NFTs…well I am damn sure you would have heard his word for some 100 times by now, after all, it is the talk of the town. People are earning millions by selling their works digitally. Celebrities like Amitabh Bachchan and Salman Khan have entered the arena and are selling their own NFTs. Even the recently released movie 83 has released NFTs of some unseen and exclusive items from the match. But, what does NFT actually mean and what makes it so godamn special Let’s try to find out in this article.

What does ‘Non-Fungible’ mean?

See, NFT stands for NON-FUNGIBLE TOKENS, which basically means Non-Replaceable tokens (Fungible means Replaceable). So, the NFTs are those products that are not replaceable, or in other words ‘One of its Kind’. See, anything that you purchase, whether it is a book, a bat or chocolate. There are many identical copies of the same product available in the market and is completely replaceable. So, the one you purchase is simply one of the many copies present in the world.

But, this whole scenario will change if that product is only one of its kind, or it has some historical or antiqueness associated with it or if it is being sold in the market after being used by a big personality or celebrity. The product will no longer be replaceable. In such cases, NFTs comes into play and serve as the platform for the product to reach its exclusive owner. What will actually scale up the price of the product is its ‘Scarcity’. Going by the simple rule of Economics, if we look at VEBLEN GOODS…in other words the Luxury Goods. They are are such goods whose demand rises more and more as the price rises, on the very contrary to the normal case.

But why a ‘Token’?

‘Token’ is the digital asset or simply the currency that is used in the blockchain world. Here, it is very relatable to the token that we have paid at milk booths or metro trains. It basically works as proof of your ownership over the item.

And yes…the whole NFT system takes place in the blockchain world. In simple words, Blockchain is a decentralized system where every transaction gets recorded one after the other permanently like a ‘Chain’. Not just the records are on public display, but their permanent nature prevents any duplication or faking of records. The whole system consists of thousands of super-fast computers across the globe checking each and every transaction while it happens.

How does an NFT work?

The whole NFT system started with a game called CRYPTOKITTIES. It was just a game, where one used to buy virtual cats and it was like the WWE or the Superhero Cards game that we used to play in childhood.

So, what happens is that the item to be sold is converted into a digital form, using Blockchain technology. Here, the ownership gets defined permanently because nothing can be edited or changed in a blockchain setup. And for getting into Blockchain technology, you need to contact a third-party cryptocurrency platform ETHEREUM, which is the only crypto coin working as an NFT platform. And, there is only one way to change the ownership of the product, it is when the owner decides to sell the product, again in a digital form only. Then, through bidding, the buyer who wants to pay the most purchases the product.

In a way, it also helps in every product discovering its potential price, as anyone across the world can participate in the bidding online. Also, it is a great platform for artists to sell their products digitally to a larger audience. At the same time, for the buyers also it is a chance to have some exclusive rights.

Some Famous NFTs sold Recently

1. There was a Nyan Cat Meme, which was basically a meme based upon a cat. You believe it or not, it was sold for a whopping 40 crores.
2. An artist named BEEPLE sold one of his digital artworks for $5 billion. Even some Indian artists like Amrit Pal Singh and Siraj Hassan sold their artworks as NFTs.
3. Jack Dorsey, the ex-CEO of Twitter sold his first tweet that he posted back in 2006 for $2.9 Billion!!!!! So…despite how crazy it may sound, you can just imagine, how much people value unique things.
4. NBA has recently made a website NBATopShot.com, where people can purchase some exclusive clips and highlights available in NFT form. Recently, someone purchased a clip for 1 crore.
5. Elon Musk, known for doing crazy stuff, sold an NFT-based techno song. Interestingly, the electronic music track was sold in NFT form only.

The Game-changing Fact

Now, here only comes the biggest surprise package of this whole story. Most of the special and exclusive things that are available as NFT…you can also have it freely by simply downloading it…yes you heard it right. Actually, NFTs are only interested in defining the ‘Ownership’ so that only ‘One’ person can call the item his own, irrespective of how many people have it with them.

In future, NFTs can be used not just for digital but also for physical goods. Recently, Nike has launched a Blockchain-based sneaker called ‘CryptoKicks’. Also, we can expect NFTs to be used as Collateral at banks for taking loans, after all, NFT is also an asset. just like any other physical asset. Singapore banks are using it for detecting frauds, Tea Board India is also working on this technology and has also got support from big foreign firms and not just that a group of Indian students are also developing a new online voting system through Blockchain technology.

Some Concerns Attached

Despite however good attributes associated with NFTs, there are a few concerns as well. Firstly, it is known that NFT requires large scale mining and costumes high energy, that too at a high temperature. So, a full-fledged NFT at work will cause great harm to the environment and climate change. A few months back, an online art platform ArtStation had to cancel its NFT sales after facing backlash on environmental issues. Secondly, Bubble: Many experts are also of the opinion that NFTs are actually nothing more than a ‘Bubble’. So, it will eventually burst out and all this craze will fade away.

What does Future await for NFT?

As we see, NFT is a very interesting technology that paves the way for the sale, purchase and defining ownership of any artwork or product in digital form. The way it has been penetrating into the system is just magnificent. After normal people, now even the big names are entering the arena, which will surely attract big number of people. But, despite all its benefits and qualities, there are quite many limitations as well standing in its way. Also, many countries including INDIA haven’t regulated cryptocurrencies yet, so it will be a little difficult to run NFTs on a large scale with such discrepancies and low penetration.

But, despite all its limitations, what really excites me about it is the technology it is based upon. Even if one doesn’t want to get into the world of cryptocurrencies, this particular technology can be used for many other things, as we also saw above. This technology has very well the potential of being the ‘Next Big Thing’ (though there are many next big things out there but anyways). Now, I am not an expert to advise on financial matters, but I think that one should try buying one or the other NFT of your interest and which is not much costly. So, whatever turn it takes, the future holds some really interesting and exciting prospects for this concept called NFT.

JAI HIND