The true value of NFTs is that they allow artists, creators and collectors to enforce their rights to distribute, resell and collect.
Since their introduction in 2014, there has been a huge amount of hype and misinformation surrounding non-fungible tokens (NFTs), especially since the total market for them has exceeded $24 billion. You can’t open a news feed without seeing an article about non-fungible tokens. They should definitely include the obligatory paragraph “NFT is a” for beginners … and for readers who have read a dozen similar articles, but still do not understand. If you belong to the latter, you have come to the right place.
NFTs can be really important and useful, and they are becoming more and more important. But NFT evangelists and skeptics tend to downplay things, overstate them, and sometimes just get it wrong. Here are a few statements about NFTs that you may have read – pros and cons:
NFT is a scam.
You can turn your art into an NFT to prevent it from being copied.
NFT is just a fad.
Each NFT is proof of authenticity for “unique”.
NFTs are harmful to the environment.
First, no – NFT is not a scam. Fraudsters use email, but we’re not saying email is a scam. Secondly, no, NFTs are not a fad, however it remains to be seen whether any particular line of digital collectibles will turn out to be a permanent collection of cultural artifacts or a short-lived fever dream of techno-social groupthink. Thirdly, while some modern blockchains have power consumption issues – so far – anyone upset about this probably doesn’t know what they’re talking about. Finally, beware of those who say that you can turn your art into NFTs, or that NFTs can prevent your art from being copied, or that they prove that a work of art is truly “one of a kind”. This language was invented by people who know how to manipulate mass perception, and all this is not true.
See also: Entering the NFT: Understanding the Environmental Impact of Digital Collectibles.
Are NFTs Digital Assets? Yes. Since the definition of an asset is “what is considered valuable”, an NFT is a digital asset when people are willing to buy it. Like an art collector’s decision to buy a Monet painting – or Maurizio Cattelan’s Banana taped to the wall (for a whopping $120,000) – the willingness to buy doesn’t have to be based on any objective reality.
That’s the problem. When an art collector buys a rotten banana taped to a wall, he knows it’s a banana pinned to the wall. So when you buy a digital banana that is practically pegged to the public blockchain via NFT, it is better to have a clear idea of what you are getting for your money and what you are not.
This is usually the point where you can read all about non-fungibility. Drop the jargon, and an NFT is just a record of something: a statement of ownership, a time-stamped transaction receipt, an agreement. Just as we agree that only the ticket holder for seat 24A at a sporting event can sit there, we agree that NFTs are not always interchangeable. And we agree that there should not be (and should not be) duplicate entries making the same claims about the same thing. It’s all about non-interchangeability.
Meaning of NFT
It is important to understand what NFTs are and how they become valuable. Unlike a cryptocurrency such as Bitcoin (BTC) or Ether (ETH), an NFT usually derives its value from its claim to something that is not controlled by the blockchain itself: a digital image file, a document to a house, a ticket to one exclusive club. . Therefore, the owner of an NFT must contend with an insecure relationship between proof of ownership on the blockchain and a thing that he claims to own but is not on the blockchain.
Think about this: would you buy an NFT just for yourself, a blockchain entry with only a unique string of data, with no connection to any digital or physical asset? Not interested? What if we told you that it’s one of a kind, or that it once belonged to Beyoncé, or that others are lining up to buy it for a higher price soon?
What do you own when you “own” an NFT? Almost all legal descriptions of property include the concepts of ownership and ownership.