If you have had any form of online presence this past year, then you have probably heard of the term ‘NFT’. So what are NFTs you ask?
It stands for non-fungible token i.e. an asset that is not interchangeable. This means that no two NFTs are exactly the same, kind of like having two or more copies of a painting but with each painting having a unique I.D number.
An NFT can be in the form of a photo (jpg, jpeg, png) gif, video or even an audio.
Now, based on how an individual NFT can be used, the value may differ. For instance, an image as elaborate as a 3D model can go for as low as $50 – $100 while a pixelated image is priced at around $6 million.
There are online platforms where you can mint (convert your file: photo, audio or video to an NFT) and sell your Non-fungible tokens.
After minting an NFT, you can put a price on it. This is usually set above the floor price (i.e. the estimated value by the online platform through which it was minted). This is mainly because for every sale of an NFT, the creator and the market gets a total of about 15% of the selling price.
The most common forms of NFTs are digital paintings, but you don’t really have to be an artist to make an NFT. A college student from India made up to a million dollars selling his selfies as Non-fungible tokens.
You are probably wondering if it is possible for an image to cost that much. Simply put, items have value when enough people agree to purchase it at a particular price.
History Of Non-fungible Token (NFT)
Kevin McCoy and Anil Dash built the first known “NFT,” Quantum, in May 2014. Jennifer McCoy, McCoy’s wife, created a video clip for it. During a live presentation for the Seven on Seven conference at the New Museum in New York City, McCoy registered the video on the Namecoin network and sold it to Dash for $4. The technology was dubbed “monetized graphics” by McCoy and Dash. This used on-chain information to clearly link a non-fungible, marketable blockchain marker to a work of art (enabled by Namecoin). Other blockchains including Counterparty, on the other hand, use multi-unit, fungible, metadata-free “hued currencies.”
Three months after the Ethereum blockchain was created, the first NFT project, Etheria, was presented and showcased at DEVCON 1 in London, Ethereum’s inaugural developer conference. Until March 13, 2021, when revived interest in NFTs ignited a purchasing frenzy, the majority of Etheria’s 457 purchasable and tradable hexagonal tiles went unsold for more than five years. All tiles from the current and previous versions, each hardcoded to 1 ETH (US$0.43 at the time of introduction), were sold for a total of US$1.4 million in less than 24 hours.
Three trademark applications for NFTs were filed with the US Patent and Trademark Office in 2020. The number of trademark applications increased to around 1200 in 2021. The US Patent and Trademark Office received 450 NFT-related trademark applications in January 2022. The NYSE, Star Trek, Panera, Walmart, Elvis Presley, Sports Illustrated, Ticketmaster, and Yahoo are among the names that have been trademarked for NFTs.
Following a number of high-profile transactions and art auctions in the early months of 2021, interest in NFTs grew.
Uses of NFT
Digital tokens linked to a digital file asset have been exchanged using NFTs. Ownership of an NFT is sometimes connected with a license to use a linked digital item, but it seldom grants the buyer copyright. Some agreements only allow for personal, non-commercial usage of the underlying digital material, while others allow for commercial use.
NFTs are frequently used in the creation of digital art. Public attention has been drawn to high-profile auctions of NFTs tied to digital art. Merge, by artist Pak, was the most expensive NFT, selling for US$91.8 million at auction in 2021, while Everydays: the First 5000 Days, by artist Mike Winkelmann (known professionally as Beeple), was the second most expensive, selling for US$69.3 million.
Some NFT collections, such as EtherRocks and CryptoPunks, are instances of generative art, in which a variety of pictures are formed by combining a number of simple graphic components in various ways.
NFTs can be used to represent in-game assets such as digital land parcels. If they may be exchanged on third-party markets without authorization from the game creator, some observers characterize them as being controlled “by the user” rather than the game developer.
CryptoKitties was a popular blockchain-based online game where users could adopt and trade virtual kittens. The game’s commercialization of NFTs earned $12.5 million in funding, with some kittens fetching over $100,000 each. CryptoKitties was added to the ERC-721 standard in January 2018 as a result of its success (and finalized in June). Axie Infinity, a comparable NFT-based online game, was released in March 2018.
Ubisoft Quartz, “an NFT venture that allows users to acquire artificially scarce digital things using bitcoin,” was launched in December 2021 by Ubisoft. The news was met with backlash, with a 96 percent hate rating on the YouTube announcement video, which has since been removed. Some Ubisoft developers have also expressed their dissatisfaction with the announcement. According to the Game Developers Conference’s annual report for 2022, 70% of respondents reported their studios had little interest in incorporating NFTs or cryptocurrencies into their games.
Artists selling artwork and music as NFT tokens allegedly garnered over US$25 million in the music sector in February 2021. To mark the three-year anniversary of his Ultraviolet album, electronic dance musician 3LAU auctioned a collection of 33 NFTs for a total of US$11.7 million on February 28, 2021. An NFT was released on March 3, 2021 to promote the Kings of Leon album When You See Yourself. American rapper Lil Pump, Grimes, visual artist Shepard Fairey in cooperation with record producer Mike Dean, and rapper Eminem are among the musicians who have used NFTs.
To promote Deadpool 2, 20th Century Fox teamed with Atom Tickets and issued limited-edition digital posters in May 2018. OpenSea and the GFT exchange both have them accessible. The 2015 documentary Claude Lanzmann: Spectres of the Shoah, directed by Adam Benzine, is the first motion picture and documentary film to be auctioned as an NFT in March 2021.
Other ventures with NFTs in the film business include the introduction of an exclusive NFT artwork collection for Godzilla vs. Kong, with filmmaker Kevin Smith revealing that his next horror film Killroy Was Here would be published as an NFT in April 2021.
The NFT for Rick Dugdale’s 2021 film Zero Contact, starring Anthony Hopkins, was also published.
The first NFT coined for a feature film score occurred in April 2021, and it was connected with Gregg Leonard’s music for the film Triumph.
Quentin Tarantino, the filmmaker of Pulp Fiction, issued seven NFTs based on unedited scenes in November 2021. Miramax then launched a lawsuit, alleging that their film rights had been infringed upon, and that their 1993 deal with Tarantino allowed them the right to manufacture NFTs in connection with Pulp Fiction.
Virtual reality is no longer a science fiction but now commonplace, the ability of NFTs to be incorporated into it makes it very likely to be more valuable with time, therefore it is a good idea to get in on it at its initial stages.
If you are still having reservations, just remember that bitcoin went from $5,000 to $50,000 in the space of less than a year, and unlike bitcoin the value of an NFT will only rise with time.