What is NFT?
Suppose an artist painted a picture and took it to a storage facility. The work of art was placed in a box and the person was given a document stating who owns the masterpiece and where it is located. Here NFT is a certificate confirming the ownership of the painting. The data about the unique object is encrypted and collected in a blockchain – a digital register where all transactions between the seller and the buyer are recorded and stored. The information is secure: it cannot be deleted or overwritten. The value of a digital asset is determined by the market – it depends on supply and demand. Different factors can influence the price:- who created the token;
- the artistic value of the work;
- how exclusive the offer is;
- how the owner benefits in the physical or digital world.
Where is the NFT Being Used?
- Art. Artists and designers create paintings, illustrations or animations in the form of NFT. The technology allows them to interact directly with buyers and earn money from their works. Collectors can show their work in virtual galleries and share exhibits with other members. Digital art is one of NFT’s most common categories. For example, the most expensive painting The Merge sold on Nifty Gateway in 2021 for $91.8 million.
- Music. Technology has diversified the music industry: composers and performers have an additional way to monetise their creations. They can create singles and exclusive recordings in NFT format and distribute them to fans. For example, the American band Kings of Leon released the album When You See Yourself as NFT.
- Films. Tokens are used to sell unique footage, trailers or entire films. For example, Warner Bros. worked with the Eluvio blockchain to develop an NFT version of the fantasy film Lord of the Rings: The Fellowship of the Ring. Users get an extended version of the film and several hours of extra content.
- Gaming. Gamers can purchase virtual weapons, clothing and accessories in NFT format and use the items in their favourite games. Examples of NFT games include Axie Infinity, Splinterlands, and Alien Worlds.
- Real Estate. Users buy and sell virtual lands and spaces in meta-universes such as Decentraland or The Sandbox.
- Collectibles. Cards of athletes, comic book heroes and character figurines can also be collected as non-interchangeable tokens. For example, the Binance marketplace sells different types of collectible NFT cards.
- Avatars and characters. Designers and developers sell unique images in the form of NFTs, they are used as a profile portrait on different platforms or social networks.
