NFT marketplaces make billions in monthly trading volumes, the NFT art piece by American artist Beeple sells for more than $69 million, NFTs constitute whole virtual worlds like Decentraland – why is all that craze and is it worth joining in?
For those who are still wondering what NFT is and why it is deemed so forward-looking, our review will serve as a quick explainer. Here are some basic notions: a non-fungible token is a recent technology based on the Ethereum blockchain that allows to assign a singular uncopyable code to any digital object and retain its uniqueness on the Internet. NFTs are developed from smart contracts executing and verifying legally relevant actions and were first proposed in 2017 as Improvement Proposals (EIPs) for Ethereum – the most widespread blockchain network – to standardize the way it works.
The core point to know about NFT is that it is neither divisible nor interchangeable (by definition, non-fungible). As a unit of data, NFT can correspond to a particular digital file or physical asset, easy to reproduce or unique (similar to a certificate of authenticity), and applies blockchain technology to give the NFT public proof of ownership. The good news is, almost anything can be tokenized on a blockchain – from the written word and video game items to exclusive art collectibles. Tokenization thus confirms the validity of ownership data even when copying or downloading NFT items, and serves as the ownership guarantee when buying or selling them.
For this reason, the world of NFTs is gradually turning into the widespread and mutually beneficial medium for both creators of collectible digital assets and traders, collectors and users – it opens up a whole new space for blockchain-based games, allows to certify the items’ authenticity, provide bigger exposure, and promote new ways of art monetization. NFT already has multiple practical applications and can easily integrate into other not-so-evident ecosystems such as the real estate market and domain names registration.