NFTs have gained a lot of attention worldwide due to their uniqueness and it’s really a hype nowadays to possess something rare.
But first of all, let’s find out what these NFTs are, when they appeared, how the NFTs work, why they are valuable and how somebody can get one. An NFT is a non-fungible token that digitally defines the ownership of music, memes, artwork, videos, gifs and many more items that exist in the real world.
The first NFT appeared on the 7th of August 2015 and its name is Terra Nullius. It was a project conceived to allow you to stake your claim on the blockchain of Ethereum. The idea of customizing the NFT was even cooler, so whoever staked their claim could write a short message and add uniqueness to the first non-fungible token.
So this digital asset called NFT gains a different identity when a unique digital signature is added to represent the ownership of the non-fungible token. Being a modern collectible item, this digital proof of possession for the NFT digital item can be sold or bought online with crypto on NFT markets based mostly on Ethereum.
You might know an aspiring artist who wants to showcase his artwork by holding an online exhibition. But since there are risks of getting his artwork replicated or stolen, NFTs come in hand by securing the ownership of his items, so he can purchase NFTs for his artworks and the pieces can’t be forged because they are unique & verifiable, containing identifiable information about who owns it or who sold it.
Besides the real world item ownership digitalised in the form of NFT, a non fungible token is a piece of data stocked on a server, locked with a password and linked to an address of the owner who has access to it. Only that specific person who owns it can decide to sell the NFT in order to be bought by somebody else.
NFTs are used to digitally tokenize assets like artwork, virtual avatars, gifs, music, memes, games, video clips, social media posts and many others by creating a one of a kind digital signature proven by a blockchain based certificate created by the NFT to give it a unique identity.
A big pillar in the building of the metaverse alongside cryptocurrencies, NFTs play an important role as they became a fantastic investment right now, with values that significantly and frequently grow just like in the case of crypto, as they gain more popularity. Some NFTs have already been sold for millions of dollars like the famous Doge meme, while others benefit from the fame and power of celebrities such as Justin Bieber who shows off his NFT portfolio on social media. It already became possible to split an NFT into billions of pieces that can be bought at an online auction just like the case of the most expensive NFT ever sold, the Doge meme for $4 million. This is creating the openness to community ownership so that everyone who loves a certain form of art can purchase and possess their own piece of the NFT.
The vast majority of digital media in all its form can be turned into NFTs, so if you plan on building a portfolio of your own, right now it’s a great time to start because you might already have more assets that can be digitalised than you can imagine. Catalogs of artsy photography, music that you composed and that can stand out as an NFT, packs of beats for producing hip-hop, trap, rap or electronic music albums, a small collection of paintings from the time you were practicing this skill, artworks designed for festivals, concerts or any other type of events.
The value of NFTs depends on factors such as ownership history, uniqueness, utility and liquidity premium. Developers take these factors into consideration when thinking about new ways to attract investors, while the investors evaluate the worth of investing in an NFT based on the same factors and their importance over time.
The ownership history of the NFT sums up to the identity of the person who created it and those who were lucky enough to own it afterwards. This is why the huge potential of growth can come up from NFTs created by worldwide famous artists and celebrities or even renowned brands. As some people might be willing to pay $1 million dollars for something so simple as an image of Kanye wearing a certain fashion item at an important event, well this NFT world will surely amaze us even more in the future.
Uniqueness is something that all NFTs possess from the very beginning of their creation or issuing due to their unique signatures that comes with a non fungible token, while most of them holding different values because they are more unique than others. A great example for this case is the most expensive tweet sold as an NFT for $2.9 million dollars. So the rarity and uniqueness of each digital asset turned into NFT determines and influences its value over time.
The utility of the NFT is given by its real world properties, purpose and benefits. If what you can do with it is important then you can generate income by using it wisely. Digital creators can maximize their revenues by turning their creations into NFTs while the interest in selling/buying/owning them determines their value. Also the gaming industry is advantaged because gamers can buy, sell, import and really use the NFTs created for special equipment, rare skins, unique racing cars, or important shields that turn your avatar into being immortal while playing to win the game or to grow your fame among the other players.
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