NFT, How Does it Works?
NFT, NFT, NFT...your subconscious should have this in-store already. The acronym is trending everywhere. It stands for Non-Fungible Token. When we say Non-Fungible, it means it cannot be exchanged for another of its kind. Let us take cryptocurrencies for example. You can exchange Bitcoin for Ethereum, Ripple, Dogecoin—whichever one you like; you still have money at your behest. Cryptocurrencies are fungible. This should give you a lead on the nature of an NFT.
NFTs symbolize items or pieces, usually digital. So, video clips, digital drawings, graphics all pass the requirements. Recently, an animated image of Nyan Cat—a widely known meme of a feline that shoots rainbows—sold on the blockchain for $660,000. This is just the highlight sale of digital kittens. It has become popular. Also, grotesque artist Beeple had an auction some time ago that sold for over $3.5 million. The adoption of NFTs has spread so wide that unpopular artists and Tiktok users have jumped on the train, and it is surprising how much some pieces go for because they are outrageous! Anyways, the same can be said for the rise in GameStop shares and DogeCoin.
Just like crypto, NFT has come to stay. There are a lot of questions to ask. Most importantly, how does it work?
How Can NFTs Be Purchased?
They can be purchased with cryptos; they co-exist after all. Although, most sellers on the blockchain prefer Ethereum to others. Fiat currencies are tenable as well. At the end of the day, it depends on how the seller wants to be paid.
Most NFTs are linked to the Ethereum blockchain. Ethereum is like Ripple and Bitcoin in terms of currency, but its ecosystem just supports a wide variety of NFTs. An NFT compared to ETH coin-stores a lot of information— not all the time—and it is of inestimable value. At a point, ETH could be worth $2,000 and exchanges will proceed around this figure. NFTs, however, do not have a certain price. They could go to the highest bidder, as the seller wishes.
Are NFTs Only About Arts?
Do not mind all the buzz around arts. Take it as the center stage for now. NFTs can be anything digital; explore imaginations. For example, Twitter boss Jack Dorsey put up an autographed tweet for sale as an NFT.
Where Do You Stand As An Artist, Buyer, Or Collector?
As an artist
The presence of NFTs gives you an avenue to sell. People may not find your art so appealing in your environs but on the blockchain, you will find a ready market. Imagine you came up with a funny Telegram sticker, you would not find a buyer on app stores neither will a museum curator take in such for auction. Putting it out as an NFT is the only way.
Besides, you get to have your imprint on your works. As long as the original changes hands, you are remunerated.
As a buyer
You get to support your favorite artists from wherever you are by, of course, buying their art. Usage rights are included too. You can freely use the art, post it online without prohibition. Now, the icing on the cake: bragging rights. It is yours, and you have a blockchain entry as backing.
As an collector
You can get speculative and garner some NFTs. Bid your time for its value to increase and make a profit.
The Advantages Of NFTs
Proof Of Ownership
Digital art has revolutionized copyright. Artists can own their art. This does not mean that the blockchain apprehends copycats. Just like it could be online, anyone can screen record a video posted or take screenshots of an uploaded picture. Easy peasy, everyone gets a copy. Authenticity will differ ( now, you can tell a dub from an original) and this is where NFTs reign supreme.
Buyers of NFTs bag verified tokens. Each NFT is encoded with digital evidence that shows ownership. This evidence is like the artist's signature to show originality. For this reason, artists still get some bucks when their works are resold. Isn't that cool? Subsequent holders can also pride in the marketability of the item whenever they choose to put it up for sale.
It Is Safer
There have been cases of cryptocurrency theft in the past. However, decentralization of the blockchain makes sneaking away with NFTs harder than nicking an art piece from an exhibition. Owners of NFTs have to play their part and keep their blockchain information securely.
What Are There To Worry About?
NFTs are jostling in the same space (blockchain) with cryptocurrencies which are in high demand for energy use. Electricity consumption is, without a doubt, on the rise. Experts and stakeholders have identified the imminent dangers and are working to keep them at bay. But for now, greenhouse gas emissions are sailing high.
Due to the growing knowledge about the consequences, artists have either not sold NFTs at all or have canceled future auctions in fear of the dangers that could befall the Earth. A very interesting example is the case of French artist Joanie Lemercier as cited in an article on WIRED.
About two years ago, Lemercier started taking steps to cut down on energy consumption. His climatic activism saw him campaign against external operations that are disrupting the ecosystem and even look inwards at his modus operandi. Long story short, he successfully reduced his energy usage by 10%—both in his studio and means of transportation. However, his recent involvement with NFTs blew away his progress like dust in the wind.
Lemercier sold six NFTs, short video clips, of his art on the blockchain-based website Nifty Gateway. It was an incredible experience. Within ten seconds, they found owners and raked in thousands of dollars for him, but 8.7 megawatts-hour of energy was consumed. The expended energy equaled what Lemercier would use in his studio for two years and it was used in less than a minute! These transactions did not end there. Lemercier will later realize that the artworks were resold. Many other artists are benefitting from the viability of the blockchain, so who can convince them about the consequences? How can Lemercier make a solid impact where his colleagues have found the perfect conditions to thrive? Carbon emission levels have exploded.
It Doesn't Stop There
There are also fears concerning stealing which seems to be under control using the digital stamp. Also, files may fall to the jaws of bit rot. Gradually, the data contained loses integrity and slows down in performance. New file formats are constantly introduced as well. Over time, preferred formats change and the common one could get archaic. Work in an MP3 format is likely to lose importance in the coming years. Another risk is the website shut down. To sell NFTs, artists put their art on certain websites. It is very dangerous if any of such websites should crash.
It is safe to know that similar downsides apply to works hung up in the museum so the differences are not much. This does not change what could happen to NFTs or make it feel any better though.
NFTs are seamless for doing business. It is an ample format for artists and other digital users to trade their content. Those who felt their art would never find the appropriate market now have a chance. It is a welcome development in this age of technology. Within this excitement is an enemy of man's existence: global warming. The detection of this problem is important to find a solution. A panacea to this problem will see the world basking in the joys of friendly NFTs or, a reverse situation will draw us closer to living in a furnace.
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