The surprise factors with NFTs
Non-fungible tokens (NFTs) have been all the buzz lately. Jack Dorsey sold his first tweet as an NFT for over $2.9 million, while the third most expensive work of art sold by a living artist was an NFT by Beeple that sold for $63.9M.
What is an NFT?
An NFT (non-fungible token) is a blockchain-based digital certificate for digital goods representing and proving ownership. While NFTs don’t (and can’t) prevent the digital goods from being copied, they do prove ownership of the original. NFTs are cryptographically protected and unique, so there can only be one owner.
By representing official ownership, NFTs can then be bought and sold like physical goods. NFTs also allow the original owner to receive an ongoing royalty whenever the “original” NFT is later bought and sold.
While NFTs aren’t perfect, the ability to create verifiable ownership of a digital product is unlocking a massive amount of innovation. It means digital goods from video clips to tweets can be owned, bought, and sold — creating a global market for digital goods that could rival and maybe even someday surpass today’s market for physical goods.
How do they work?
Let’s start with an example. Imagine you’re a famous photographer and you take a photo of your dog. You post the picture on your website or an NFT marketplace, where you showcase your art.
You then create an NFT for that photo using a process called minting. Now, you can sell that photo by selling the associated NFT.
Like with any other possession, the NFT buyer can later sell it themselves. As the original creator/owner, you can receive a royalty (based on the selling price) for each subsequent purchase and sale. This creates a tremendous incentive for people to create and sell NFTs for their digital goods.
NFTs making headlines
- Monaco F1 Delta Time track: NFT-powered racing game F1 Delta Time has auctioned off a segment of an in-game track for $222,000
- World’s first digital NFT house sells for $500,000: The new homeowner paid digital artist Krista Kim 288 Ether — a cryptocurrency that is equivalent to $514,557.79 — for the virtual property
- Fox Creates $100 Million Fund for the Non-fungible Token Market: The network is launching a new fund for digital creators and seeding it with $100 million
- CNN selling historic news ‘moments’ as NFTs: The network’s NFTs will depict historical moments such as space travel, technological advancements, and presidential elections
- A ‘Baby Birkin’ NFT was sold for the equivalent of $23,500: Its sale price pales in comparison to the estimated $9,500 price of the 25-centimeter physical “baby” Birkins sold by Hermès
- Israel President to Receive Oath as NFT at inauguration: Israeli parliament will issue the newly elected president with a tokenized version of the presidential oath
- Mastercard-powered NFTs will help consumers offset carbon ‘down to a cup of coffee’: The company will incorporate carbon footprint tracking into its blockchain-based solution
- IPwe and IBM Seek to Transform Corporate Patents With Next Generation NFTs Using IBM Blockchain: They are working to allow enterprises to sell, buy, trade, and commercialize their IP more easily
- airBaltic — world’s first airline to issue NFTs: The airline company recently issued NFTs to create a collectible marketplace around its brand
While the exact future of NFTs is unknown, one thing is for sure. There will be many other developments in this decentralized economy that have yet to be imagined.
