The past few months have seen social media carrying news pieces stating art being sold for ‘so and so NFT’. I am sure you and I both have come across this term far too many times now. This has got us wondering what NFTs are. While many have dismissed it for being just another new word connected to the virtual or crypto world, a lot of others have Googled about it.
If you are already into the crypto world or are a tech enthusiast, you might have a fair idea about NFTs, but if you aren’t any of it, you will be just as confused in spite of Googling about it, as I was until now.
So let’s together try to understand what NFTs are, in simple words.
NFTs or Non-Fungible Tokens are unique digital assets/commodities that one individual can own.
Now, what does the term Non-Fungible mean?
It simply means digital assets which are one of a kind and cannot be replaced. They are only one in quantity, unlike cryptocurrencies which are available in huge numbers. While you can exchange one bitcoin for another, you cannot do the same for NFTs. Each token that the NFT is for, has unique properties and doesn’t hold the same worth or amount as other similar tokens. That is why they are known as Non-Fungible or Non-Replaceable Tokens.
NFT is a great way to authenticate the original ownership of a digital asset/artwork. NFTs can only be bought and sold online as the items are virtual/digital and not real. The entire transaction of buying and selling NFT is recorded using blockchain technology. Thus, it is easier to secure the ownership of NFTs. Due to blockchain, it is extremely difficult to alter or counterfeit NFTs. Moreover, since there is a scarcity of NFTs, they hold a high value. However, unlike cryptocurrencies, NFTs are speculative assets. Even though their value can boost to high levels, their value can also drop to zero.
Since NFTs use blockchain technology which is decentralised in nature, anyone wanting to put their digital artwork on sale can create their own NFT and set a value of their choice. Those willing to buy their NFT can do so mostly using a cryptocurrency named Ether. In layman’s language, purchasing an NFT is like purchasing the copyrights of a virtual asset.
It is important to note that currently, NFTs are mostly limited to digital artwork like posters, audio/video clips, images, paintings, etc. A recent example of this would be the digital painting of Raja Ravi Varma going for auction. An iconic Indian painter, he is known as the ‘The Father of Modern Indian Art’ who brought a historic turn in the art of India. Similarly, India’s angry young man, Amitabh Bachchan put up autographed vintage posters of himself and his movies for auction as NFT collectables. His fans’ love resulted in the collection getting sold for 9,66,000 dollars (Rs 7.18 crore approx).
NFTs however might have gone one step forward than just dealing with digital artwork. In what’s being said to be the first, a South Korean university, Sungkyunkwan University issued NFT certificates to three students who won in-school competitions at the university’s upcoming online graduation ceremony. NFT certificates can be used any time as official proof of graduation without the risks of losing the original or fear of forged copies, the university assured. This means that the employers wanting to appoint these students can simply use these NFT certificates as proof of their education and qualification.
Similarly, Nike too recently acquired a virtual shoe company named RTFKT Studios that makes NFTs for Metaverse. This is indicative of companies preparing themselves to make a dashing entry into the next-generation world.
The coming of NFT is a new addition to the virtual world. Yes, there is a craze about it among the common people as well as the investors. Nevertheless, since it is in its baby stage, a majority of people are sceptical, mainly because it’s all virtual. It’s all about owning digital assets that we cannot touch. Thus, we cannot be quite sure of what it has in store for us.