What Is NFT? The Emergence of Digital Art as NFT
On Jul 01, 2021
There is a term that we have heard a lot in the news or on the internet lately – NFT. With technology linked to blockchain and cryptocurrencies, NFTs have been shaking up the art world since the start of the year. Especially in the last months, this term has become increasingly ubiquitous, and people talk about NFT ART regularly. NFTs are trending on the web and it now has a great community backing NFT art.
What Is NFT?
Before moving on to the detailed information about NFTs, let’s find an answer to the “What does NFT stand for?” question
NFT stands for non-fungible token. The non-fungible token is a unique digital art called “One-of-a-Kind Digital Asset” that uses blockchain to ensure its authenticity. The main feature of NFTs is that they are singular items that are not interchangeable and impossible to replicate. Each NFT has its own specific set of attributes that make it unique and indivisible. This uniqueness means that an NFT cannot be replaced by another piece of art that is the same because there are no other identical pieces.
NFT token is a kind of digital certificate that can be used to represent the property of unique, non-repeatable, widely-known, and also rare objects. It allows us to tokenize all kinds of digital content, from tweets to videos, digital artwork to photos, music, etc. Today, NFTs are commonly used for digital art, while there are also different uses such as in-game items and sports collectible cards.
What Is NFT Crypto?
NFT crypto is different tokens from other cryptocurrencies by their design. As we know, Bitcoin price is not set by any particular company, institution, government, or central bank. The price is formed in the cryptocurrency exchanges according to the supply and demand balance. In contrast, the value of NFTs is determined by the creator or auctioneer rather than the order board.
Utilizing blockchain infrastructure, such as Bitcoin, most NFTs are part of the Ethereum token standards. But unlike other cryptocurrencies, they are not traded in Ethereum’s ERC-20 standard, but ERC-721 and ERC-1155 standards.
So, thanks to the unique cryptographic and decentralized features of blockchain technology, authors can now mark their digital products with a unique signature.
We can imagine selling the rights to any type of work in the form of tokens – digital works such as drawings, photos, sounds, tweets, or videos of creators but also sporting events, virtual playing cards, fashion items. In fact, everything that is subject to a user license could be sold as a non-fungible token.
If the subject of investment is interpreted through digital art, it is not much different from investing in physical art. Similarly, the value of an asset purchased as a collector is determined by many factors, such as how rare the asset is, how old it is, and the artist who made it, etc.
Fungible vs non-fungible Token
People still have trouble understanding the NFT meaning. That’s why it is essential to know the definition of fungible and non-fungible terms first.
We can look at many examples from our daily lives to better understand what fungible items are. Fungibility implies the exchangeability of a good or commodity for its own kind. In other words, fungibility refers to the degree to which assets can be exchanged for their equivalent without detracting from the value of the process or product. A fungible asset is something whose units, such as money, can be easily bought and sold.
For example, dollars in your pocket or Bitcoin in your crypto wallet are the best examples of an exchangeable asset. They’re both easily interchangeable with something that is the same for all purposes. When your friend asks you to borrow $100, the next time, he can pay off the debt with another $100 note. In this case, the $100 bills will have the same value even if they are not the same notes.
Fungibility is a critical feature of cryptocurrencies. Unlike NFTs, cryptocurrencies such as Bitcoin or Ethereum can be exchanged with each other just like the banknotes we use in our daily lives. If you’ve decided to buy bitcoin, it doesn’t matter which exchange you want to buy it from or when it was mined. You can always exchange 1 Bitcoin for another one. The value will be the same.
However, it is difficult to exchange a diamond, even if it has the same value in a smaller cut. Because their qualities remain different. Also, you cannot exchange one movie or plane ticket for another. These products cannot be replaced or exchanged.
Non-fungibility is essentially a term for uniqueness. This is what makes NFT arts so different. The NFT technology converts rare, time-honored collectibles into unique digital tokens on the blockchain.
History of NFT
The entire history of NFT dates back to 2012. Early work on NFTs began with the emergence of “Colored Coins” on the Blockchain network.
Although Colored Coins failed, it demonstrated the enormous potential for the issuance of unique digital objects in Blockchain networks. As a result, in 2014, a group of developers created a financial platform called “Bitcoin counterparty” that allows for the creation of this type of rare digital assets. The first community-led NFT named Rare Pepe was launched on this counterparty platform.
The first Ethereum-based NFT experiment/study was CryptoPunks in 2017, made up of 10,000 different characters, each with a set of “unique” features, inspired by the “cypherpunk” group.
Although NFTs are famous over the Ethereum network today, the first Ethereum-based NFT arts did not launch until 2017. Inspired by the “Cypherpunk” group, two developers created CryptoPunks that was made up of 10,000 different characters, each with a set of “unique” features.
In the same year, Ethereum Request Comments 721 (ERC721) was released as a crypto standard for non-fungible tokens. With this standard, it becomes much easier to implement NFTs. Soon after, NFTs gained immense popularity with CryptoKitties, a blockchain-based sandbox game that allows players to adopt, raise and trade virtual kittens.
Today, the non – fungible token ecosystem is vast, diverse, and constantly growing.
What Is NFT Marketplace?
NFT marketplace is a platform where NFTs are exhibited and purchased. Simply, the NFT marketplace is where the NFT art is sold. On these platforms, you can buy the NFTs you like that are listed by the creator, artist with the options of the auction or straight purchase.
Now, How to buy NFT? It is another question that people wonder about a lot. First of all, it should be noted that NFT trading is usually done with cryptocurrencies. So, if you want to buy NFT, you must have some cryptocurrency. After this step, you can buy NFTs from various NFT marketplaces.
As NFTs become popular, more and more NFT marketplaces are emerging. If you are a collector you can find the best investment opportunities through NFT marketplaces.
Top NFT Marketplaces for creators to sell NFT:
OPENSEA – A peer-to-peer marketplace for rare digital items and crypto collectibles
RARIBLE – The first NFT marketplace owned by the community
SUPERRARE – Marketplace in early access, onboarding, only a small number of hand-picked artists.
FOUNDATION – It is a creative marketplace where artists, curators, and collectors, can discover a new creative digital economy.
Nifty Gateway – Founded by the Winklevoss twins, Nifty Gateway is a digital art online auction platform for non-fungible tokens.
How NFT Are Used?
Just as Bitcoin or other cryptocurrencies have a monetary equivalent, NFTs have a counterpart as an original photograph, art form, or other intellectual property. Here’s how it works in practice: When you buy an NFT, you get a digital certificate form (image, song, video, whatever you can think of) that no one else has.
The use cases for NFT are truly endless. However, perhaps one of the most notable of these is the “NBA Top Shot”. NBA Top Shot is a system where famous players of the league sell their legendary moments and matches as NFT. For example, a video clip of LeBron James dunking sold for $208K. Of course, it is also possible to watch this video on YouTube without paying a penny. However, as we said, the whole point of NFTs is that they are unique, and the certificate of ownership only belongs to you.
Future of NFT
As the practice with NFTs increases, we see that new creative business models are being built. The digitization or tokenization of physical assets can be applied to a wide range of industries. Considering the insane fees and the acceleration of technology, it is highly likely that NFTs will take place in our lives in the future.