What is NFT
NFT (non-fungible tokens or non-fungible token) is a technology that secures the ownership of a digital object to one user and confirms the uniqueness of the digital property. The concept comes from the world of cryptocurrencies and works on the blockchain: a technology that records data in digital blocks in a particular order. Blockchain information cannot be deleted or changed. Blocks are stored on different devices worldwide, not on the same server. Hacking a digital object on the blockchain is almost impossible.
A token is an element of a blockchain or a digital record that can be compared to securities or stocks in the real world. There are replaceable tokens, partially fungible and non-fungible (NFT token).
The technology appeared in 2017 and was based on the smart contracts of the Ethereum cryptocurrency. Smart contracts are written codes of agreements and a way to use an object. In the real world, the contract is secured with a signature; in the digital world, this function is performed by a token.
Initially, NFT technology supported blockchain art: it protected the copyright of unique content. Determining the authorship of a picture in the digital world is complex. The image with the cat in JPG format does not differ from the copy. When copying, uniqueness is lost, and the author remains unknown if users do not indicate his name under each publication. When an image receives an NFT token, the copy history is saved, and each user knows the author and owner precisely.
The first transition of a real work of art to digital became a performance. Banksy’s Morons (White) stencil from 2007 was purchased by Injective Protocol for $95,000. The result was burned, and only a virtual version was left in the form of an NFT token.
Now tokens are received not only by NFT paintings but also by copyright images, gifs, music, photos and videos, and game items. Even objects of the natural world: cars and real estate. Perhaps there will be no need to process paper documents in the future because NTF will even replace passports.
How to create, sell and buy NFTs
How to buy NFTs
First, you need to choose one of the sites. NFT platforms trade digital objects in cryptocurrencies, sometimes in dollars. Example sites: Juggerworld, Treasureland, Blockparty, Nfty Gateway, Rarible, OpenSea, NFT STARS, NFT-X, and others.
The buyer receives a digital certificate with unique blockchain data and stores the object on any device: in smartphones, computer memory, or flash drive. The object remains in IPFS (Inter-Planetary File System) – perpetual storage. Other users can download and view the thing, but the private key (certificate) remains with only one user. When copying, the owner can issue public keys to other users to confirm the object’s authenticity.
How to create an NFT token and sell it
The same platforms are used to create and sell. The user needs a crypto wallet to pay the platform commission (not always) and the object itself. The owner uploads content to the platform and sets a price.
NFT is created in one of the blockchain formats: ERC-721, ERC-1155, ERC-998, EIP-2309, and others that NFT platforms offer.
The NFT author has the right to:
- Limit the number of copies.
- Receive royalties from each sale (sometimes, this happens automatically).
- Do not prove copyright, which is registered in the blockchain.
Why are NFTs needed?
Content creators earn
Usually, authors promote the platforms where they publish their content. In return, they get advertising and virality but not money directly. With NFT, royalties from using his content are available to the author.
Copyright protection
Before the NFT, objects had to be signed to retain the author’s name. The method worked poorly, and the author’s name was often lost. The blockchain records the creator of the object, the current owner, and the history of resales.
Replacement of digital documents and tickets
With NFT, real estate or car ownership is confirmed by a token instead of a paper document. The technology is also used to sell tickets for events. The difference with conventional e-tickets and documents in terms of security: NFTs cannot be counterfeited or stolen.
Content interactivity
NFT adds interactivity to media content and includes the user in its creation.
Investments
Buying digital objects is a profitable investment. NFTs are getting more expensive, and digital objects are being resold for impressive amounts, but it is impossible to say which NFT will skyrocket in price. Not all NFTs are valuable: it depends on the author and characteristics.
Music NFTs
NFTs are revolutionizing the music industry by giving musicians opportunities they never imagined before. In current realities, most of the musician’s profits go to the manager, label, and distribution company. The amount of money going to the musician himself is, by comparison, very small. NFTs turn this model on its head by offering almost instant payouts with much more money transferred to the artist.
Musicians can use decentralized distribution platforms that pay money in real time when their music is listened to. It so happened that distribution companies charge substantial money for their work, and payments to musicians occur once or twice a year. NFTs, bring musicians and their fans closer than ever before. Songs, music videos, photos, GIFs, merchandise, and experiences will be provided to fans as NFTs.
Projects like Opulous are supporting musicians in new ways using intelligent contracts and NFTs. Artists can take out a loan to develop their music and repay it with the profits from releasing songs. With NFT, musicians have new opportunities to earn the money they need to launch a project or release new songs.
Various kinds of musical NFTs
There are several varieties of NFTs in the music space. Let’s find out how they influenced the industry we are used to.
Full songs and albums
Have you ever dreamed of getting your hands on the first recording of your favorite song or album? Now it’s possible! More and more artists and musicians are using NFT to release exclusive recordings to be closer to their audience.
Recently, acclaimed R&B artist and award winner Trey Songz launched an exclusive NFT Mystery Box on Binance NFT that includes new unreleased songs and unique tracks created by the author. Another NFT set from this collection features the latest songs, the opportunity to talk to Trey via video call, and even participate in recording a track for his album.
Digital artwork and photography
Works of art of various kinds play a significant role in the creation of performers and, to a certain extent, influence their income. Digital images include limited edition album covers, posters, and exclusive backstage photos from concerts.
For example, the Melos X David Bowie series on Binance NFT includes unreleased audio and photographs of David Bowie and behind-the-scenes stories.
Concert tickets
The growing popularity of non-fungible tokens is creating more ways to use this technology in the real world, such as exclusive perks, luxuries, and even concert tickets. The advantage of an NFT ticket is that you are protected from scammers and will never lose it!
Videos of favorite performances
Like NBA Top Shot NFT video clips, you can now forever capture the moment of your special concert by purchasing it as an NFT and even playing it at home in the future.
NFT art
Again, there are many different approaches and benefits that NFTs can offer the art industry. It can be said that NFTs are best known as digital images with unique owners. The volume of transactions with NFT art, at the moment, bypasses any other NFT resources.
NFT images vary; some cost 0.001 ETH, others 100+ ETH! The cost of NFT images is subjective and can be anything, depending on the buyer. Images with trendy designs, captivating GIFs, or simply interesting stories from an artist or famous brand are more likely to sell for more money than regular images.
Some NFT images can offer unique experiences as artists can interact with the data streams to enhance designs. For example, an enthusiast can program a digital photo of the Mona Lisa to smile when the price of ETH goes up and frown when it goes down.
Bringing NFT into the art industry will help traditional artists as well. Physical paintings will be able to receive a unique NFT “tag” (such as a QR code) that will allow them to track their owners. The artist himself can set the commission costs for each sale. Making a profit by reselling your work over the years is genuinely revolutionary.
How traditional media platforms are moving to NFTs
From time to time, new technologies or trends emerge that force market participant to either adapt quickly or risk being left behind. This phenomenon has recently become visible in the media industry due to the explosive popularity of non-fungible tokens (NFT) and their ability to change digital content ownership, distribution, and monetization. Since early 2021, several media platforms have been experimenting with new technology. Some have even included it in their plans to fully digitize their products and services.
NFT Quartz
In March 2021, the financial news website Quartz announced its plans to sell the news article as an NFT through a four-day auction on OpenSea. At the end of the auction, it was sold for 1 Ether (then worth $1,800) to an electronic art collector who goes by the pseudonym “zonted” on the OpenSea marketplace. The article was a handcrafted SVG image. As with most NFT art, the creator—in this case, Quartz—did not transfer the copyright to the report to the buyer.
TIME Magazine
TIME has been active in the NFT space since technology began circulating on major news websites. Like Quartz, TIME launched its NFT in March 2021. For its first campaign, NFT TIME tokenized the iconic theme “Is God dead?” cover, along with two other bodies with a similar theme, “Really Dead?” and the yet-to-be-published “Fiat Is Dead?” The collection includes tokenized images of all three covers. Notably, TIME sold its collection for nearly $500,000.
New York Times
On March 25, 2021, The New York Times sold an NFT column about the NFT marketplace Foundation for $560,000. What was interesting about this auction was that the tokenized article did not have any historical significance and did not address a specific historical event before the NFT sale. The article was written by Kevin Ruse just a day before the official launch of the NFT and is titled “Buy this blockchain column,” which seems to highlight the generosity of the NFT sector. According to Rose, proceeds from the auction went to the Neediest Cases Fund, a charity run by The New York Times.
NFT CNN
Another notable case is the CNN Vault project, which allows people to buy NFTs that historical display moments and exclusive stories from the last 40 years of operation. The tokens are minted and available for purchase on the CNN website. Buyers can showcase their collections on their CNN pages and earn rewards and other insider benefits by collecting tokens for related topics.
Gaming industry in the field of NFT and Play-to-Win Games
Games have always been created in isolated companies controlled by centralized entities. Developers or publishers dictate the system’s rules and usually have strict terms regarding in-game currency.
Players are generally prohibited from selling their in-game items or assets for fiat currency. Often they had to resort to the illegal use of third-party platforms and rely on insecure peer-to-peer (P2P) transactions. As a result, digital assets are ultimately owned and controlled by developers. But many players value their virtual property.
Play-to-Win games allow players to generate a steady stream of cryptocurrency simply by playing the game. The mechanics of each round may differ, but rewards usually come from staking, farming the game’s currency, or generating tradable NFT items. In older blockchain games, users mainly relied on random chances to win. However, Play to Win has created in-game economies and business models where players can work for income.
Axie Infinity on the Ethereum blockchain is one famous example. The game combines traditional video game elements and gameplay with the old blockchain game model. For instance, Axie Infinity features an adventure mode, PvP battles, and tournaments – which are commonly found in the traditional gaming industry. The game is available for Windows, Android, Mac OS, and iOS.
With its mix of gaming and finance, play-to-win games fall under the GameFi category. Each game provides financial incentives to play and progress. As mentioned, there is usually a deepening aspect of repeating specific actions that allow users to earn income in two main ways:
- Earn in-game cryptocurrencies. An example would be Axie Infinity’s Smooth Love Potion (SLP), acquired by completing daily quests or battling monsters and players.
- Earn or trade NFT while playing. Each NFT can represent an item, character, or another in-game collectible. Depending on the game, they can be purely cosmetic or serve an in-game use or purpose.
- There is a third play-to-win earning alternative: staking. Some NFT games allow users to lock NFTs or cryptocurrencies into intelligent contracts, generating rewards. For example, MBOX token staking rewards users with MOMO NFT mystery boxes. Each one contains a random NFT of various rarities that can then be sold on the secondary market. However, you will need a substantial initial deposit to win big staking rewards.
Conclusion
NFT (non-fungible token) is a blockchain-based technology that confirms the uniqueness of a digital object, protects copyright and keeps a history of changes and resales.
A digital object is uploaded to one of the NFT platforms, and the price is indicated in cryptocurrency (sometimes in dollars). Technology sells art, pictures, music, gifs, and game items. NFT even replaces paper documents when buying real estate or a car.
The technology gives income to content creators who receive royalties. NFTs are also an alternative to traditional investments. Digital objects are rising in value and are often sold at auctions for thousands and millions of dollars.
