Non-Fungible Token (NFT) has received a lot of attention lately. But what are they? And why are they being traded for millions of dollars?
The question of traceability
The value of art, such as painting and sculpture, has always been quite high. The worth of a work of art is generally determined by the artist and whether or not the piece can be shown to be an original. Art historians and connoisseurs may spend hundreds of hours authenticating a work of art in order to ensure its validity.
But in the era of the Internet, when digital works of art may be duplicated endlessly, how can you tell which version is genuine? How can you figure out who made a file?
Smart contracts and NFTs
Blockchain is used to track and authenticate digital transactions. Ethereum’s technology, on the other hand, has evolved far beyond cryptocurrencies to include so-called “smart contracts” – which is where non-interchangeable tokens (NFTs) come in.
Artwork owners may construct their own NFT using a smart contract, which is kept in a distributed blockchain ledger. This unique token is indivisible, unbreakable, and indestructible. It’s kept in the owner’s digital wallet and is not dividable, unforgeable, or destructible. These non-interchangeable tokens can be purchased and sold just like real photographs after they’re generated.
What about copyright?
The most popular NFT to date was the one given to Nyan Cat, which has a market value of about $600,000. When Nyan Cat NFT was put up for sale, it was purchased for 300 Ethereum coins, which is around $600,000.
So, is the copyright in this NFT now owned by the owner of this NFT? No. He simply has ownership of the picture and its associated social esteem. TA rightholder may identify a photograph as his or her own and claim it to be “original” – even if the millions of other copies on the Internet are identical, he or she has the genuine article rather than a duplicate.
The value of the item is backed by an identical artwork, and if the digital artwork continues to appreciate in value, it may be sold or auctioned like a real work of art. It’s conceivable that NFTs will become another popular investment alternative.
Anyone can buy NFTs?
Yes, non-interchangeable tokens and associated artwork may be purchased by anybody. All you need is a digital wallet that supports Ethereum cryptocurrency to buy and sell non-interchangeable tokens and related artwork. You may then use one of NFT’s many trading platforms, such as OpenSea or Rarable, to build your digital artwork collection.
However, as with any cryptocurrency transaction, you should keep in mind:
The value of cryptocurrencies and NFT is unpredictable, thus the artwork you submit may depreciate considerably. However, their price can rise dramatically over time, which might result in significant earnings.
Your digital wallet is similar to a real wallet; if your NFTs are stolen or hackers get access to your passwords, they can steal them as well.
It will be fascinating to see how the NFT market develops, as well as how this technology may be utilized in other applications.
