Digital space requires its legislation and approval. NFTs are digital certificates that identify digital and physical objects, distinguishing one object from another and confirming that it belongs to a specific person. NFT is already a solution to problems in games and digital art and expands the boundaries.
NFT is the major trend of 2021 in the blockchain. NFT stands for Non-Fungible Token
. It is a technology that digitizes and notarizes interactions with any virtual and physical assets. Now, when digital assets are in particular need of legal protection, NFT has become an exceptionally demanded
Over the past year, amid the pandemic, the NFT sales market has quadrupled
, and the number of transactions exceeded two hundred and fifty million dollars. NFT can be used to sell anything, but non-fungible tokens in crypto art are especially popular: according to the CryptoArt
platform, by mid-February, the value of all art sold was one hundred million dollars.
everything possible to decentralize. Decentralization is the elimination of the usual intermediaries that power complex systems. Data stored in one place is vulnerable and easy to fraud. The blockchain stores all information about all transactions on thousands of computers, so it cannot be destroyed or falsified.
The first massive use of blockchain was cryptocurrencies. All information about every transaction is stored on many machines and is constantly updated, so crypto payments do not require banks or other intermediaries.
Ethereum has developed the application of blockchain through the implementation of smart contracts. These are contracts that do not require a person to control their accomplishment. Ethereum made possible complex transactions with various digital assets.
Previously, most blockchain services and applications used interchangeable tokens and assets. NTF disallows interchangeability but keeps all the benefits of the blockchain. Thus, NFT is a digital certificate that represents a unique object. NFT issuer can attach NFT to any digital product: image, video, audio, etc. The token will contain all data, its history, and its valid owner.
Since tokens are stored in an open and distributed blockchain, the data Flow and the history of transactions will always be available and reliable. Everyone can always know who made the tokenized asset and who it belongs to at the moment.
NFT technology has the potential to tokenize - transfer to the blockchain - any product, but so far, tokenization is focused on digital assets. This process brings useful properties to any digital product that adds value:
Stable ownership and inalienability:
A tokenized digital asset is decentralized and does not depend on the system in which it is located. Purchases of digital items and art are no longer dependent on their developers and authors.
Tokenization is a guarantee of authenticity. Verified
digital artwork, for instance, is easier to sell.
Tokenized digital items can be transferred to different digital spaces.
Complex mechanics can be incorporated into the properties of a digital item during its creation. Smart contracts
make any complex transactions possible.
Due to NFT, digital items can become different from their copies. Ownership of the original and its value will not decrease but grow with new copies, downloads, and distribution. When more and more people know about the artwork, its cultural value will rise.
It is how it works with reproductions of paintings in the physical world. The more hype around the artists, the higher the price. The same thing will happen with tokenized digital art. The value of any item in the physical world is determined by the cultural context. The blockchain fixes this value and its ownership and creates this context in digital space.
- Games are now the largest sector of the digital economy with many non-fungible items. Each in-game item becomes more valuable by being tokenized. It means that the game itself becomes more valuable for the user. Any asset in a blockchain game is easily transferable. Therefore, games can become a real income. Players from some countries now can earn more in games than they would earn offline.
- The Crypto Renaissance is happening now with digital art because of NFT. Digital artists are finally getting financial support in the digital space and getting rid of piracy and misappropriation. Digital art now has its fixed owners and can be as valuable as classical art.
- Tokenization has added value to digital collecting by confirming the uniqueness of digital items. It is easier to sell and change them. Popular sports in the United States have already begun to develop non-fungible tokens for collections. For example, NBA Top Shot was the first app to combine sports and NFT. The creators of the platform from Dapper Labs received an NBA license. The NBA Top Shot database contains hundreds of thousands of NBA basketball moments. Players can sell, buy, and trade cards to build their collection of episodes featuring a favorite player or even a team. In late April 2021, the Ultimate Fighting Championship (UFC) promotion filed two patent applications to begin selling NFT.
- IBM is tokenizing its patents in collaboration with IPwe. IBM assumes that the tokenization of intellectual property will facilitate the sale and monetization of patents, and increase liquidity to this asset category for investors and technology companies. IPwe expects its NFT to become ready at the end of 2021.
NFT is a great solution for ensuring intellectual property rights. However, buyers need to carefully check how reliably the metadata and media are stored in the projects whose NFTs they buy. Information about media and the media itself are tied to tokens but are not usually stored on the blockchain, and depend on the project servers. The majority of NFT projects now use reliable methods for storing metadata and media, but it is still important to choose trusted places to buy.
NFT technology digitizes and makes interaction with any digital product more available. Ownership, purchase, sale, confirmation of originality.
NFT opens up the prospect of a new digital world in which digital creators gain direct access to audiences and collectors, bypassing cultural institutions and national borders. It is not about another production and distribution channel but about overcoming the restrictions of the digital market. Digital tokens are designed to make the digital world transparent
We still need to shift our paradigm to begin to understand what ownership of a digital work is and how its value is formed.