Possibly you have heard of the famous NFT and they have briefly told you what this new form of buying and selling art is all about. In this article we will tell you the keys about NFTs: What does NFT mean?, what is a non-fungible token and why it is so relevant in the world of blockchain.
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What is an NFT?
NFTs are unique digital assets Blockchain technology is used to represent works of art and collectibles, from videos to songs to images. The main impact of NFTs is to facilitate the possession and sale of digital content.
In the past, for example, digital artists could amass a large social media following, attract freelance commercial work, and perhaps sell prints and other merchandise featuring their designs, but they had trouble monetizing digital art directly, as consumers asked: Why should I buy it when I can take a screenshot for free?
While the technology behind NFTs made it easy to trade and sell images online, it's really the NFT community that should get the credit for it. create a market for these digital assets, because technically, digital images that have been converted to NFTs can still be saved or captured at no cost.
How does it work?
Typically, creators or artists mint their work on an NFT marketplace, which includes platforms like OpenSea, SuperRare, Nifty Gateway, Foundation, and many others. Minting is the act of creating an NFT, which means create a smart contract that will be stored in the blockchain network. The smart contract contains a lot of important information: it lists the creator of the work and guarantees that the creator, or other parties, receive royalties every time the NFT is sold.
While artists constantly encourage other artists agmake a lot of money doing NFT of their work, there are obstacles. Perhaps most prohibitively, mining an NFT is not free, and its cost increases the more congested the Ethereum network becomes, and more computational effort is needed to get the job done. The financial cost of that required computational effort is the "gas fee," which fluctuates constantly. Currently, it costs about $70 to mint an NFT on Ethereum.
What problems do NFTs have?
While NFTs have had a positive impact on many artists, there is not yet enough data available to see if NFTs are benefiting many or just a few. The only comprehensive NFT study published so far collected prices from 2017 to April 2021 and reported that $15 was the average sale price of 75 percent of the NFTs, with only 1 percent of NFTs reaching prices above $ 1,500. This data, however, should be taken with a grain of salt. It's heavily skewed because most of its data points come from a time before NFT was adopted on today's scale.
Preventing theft is an ongoing challenge: Artists who have refrained from creating NFTs have often seen their work minted by unknown parties, and only a few NFT marketplaces verify the creator of a piece before allowing it to be sold. Artists who have complained about this problem online have been told to create NFTs of their work just to stop the theft, an imperfect solution that leaves artists feeling compelled to create NFTs. Besides, many artists have refused to create them on moral grounds.
Without going any further, this work by the artist and pioneer of digital art Beeple, called Human One, sold for almost 30 million dollars at auction in 2021.
The NFT is a generative work of art with movement, which represents the concept of first human born in the metaverse, a hybrid piece between the physical and digital world, which will be updated by Beeple in the future, as he explained, an unprecedented experience that arises thanks to blockchain technology.
This type of play is common in the NFT market, which has grown during the pandemic alongside the cryptocurrency platforms they rely on to function, as millions of young investors, usually men, have poured money into this new asset class.
The popularity of NFTs has drawn the attention of institutions such as Sotheby's auction house, which sold $100 million (A$140 million) of digital tokens last year. Justin Bieber, Jimmy Fallon and Gwyneth Paltrow they are all proud NFT owners.
Meanwhile, new examples of the uses of NFTs are slowly emerging, including the purchase of digital real estate or the trading of collectible NFT games.
If you have been interested in this article and want to continue reading about the blockchain network, in this other post we talk about the best cryptocurrencies to invest.