Blockchain. We’ve all heard the conversations going on about it, many of us might not know how it works but we understand how it’s revolutionary and world-changing. But what are Non-Fungible Tokens?
Non-fungible means irreplaceable. Unlike cash, where you can exchange a $10 note for another, NFTs are unique and irreplaceable, which is how they gain value. NFTs use blockchain technology to verify ownership of the original digital product. The act of buying and selling NFTs is the buying and selling of digital ownership of a unique token.
Like any new technological invention, NFTs have their own benefits and drawbacks. The benefits that NFTs bring to the art industry and collectors have contributed to the rise of their popularity.
The first benefit that NFTs bring is that they increase the value of digital. Before blockchain, digital art was susceptible to copies. By turning your digital art into an NFT, a digital signature will be attached to the artwork. This distinguishes the original artwork from copies. Similar to how we value the original copy of the Mona Lisa, NFTs can bring the same value to digital art. This gives digital artists a possible revenue stream for their art and to their fans, a new way to support their favourite artist.
Secondly, NFTs build communities. NFTs bring people with similar mindsets together and gives them a sense of belonging. For example, the “Bored Ape Yacht Club” NFTs creators actually created a physical hangout for those who own their NFTs. By owning an NFT, you feel like you are part of a special club.
Lastly, NFTs are revolutionising contracts by replacing long tedious physical contracts with smart contracts. Blockchain technology makes it easy to verify ownership of an item without the need for long paperwork. This could possibly lead to more uses apart from digital works of art.
NFTs are not a perfect invention as it has their drawbacks. These drawbacks are the reason why people may be hesitant to dive into NFTs.
You should know that owning an NFT does not give you the copyright to the artwork. Similar to owning a physical artwork or painting. Owning the original painting does not give you the commercial right to reproduce the artwork. NFTs simply prove that the artwork is your property.
Secondly, NFTs were created for digital artists to make money by making their digital art scarce, it has however been overtaken by opportunists businessmen. An example would be the “Lazy Lion” NFT collection which is 500 unique avatars mass produced using computer-generated code. The issue is that the creator of “Lazy Lion” is not a passionate artist and yet is making thousands and millions of this.
Lastly, NFTs are bad for the environment. Most NFTs are stored on a blockchain called Ethereum which consumes a lot of energy to run. As fossil fuels such as coal are still a major source of power for crypto mining and other industries around the world, this greatly affects the environment.
In the future, we foresee the use of NFTs will continue to grow alongside blockchain technology and the advancement of smart contracts. NFTs will continue to change, evolve with new technology, and grow within this ever-evolving industry.