Almost every technology-savvy person has heard the term Non-Fungible token (NFT) in the last few months. The excitement grew, even more, when a digital asset was sold for a whopping $69 million naira. Woah! That was revolutionary, and since then, many celebrities and even crypto investors have jumped on the NFT bandwagon, including Tom Brady and Paris Hilton.
With the popularity of this previously unknown technology increasing, there have been a lot of questions arising from prospective investors and the likes in order to fully understand what this technology is about, why is it valuable? What makes it different? And many more questions plagued the minds of such individuals.
What is this hype about NFT? Answer to the top 5 most questions frequently asked
1. What is an NFT? A non-fungible token is a unique verifiable digital asset that can be exchanged between a creator and a buyer. The special uniqueness is important in distinguishing NFTs from other digital assets; this is because NFTs are not interchangeable i.e one NFT cannot be substituted or replaced with another, like a paper bill or a share of stock, but each NFT is unique and has its own value.
2. What makes an NFT valuable?
The value of an NFT is derived from what it represents, which is basically something that exists in the digital world like an original piece of art or digital asset. The NFT itself doesn’t necessarily have to contain the digital property, but it sure points to its location on a blockchain. Like a voucher or a property deed, an NFT shows the value of the thing it represents.
3. What’s the connection between NFTs and cryptocurrency?
NFTs and Cryptocurrency are unfortunately not the same, but they are built using technology that is similar to Ethereum and Bitcoin. Also, like cryptocurrencies, NFTs exist on a blockchain, which is used to verify their unique identity and proof of ownership. The blockchain keeps a record of all the transactions connected to the NFT which makes it easy to trace back the transfer history of each NFT and the property which it represents.
4. Are NFTs the future of art and collectibles?
This answer has multiple perspectives, so it depends on who you ask. If you ask an artist, musician, athlete, or celebrity, they will tell you that they love NFTs because they provide a new, exciting, and one-of-a-kind way to sell their goods such as GIFs, memes, and tweets directly to their fans. NFTs also provide artists and other celebrities with the opportunity to always earn a certain amount known as royalty whenever the NFT is sold to a new owner; this is accomplished by programming it into the NFT (via smart contracts). Art Galleries can now see a way to reach out to a new generation of art collectors.
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5. What questions remain about NFTs?
Shockingly, although this new technology called the NFT has been around since 2014, it has just begun to get popular and used in the real world. As noted since NFTs run on blockchain technology, they have great prospects for uses in the art and collectibles world and even beyond it. A lot of use case scenarios ranging from video games and fashion to vehicle and real estate ownership have been cited. With the use of blockchain technology, NFTs can offer efficiency and security through its use of embedded smart contracts. However, the NFT market is still very new, and questions about rights, ownership, intellectual property, and a lot more have not been fully explored.
Anyways, this is technology, there is always the next big thing.
