What Are NFT's And What You Need To Know
When I was introduced to NFT’s, one of the first I ever saw was of this pop tart like cat with a rainbow that looked like it was streaming from its private regions. Fast forward, little did anyone know that the pop tart rainbow cat was a viral meme that would eventually be sold at an online auction for approximately three hundred ETH (Ethereum).
Ethereum is the second most popular crypto currency, and at the time of the sale 300 ETH was equivalent to nearly six hundred thousand dollars at the time. At the time of this writing, ETH is trading at approximately $2330.21, making the NFT worth approximately $699,063.00. One might ask, how can someone own the original copy of the gif that was all over the internet?
It's because it was sold as an NFT, (which is short for non fungible token) which acts like a digital certificate of authenticity. The market for NFT’s ballooned in 2020, climbing to a market cap of at least $338,000,000 from $41,000,000 in 2018. Skeptics are asking whether these assets are really worth the value assigned to them especially if all it takes to view them is an internet connection.
To understand how NFT’s work, first you need to understand what fungibility is. Fungibility refers to the ability of an asset to be exchanged or substituted with similar assets of the same value. A simple example of a fungible asset is currency.
Say you have five one dollar bills in your wallet, and you may not want to carry around so much change, so you exchange them for a single five dollar bill. The value of your money is still five dollars regardless of the fact it's now in a different form (the five dollar bill).
Non fungible assets are the opposite; each one is unique and can’t be easily substituted for something similar. Think of the Mona Lisa as an original piece of art. It couldn't be swapped out for say a Mona Lisa poster from new gifts because the poster doesn't hold the same value.
In 2020, NFTs achieved mainstream popularity through a number of popular games. These games use NFTs to enable players to trade virtual animals, digital collectibles that exist in the game world and cannot be bought or sold outside of the game itself.
The investment community also starting to take notice of this trend, with holdings in one particular company valued at over $2 billion on the Ethereum Blockchain now dwarfing all other crypto currencies combined. NFTs are often referred to as digital collectibles because they are scarce digital assets that can be bought, traded, and sold.
What is the use case?
Most tokens used for trading on traditional exchanges can also be turned into a non-fungible token (NFT). This is great for players but it also opens new possibilities for developers. Following are a few of the NFT use cases that are possible through the adoption of NFTs by developers and players alike:
Exchanging goods, shares, or other current assets for items you cannot get anywhere else.
Combining known and unknown information together to create new items that cannot be found anywhere else, game items, and more.
Wisdom of the Crowds
Having a better idea of what people want based on their actions.
Creating something completely new in the digital world
Making something rare for the digital users
Why have NFTs become Important?
The sale and purchase of the digital asset was just a fantasy but NFTs made it possible with the use of secure and advanced technologies. Digital arts, music, paintings, and almost all other digital assets can be bought as NFTs. The core idea of NFTs has created a new stream of revenue for the artists. The hype is real and the “King of Leon” music band has already released a music album as an NFT.
Should you invest in NFTs?
The actual value of NFT depends upon the buyer who is willing to pay for the asset. There is no hard and fast rule to determine the real value of any digital asset. Most celebrities are already interested in creating their own NFTs.
The NFT ecosystem is hot. There’s a new type of token coming out every day, with complicated multi-token ecosystems and smart contracts to boot. And while some people will tell you that these networks are most likely being prepped for a grand exit in the very near future, others believe that NFTs and other Blockchain-based assets like them are here to stay.
Everything may be sweet and smooth about investing in NFTs but there are some investment risks too. If the demand for the NFTs decrease, your digital asset can become worthless in the future. The overall condition of the Blockchain market indicates the positive trends in the demand and supply of NFTs. In case you are thinking about jumping into NFTs to make money, make sure to do your research to understand the working of the tokens.
Jugrnaut is part of production duo Arkatech Beatz (formerly known as The Infinite Arkatechz). Arkatech Beatz are a platinum production team from New York now based in Atlanta. They were affiliated with Loud Records/Sony Music Entertainment as A&R’s and have produced for artists such as Big Pun, Nas, Raekwon, Jadakiss, The Game, Waka Flocka Flame, Lil Scrappy, Killer Mike, Shawty Lo, Mýa, Alley Boy, Trouble, Max B and others. Arkatech Beatz consists of members Jugrnaut & Mike “Trauma” D . Arkatech Beatz currently head their label Arkatech Beatz Entertainment which is globally distributed by The Orchard/Sony Music Entertainment.