If you are following the crypto space lately then you must be hearing and reading the word NFT almost everywhere on the internet. It might be confusing at first but trust me it is a really cool concept and might be the next big thing in this already new world of cryptocurrency.
Well, to start with let me tell you that bitcoin is the oldest concept of this ever-evolving cryptocurrency space and there are many already evolved things appearing everywhere like DeFi, Dapps, NFT etcetera.
So, let’s start by understanding Ethereum use cases and Smart contracts supported by the underlying blockchain technology.
Ethereum also being a digital currency and is almost identical to the bitcoin structure but, it has one thing which makes it different from bitcoin. Ethereums blockchain not only stores transactions in its blocks as bitcoin does but, it can also store smart contracts on its blocks making the use cases much more varied.
One such use cases are NFT.
NFT stands for “Non-fungible token” well, you can find the full form of that abbreviation anywhere on the internet but, what does it really mean?
let’s start by understanding what is fungible?
Fungible is anything that can be divided into smaller parts or smaller groups of the same structure. For example, bitcoin is fungible as it can be divided into smaller parts like 0.1, 0.005 bitcoins, same as with a rupee, it can be divided into smaller paise.
Now, non-fungible means one which cannot be divided into smaller fractions.
So, what does it mean?
It means a lot for artists or original NFT creators. Let’s look at an example of a Leonardo di Vincis painting Mona Lisa, anyone can search it on google and you will be blasted with results of the painting in a JPEG form and you can get it printed and hang on your walls but, does that make it any value? no, because it holds no value as opposed to the original painting which is already in a museum and will cost you 800 million US dollars and hence is non-fungible.
So, the message I am trying to convey here is, it is all about scarcity and supply and like, if a new day modern creator of art, be it digital art, music or even a combination of both decides to create an art which is limited in supply and can be collected by only a few then that’s an NFT and it can be made sure that it cannot be copied and is secured by the use of Ethereum’s blockchain architecture.
NFT can be anything from the first tweet of any celebrity to the last tweet of any celebrity.
It can be music made by a popular musician in limited supply and is not released for the whole world but a few limited people, the hardcore fans of the musician.
Recently the famous electronic artist Steve Aoki released some of his tracks in the form of NFT and sold them for a whopping 1.35 million dollars.
One of the advantages of releasing it as an NFT is the extreme price at which it can be sold and another being the ever-increasing valuation of that music as few people have access to it and Ofcourse Steve Aoki is getting old by time. So, you never know.
Another example is a GIF of a cat just sold on an NFT marketplace for 500 million dollars.
And how can we forget the Cards collecting community instead of protecting their card collection putting a huge amount of care in the process, they can now own it in a digital form which reflects and has real monetary value to it.
The whole point is collectable value, the collectors pay huge amount of money for collectables which can be stolen or destroyed so by purchasing any collectable item in the form of an NFT not only secures it from any kind of fraudulent activity or any disaster but, you don’t even need a place to store it. Any NFT is stored in a blockchain of the underlying Ethereum architecture which is extremely secured and is always accessible.
Another use case can be, suppose if you make an artwork which cannot be carried everywhere, like physical huge art installations, now you can just make a 3D render of that artwork and carry it anywhere in your NFT wallet and also sell it making huge money.
Financial institutions are also planning to make NFT collateral loans in which one can use his/her NFT to obtain loans from banking institutions keeping them as collateral.
The NFT is at its hype stage and seems extremely cool for now, we will have to wait for the dust to settle down to see what it actually holds for us in the future. It seems very promising and can be considered as one of many great use cases from the Ethereum architecture. It is turning out to be a boon for artists and collectors. This is one of few use cases of the crypto revolution, we will cover more such concepts in our upcoming articles taking a deeper look into Dapps, DeFi etcetera.
