The NFT market has been on a rollercoaster ride in 2021 starting with the $69m sales of a digital artwork backed by a cryptographic token known as an “NFT” hit the headlines. But what are NFTs and why are they suddenly so popular?
In the new age of cryptocurrency, NFTs are a new economic collectible form of digital art. The popularity of NFTs has begun to rise on the internet. This started to happen when Mr. Yuvraj Singh the famous Indian Cricketer had launched them with the partnership of Colexion.
Sorry for writing about it late, I was busy right-clicking on that Beeple video and downloading the same file the person paid millions of dollars for.
Wow, rude. But yeah, that’s where it gets a bit awkward. You can copy a digital file as many times as you want, including the art that’s included with an NFT. Now let’s see what is NFT’s and what’s the craze everybody is having about it?
What are NFTs?
NFT stands for a Non-Fungible Token which is a digital file stored on a blockchain network. The blockchain network records and distributes digital information. The unique thing about NFTs is that it is the original file. Although there are a bunch of copies and prints of the art piece, there can only be one owner of the original.
The person who has ownership over the file has custody of it permanently, which makes it nearly impossible to try and copy the properties of the original. NFTs are created so that there’s one like no other. When selling an NFT, you are giving all the ownership and rights to the buyer.
NFTs are cryptographic tokens – much like a cryptocurrency – that are recorded on a blockchain and can be used to prove the authenticity, ownership, and provenance of anything – physical or non-physical – such as artwork, collectible cards, or real estate, non-fungible implies the token is unique and cannot be duplicated or swapped for anything else (unlike individual bitcoins, for example, which are “fungible).
NFTs are a type of cryptocurrency. With this comes crypto climate concerns. Ethereum is a form of currency also known as Ether or ETH. Ethereum is a blockchain platform, it creates and shares financial services, entertainment applications, and business affiliations.
Ethereum with NFTs is a type of security. It allows developers to publish without any risks of fraud or interference from other parties. Since NFTs have only one owner at a time they’re secured by the Ethereum blockchain which stores extra information than a typical ETH coin. This guarantees the buyer's original rights when purchasing, or proof-of-work (POW) security.
NFTs are not just for tokenizing assets. They can also act as smart contracts – contracts that are programmed to automatically execute certain actions in certain conditions.
NFTs are used for –
· Art and music
Why were NFTs introduced?
They have been presented as a solution that ascertains ownership over an object that can otherwise easily be reproduced. Unlike a traditional painting or sculpture, digital artwork is trivially easy to duplicate – it’s just a matter of downloading a copy. NFTs prove authenticity in the same way that the blockchain ensures a single bitcoin is owned only by one person.
Why are NFTs so popular?
These tokens are the most valuable asset in the digital world. They can be created using blockchains. The blockchains are being used to get bitcoins, these coins are also known are Cryptocurrencies. NFTs are also known as the nifites they represent the digital world in the real world. They are popularly being used in the art, video, gaming, and music industry. They are bought and are being sold with the cryptocurrencies encoded with a digital number and software.
In the End,
But even with NFTs gaining popularity, as with any other asset class, there is always the risk that the bubble bursts. NFTs may be the white-hot phenomenon of the moment, but, as with any new technology, they still have some way to go before they are widely accepted and become truly mainstream.
Despite the eye-watering sums changing hands in headline-grabbing transactions, they are still very much a niche product, and may well turn out to be a passing fancy – digital tulips, perhaps (or Cryptokitties, even). Holders of tokens could end up sitting on a surplus of NFTs with little buying interest if there is a slump in their popularity, in the same way as numerous bubbles have burst over the last several years.