did not affect the popularity of NFTs and their market in general. This indicates the absence of the direct link between traditional cryptocurrency and NFT tokens as such. Moreover, after the record-breaking sale of Beeple’s digital painting “Everyday’s: The First 5000 Days,” sales of non-fungible tokens have skyrocketed.

NFT tokens from promising artists as well as sports tokens are named among the most profitable investments. However, experts suggest investing no more than 10% of the investment portfolio in NFT due to their relative novelty.

Many, however, see NFT as a revolutionary step in blockchain development that can affect the future of market relations globally.

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