What is NFT? Why are people ready to pay millions of dollars for them?
Christie, through an auction, sold a digital art named ‘Everyday: The First 5000 days’ for a whooping US 69 million dollars. Different websites like NBA Top Shot have been selling digital NBA cards, where one single card is selling for more than US 200,000 dollars.
The explosive market of crypto art is not a matter of joke. Let us understand why NFT has become a trending matter of discussion everyday.
What is NFT?
NFT (Non-Fungible Token) is a form of digital file that has ownership and verified identity. The verification process is conducted using blockchain technology. Because cryptography and blockchain technology are interrelated, you can hear a lot of crypto-related words when talking about NFTs. For example, crypto-collectables, crypto-art, etc.
Is NFT the same as Bitcoin?
The main difference between Bitcoin and NFT is that Bitcoin is limited and fungible in nature. Being fungible means each bitcoin will have the same price, and when it comes to trading one bitcoin with another, both of them can be traded as equal. On the other hand, NFTs are not limited in nature, and if we talk about fungibility, two artworks can never be the same. Also, two NFTs cannot be interchanged for one another.
Why do NFTs have value?
With NFT, you can securely purchase, exchange and value digital art through the use of a digital ledger. NFTs have slowly started to make their mark through gaming, digital art, digital patents etc. NFTs are more of a collectable item that cannot be mutually exchanged or interchanged. They are simply created by uploading files like digital art and auctioned in a virtual marketplace.
The ethereum blockchain network is used to store these digital arts and tokenize them to prove the ownership of those products. Therefore, we can conclude that for selling an art form, the middleman is removed from the picture.
The future of NFTs
We can clearly see the impact of cryptocurrencies, blockchain technology and digital assets in our daily life. And NFT is showing the exact same growth pattern as its predecessors have shown before. But the future’s still uncertain and may require some correction to exist in this socioeconomic society.
Although it is true that the current young generation people are highly interested in NFTs, the most important question remains if this generation has the power to continue purchasing these digital assets and utilize them in the future.
As for the NFTs themselves, their true potential is yet to be discovered. We don’t know yet if the major art industry and fashion personalities will submerge themselves into this new and emerging technological advancement. But the fact that NFT has opened the door for many artists to be recognized and valued for their work.