In 1996, a painting by Jackson Pollock was sold to Pierre Lagrange for $17 million and he physically conveyed the art piece. Fast track to now, 2021, digital prints have also become tradable commodities and some are being sold for mind blowing values worth millions.
You may have heard of recent breaking auction sales of Non-Fungible Tokens (NFTs) belonging to brand influencers making headlines. Thus NFTs have gained explosive market prowess and value. If you’ve been wondering what that is all about, then read on to gain the insight into NFTs.
FUNGIBLE TOKENS Fungible tokens are tokens that are tradable for each other, and their value remains constant. Bitcoin is a fungible token because it has the same value regardless of its owner or history. A currency is also a fungible asset, a twenty dollar bill no matter the color, size or code will always maintain same value and be tradable for another currency or currencies valuing twenty dollars
NON-FUNGIBLE TOKENS Non-fungible tokens are digital assets that contain identifying information recorded in smart contracts. A smart contract is a written contract translated into code with conditional statements.
The contract will self-verify the conditions and will only execute if they are met..
Individual characteristics of the token can dictate its uniqueness, hence different in value from any similar token or look alike. Non-Fungible tokens are similar to assets like rare stones, works of art and collectible luxury items.
This new digital trend of tokenization could be used to protect the rights of creators such as artists, musicians who produce unique with blockchain managed ownership. Examples of goods that can be tokenized include collectibles, game items, digital arts, event tickets, domain names, and ownership records for physical assets.
Just like in Art, the Artist, the artwork’s aesthetics, the feelings it conveys, market place and anything else that is derived from its physical appearance may influence its price.
FEATURES OF NFTs
•Rare:The value of NFTs comes from their scarcity. Although NFT developers can create any amount of non-fungible tokens, they often limit the tokens to create scarcity.
•Non-divisible: NFTs cannot be divided into smaller denominations like a currency or a fungible token. Instead they remain just as they were tokenized.
•Non destructible: With NFTs, the meta data is stored on the blockchain via smart contracts, each token cannot be destroyed, removed or replicated. Creators possess ownership rights to the tokens forever.
•Verifiable: Storing historical ownership of data on the blockchain for digital artworks can be traced back to the original creator, which allows the digital piece to be authenticated without the need for any third-party verification.
•Unique: The work, the work expression of the creator as well as meta data of the token can be used to prove ownership of digital items as well as the physical asset.
•Liquidity: NFTs are tradeable in the market places hence providing liquidity. Market places platforms are able to reach a wide audience, thus allowing for far greater exposure for the token.
•Standardization: Existing digital assets like tickets to domain names have no digital representation in a smart contract. By representing non-fungible tokens on public blockchains, developers can build common, reusable, inheritable standards relevant to all non-fungible tokens. This will enhance ownership record, transfer, and simple access control.
•Immutable and Scarce Non-fungible tokens use smart contracts that also allow developers to place hard caps on their supply. Additionally, it empowers developers to enforce stringent and persistent properties that cannot be changed or modified after issuing these non-fungible tokens.
Moreover, the developers can also specify which properties cannot be modified over time by encoding them on-chain. Hence, this is crucial and beneficial for several digital assets, including artistic works, which relies heavily on individual pieces’ scarcity.
WHY WOULD I WANT TO OWN AN NFT? CAN I MAKE MONEY FROM IT?
One reason to buy an NFT is for its emotional value, prestige and bragging rights attached to the token, which isn’t so different from the reason we attach when buying physical goods. No one buys Louis Vuitton jeans because they need it. They buy it because it makes them feel good. The same can be true for an image, video, or other digital assets.
A collector may also purchase a digital token or NFT because they foresee that its value is likely to appreciate in the future and can profit from it.
HOW DO THEY DERIVE THEIR VALUE? Like all assets, supply and demand are the key market forces that determine the value for the token. Also, the brand name and scarcity behind the NFT drives the demand for gamers, collectors and investors and huge monetary rewards can be realized from their auction or sales.
The first Ethereum-based NFT experiment was CryptoPunks, which consisted of 10,000 unique collectible punks, each of which has a set of unique characteristics. Built by Larva Labs, CryptoPunks featured an on-chain marketplace that could be used with wallets like MetaMask , lowering the barrier to entry to interact with the NFTs. Today, with their limited supply and strong brand among the early adopter community, CryptoPunks are likely the best candidates for true digital antiques.
HOW TO CREATE AND SELL NFTs
NFTs smart contracts utilizes the Ethereum blockchain, to create an NFT, you will have to:
1. Download and install Metamask wallet.
2. Open browser, connect Metamask and login with credentials.
3. Visit Rarible market place, create an account and start creating the digital asset, then connect it to Ethereum using the earlier downloaded Metamask addon software. This serves as an interface to the blockchain protocol.
4. Label and define your digital asset then set the price and rarity. The Rarible market place being used determines the listing price and the Ethereum protocol will determine the Gas (transaction fee).
5. This Gas enables you tokenize the asset, it costs about ~55 dollars but may vary.
6. Set your price and Upload your file and watch the market make sales for you.
Top Market places for NFTs
• Rarible
• OpenSea
• SuperRare
• Nifty Gateway
• Foundation
• VIV3
• Enjin
• NBA Top Shot
RISKS OF OWNING AN NFT
There are a lot of risks associated with engaging in new technological trends due to the fact that the NFT and crypto ecosystem is still undergoing formation, however they possess huge market potential.
• To sell NFTs, you may need to deal in crypto currencies such as Bitcoin and Ethereum to provide liquidity for exchange of value, and these cryptocurrencies may sometimes be prohibited in a country. Scammers may steal your crypto, if you are a new entrant. It is therefore necessary to be wary and consider risks of dealing within the country jurisdictional environment.
• Anyone can create an NFT of anything regardless of whether it is original or fake. You may purchase it without knowing its originality, it is therefore a space for the knowledgeable who are well informed of using this technology.
• There is no regulation of NFTs as well as Buyers who participate in the space, they do not undergo any due diligence scrutiny and one may unknowingly be dealing with money launderers.
• There is a risk for a fall in value for NFTs that have traded hands if no demand subsequently exists for them.
• NFTs sales are handled securely by the blockchain, however, creation and storage are done through the market place platform. If the platforms get closed, your life’s work will be inaccessible.
• Carbon footprint of NFT when tokenizing them into smart contracts is energy inefficient as it consumes a huge amount of energy thus producing excessive CO2 emissions. The possible adverse impact on the environment for the profit seeking objective and convenience is adding to the unsolved environmental pollution.
RECENT EXPLOSIVE NFT SALES
• Canadian musician Grimes, made $5.8 million in less than 30minutes selling NFTs on February 28, 2021 auction.
• Twitter founder, Jack dorsey sold his NFT tweet for $2.9m for charity on March 22, 2021
• Mike Winkelmann, known as Beeple, a renowned digital artist sold his life work NFT digital collage for $69.3. It was one of the most expensive work of art sold at auction by Christie auction house on March 11, 2021.
CONCLUSION
The market for NFT now is making record sales and has ushered in a new era of digital market for non-fungible tokens. If you are a creator of digital content with insight of the risks and effects of NFTs, you may wish to cash in on this trend to provide exposure to your work of art and profit from it.
You may not have a popular brand name but if your work of art is good, you can monetize the digital copy.
Thank You for the time, let us know if this info was helpful to you. Cheers.
You may have heard of recent breaking auction sales of Non-Fungible Tokens (NFTs) belonging to brand influencers making headlines. Thus NFTs have gained explosive market prowess and value. If you’ve been wondering what that is all about, then read on to gain the insight into NFTs.
FUNGIBLE TOKENS Fungible tokens are tokens that are tradable for each other, and their value remains constant. Bitcoin is a fungible token because it has the same value regardless of its owner or history. A currency is also a fungible asset, a twenty dollar bill no matter the color, size or code will always maintain same value and be tradable for another currency or currencies valuing twenty dollars
NON-FUNGIBLE TOKENS Non-fungible tokens are digital assets that contain identifying information recorded in smart contracts. A smart contract is a written contract translated into code with conditional statements.
The contract will self-verify the conditions and will only execute if they are met..
Individual characteristics of the token can dictate its uniqueness, hence different in value from any similar token or look alike. Non-Fungible tokens are similar to assets like rare stones, works of art and collectible luxury items.
This new digital trend of tokenization could be used to protect the rights of creators such as artists, musicians who produce unique with blockchain managed ownership. Examples of goods that can be tokenized include collectibles, game items, digital arts, event tickets, domain names, and ownership records for physical assets.
Just like in Art, the Artist, the artwork’s aesthetics, the feelings it conveys, market place and anything else that is derived from its physical appearance may influence its price.
FEATURES OF NFTs
•Rare:The value of NFTs comes from their scarcity. Although NFT developers can create any amount of non-fungible tokens, they often limit the tokens to create scarcity.
•Non-divisible: NFTs cannot be divided into smaller denominations like a currency or a fungible token. Instead they remain just as they were tokenized.
•Non destructible: With NFTs, the meta data is stored on the blockchain via smart contracts, each token cannot be destroyed, removed or replicated. Creators possess ownership rights to the tokens forever.
•Verifiable: Storing historical ownership of data on the blockchain for digital artworks can be traced back to the original creator, which allows the digital piece to be authenticated without the need for any third-party verification.
•Unique: The work, the work expression of the creator as well as meta data of the token can be used to prove ownership of digital items as well as the physical asset.
•Liquidity: NFTs are tradeable in the market places hence providing liquidity. Market places platforms are able to reach a wide audience, thus allowing for far greater exposure for the token.
•Standardization: Existing digital assets like tickets to domain names have no digital representation in a smart contract. By representing non-fungible tokens on public blockchains, developers can build common, reusable, inheritable standards relevant to all non-fungible tokens. This will enhance ownership record, transfer, and simple access control.
•Immutable and Scarce Non-fungible tokens use smart contracts that also allow developers to place hard caps on their supply. Additionally, it empowers developers to enforce stringent and persistent properties that cannot be changed or modified after issuing these non-fungible tokens.
Moreover, the developers can also specify which properties cannot be modified over time by encoding them on-chain. Hence, this is crucial and beneficial for several digital assets, including artistic works, which relies heavily on individual pieces’ scarcity.
WHY WOULD I WANT TO OWN AN NFT? CAN I MAKE MONEY FROM IT?
One reason to buy an NFT is for its emotional value, prestige and bragging rights attached to the token, which isn’t so different from the reason we attach when buying physical goods. No one buys Louis Vuitton jeans because they need it. They buy it because it makes them feel good. The same can be true for an image, video, or other digital assets.
A collector may also purchase a digital token or NFT because they foresee that its value is likely to appreciate in the future and can profit from it.
HOW DO THEY DERIVE THEIR VALUE? Like all assets, supply and demand are the key market forces that determine the value for the token. Also, the brand name and scarcity behind the NFT drives the demand for gamers, collectors and investors and huge monetary rewards can be realized from their auction or sales.
The first Ethereum-based NFT experiment was CryptoPunks, which consisted of 10,000 unique collectible punks, each of which has a set of unique characteristics. Built by Larva Labs, CryptoPunks featured an on-chain marketplace that could be used with wallets like MetaMask , lowering the barrier to entry to interact with the NFTs. Today, with their limited supply and strong brand among the early adopter community, CryptoPunks are likely the best candidates for true digital antiques.
HOW TO CREATE AND SELL NFTs
NFTs smart contracts utilizes the Ethereum blockchain, to create an NFT, you will have to:
1. Download and install Metamask wallet.
2. Open browser, connect Metamask and login with credentials.
3. Visit Rarible market place, create an account and start creating the digital asset, then connect it to Ethereum using the earlier downloaded Metamask addon software. This serves as an interface to the blockchain protocol.
4. Label and define your digital asset then set the price and rarity. The Rarible market place being used determines the listing price and the Ethereum protocol will determine the Gas (transaction fee).
5. This Gas enables you tokenize the asset, it costs about ~55 dollars but may vary.
6. Set your price and Upload your file and watch the market make sales for you.
Top Market places for NFTs
• Rarible
• OpenSea
• SuperRare
• Nifty Gateway
• Foundation
• VIV3
• Enjin
• NBA Top Shot
RISKS OF OWNING AN NFT
There are a lot of risks associated with engaging in new technological trends due to the fact that the NFT and crypto ecosystem is still undergoing formation, however they possess huge market potential.
• To sell NFTs, you may need to deal in crypto currencies such as Bitcoin and Ethereum to provide liquidity for exchange of value, and these cryptocurrencies may sometimes be prohibited in a country. Scammers may steal your crypto, if you are a new entrant. It is therefore necessary to be wary and consider risks of dealing within the country jurisdictional environment.
• Anyone can create an NFT of anything regardless of whether it is original or fake. You may purchase it without knowing its originality, it is therefore a space for the knowledgeable who are well informed of using this technology.
• There is no regulation of NFTs as well as Buyers who participate in the space, they do not undergo any due diligence scrutiny and one may unknowingly be dealing with money launderers.
• There is a risk for a fall in value for NFTs that have traded hands if no demand subsequently exists for them.
• NFTs sales are handled securely by the blockchain, however, creation and storage are done through the market place platform. If the platforms get closed, your life’s work will be inaccessible.
• Carbon footprint of NFT when tokenizing them into smart contracts is energy inefficient as it consumes a huge amount of energy thus producing excessive CO2 emissions. The possible adverse impact on the environment for the profit seeking objective and convenience is adding to the unsolved environmental pollution.
RECENT EXPLOSIVE NFT SALES
• Canadian musician Grimes, made $5.8 million in less than 30minutes selling NFTs on February 28, 2021 auction.
• Twitter founder, Jack dorsey sold his NFT tweet for $2.9m for charity on March 22, 2021
• Mike Winkelmann, known as Beeple, a renowned digital artist sold his life work NFT digital collage for $69.3. It was one of the most expensive work of art sold at auction by Christie auction house on March 11, 2021.
CONCLUSION
The market for NFT now is making record sales and has ushered in a new era of digital market for non-fungible tokens. If you are a creator of digital content with insight of the risks and effects of NFTs, you may wish to cash in on this trend to provide exposure to your work of art and profit from it.
You may not have a popular brand name but if your work of art is good, you can monetize the digital copy.
Thank You for the time, let us know if this info was helpful to you. Cheers.
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