A mysterious acronym: NFT. And an obscure name: Non Fungible Token. Behind this new concept, what exactly is there? We talk a lot about NFTs, often mocking them or mocking those who buy them at high prices. To understand what it is and what is hidden behind these three letters, it is not simple. Because you need to have assimilated other complex concepts – the blockchain, cryptocurrencies, the metaverse and the Web3 – before approaching NFTs.
Quick summary: blockchain as a kind of completely decentralized database, shared by all its users. It is a technology for storing and transmitting information in a traceable but anonymous manner (at least, in pseudonymity). Cryptocurrencies blockchain-based virtual currencies and an encrypted computer protocol. the metaverse is a virtual world where everything is in the form of an avatar. the Web3 is the new Internet, which embodies all of these concepts and should gradually replace the centralized Net dominated by Gafam (Google, Amazon, Facebook, etc.) as we know it today.
1. What is the meaning of an NFT?
NFTs are non-fungible tokens, i.e. unique virtual tokens. Units of data stored in the blockchain. This type of certificate is indeed a unique and irreplaceable digital asset. In concrete terms, money is “usable” because you can exchange one euro for another without changing anything. It can also be divided differently (1 euro, 5 euro, 10 euro) and the offer is unlimited or almost.
A non-fungible token is an incomparable asset. This is the case with a work of art but also the proof of ownership of a house (its shape, its location, etc. is unique) or the collector’s card. Actually, we can copy a painting but the original always has a lot of value. Then, stored in the blockchain, the NFT also serves as a certificate of authenticity thanks to the cryptography of the system. It cannot be altered or, in theory, stolen. At least as long as you don’t provide personal information, such as the access code of your virtual wallet, the Wallet, where your NFT is stored.
2. What is the interest of NFT?
In concrete terms, we have moved away from a world where the creator of unique content – a digital work for example – publishes his work somewhere on the Internet. It can be reused (copy) without him knowing that he has no control and the job itself is very difficult to find. With NFTs, the person is able to issue an original work on their own and benefit from it for the rest of their lives. No matter what happens, he will remain a writer forever.
For example, he will sell it for the first time (with a certificate of authenticity that will follow the work for the rest of its life). If possible, later, it will be resold, the author or author of the work may receive a small commission on the new transaction. No matter what happens over time, this person will always be considered to be at the source of the work and will continue to benefit from it through sales. And he can manage the copying and copyright rights if he wants to. This is why owning a pair of Nike on NFT does not give you the right to use the image freely.
3. Are NFTs just about art?
Not really. They’re already reduced to the buzz effect but it can be about anything unique. It can be anything digital: a drawing, music, the original script of a movie, a tweet, a fashion item to wear with your avatar in the metaverse … or even “phygital” things, it’s a digital duplicate of something that exists in real life. For example, buying a collector’s watch or a designer bag that is almost manufactured as well.
It can be used as an accessory in a metaverse but is much simpler as a kind of identification card for good. In this NFT, hide the date and place of creation, the origin of the components (traceability), the carbon footprint, the name of the worker who did the good, and so on. In it can be additional data on the life of the product (date of repair, type of intervention, etc.). So is owning an apartment. Instead of having notarized papers, one can imagine an NFT that stores all the proof of ownership and transaction data.
4. How do I make NFTs (and who can make them)?
Anyone can do NFT. The easiest way is to obviously create a unique work of art. Once the digital file is created, you need to select the blockchain you want. Most of the time, Ethereum wins. You will need to create a Crypto Wallet to recover money from the sale of your NFT. There are thousands of them (MetaMask, ZenGo, eToro, Coinbase, Binance…).
Third step: register in a market. It is a portal where NFTs are sold. The most well -known platform is OpenSea but there are many more (Rarible, Mintable, Nifty Gateway, etc.). These digital art galleries sell your works in exchange for cryptocurrencies. Once your account is created, you will need to fill out your NFT information and electronically sign the documents and authorization to sell. After this step, your NFT is now in your Wallet. It will only disappear once the sale has been made and the agreed amount has been transferred.
5. What are the uses of NFTs?
In addition to art, NFTs are of interest in many other areas. We are talking about a certificate of ownership of real estate or even a luxury watch. This is also true for tickets to a concert or a sports game, video games (not the property of the game itself but items in this game) or even collections.
But beware, an NFT can be misleading. According to an analyst who analyzed the OpenSea market in depth, approximately 80% of NFTs registered on this platform are for plagiarized works of art, fake collections or spam. So watch out if you dream of becoming an NFT collector or are looking at this market (90% of NFT buyers do this in hopes of becoming rich). Take a close look at who is selling this NFT and whether they are really the owners of the rights.
Roller coaster prices
Sure enough artist Mike Winkelmann, alias Beeple, made an impression in 2021 at a bizarre auction at Christie’s where one of his works of digital art sold for 69 million dollars. But the value of an NFT is highly variable. As evidenced in the first tweet from Twitter founder Jack Dorsey.
Converted to NFT, the latter sold for $ 2.9 million. When its owner sold it, he asked for 48 million. Unfortunately, the first offer was $ 280 and, a week after the sale, the price painfully reached the equivalent of $ 6,000. In short, let’s not forget the fact that all of this remains a risky bet.
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