For a while now, there is a big hype about a new cryptocurrency called NFTs. Digital art, music can be nowadays sold for millions. And the new cryptocurrency has also played an important role in it.
This technology began as a niche technology for cryptocurrency and gaming fans, but it has been pushing into the mainstream for a few weeks now. NFTs or non-fungible tokens are becoming increasingly popular, especially in the art scene. But what’s is really behind the NFTs hype, and what is the secret of them?
The abbreviation NFT stands for non-fungible token. NFTs are certificates for unique digital objects, that certifies the ownership of a specific file. An NFT can be replaced by something equivalent.
NFTs are also objects that are unique due to certain properties. Such objects can exist either in digital or physical form. With physical objects, such as a painting or a car, it is easy to establish a value. This is measured by the uniqueness of the artwork and how much people are ready to pay for it.
With digital objects, it is much more complicated to value them. Determining the exact value or owner of a file is difficult. This is where the idea of NFTs comes in: digital tokens contain information about a specific file that is both unique and verifiable.
The blockchain is basically a special database where transactions of digital goods, such as cryptocurrencies, are stored in blocks and distributed digitally around the world. This technology is quite popular in the entertainment industry: there are even online casinos, which provide gamers the opportunity of using blockchain transactions. Anyway, if you aren’t ready to use it, take a look at the Playamo slots – the modern online gambling platform.
Unlike cryptocurrencies, NFTs in a blockchain does not represent an exchangeable asset that is transferred from one person to the next. Every NFT is like a unique piece of digital art that is associated with an owner and a value. And modern blockchain technology is used to verify the authenticity of these pieces of art.
Currently, the open Ethereum blockchain is most relevant for trading with NFTs.
What started as a niche topic among crypto and gaming fans has meanwhile aroused great interest as well. Anyway, NFTs are mostly popular in the art world. So, the Canadian artist Grimes auctioned off digital art on the Nifty Gateway platform, raising around six million dollars within 20 minutes. There are more and more artists which are interested in trading their art with NFTs. NFTs are also popular among collectors and gamers. In addition to crypto art, collectible things such as memes or cards, or content from computer games, are also traded on NFT platforms such as Open Sea.
Why NFTs are so popular in the art world? In the art world, ideal value often plays a greater role than material value. The digital certificate, which guarantees the authenticity and at the same time limits copies, also elevates virtual things to status symbols. That’s why there are many perspectives on it especially for artists, painters, etc. For crypto art creators, NFTs offer a new potential revenue stream. While artists sell their works digitally, they attract collectors, speculators, and fans by making them scarce to just a few copies.
So, one of the main positive sides of NFTs is connected to many new opportunities especially for people from the art world. But one of the points of criticism concerns possible copyright infringements. For example, if it is not verified whether a seller on the blockchain owns the rights.
In addition, NFTs require a lot of energy. Since a single transaction on the Ethereum blockchain requires the processing power of numerous computers, the power consumption is very high. And NFTs do not consist of just one transaction, but a large number of them.
To sum up, NFTs technology has both positive and negative aspects as every digital trend.
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