Why is Non-Fungible Token in the news?
The reason is simple people are converting their images, text and videos into tokens and then selling them for millions of dollars. Two famous story and their characters are mentioned below. This was the prime driver for people to look towards e-nft as a viable option.
- Jack Dorsey – Twitter founder 1st Tweet on nft market place Cent.co – 2.9 Million USD
- Bleepe NFT – Everydays First 5000 days – 69 Million USD
What are Non Fungible Tokens e-nft?
NFT stands for non-fungible token. Let us look at what exactly is an NFT. According to the Inhouse community website, an NFT is a unique cryptographic asset linked to an object.
Another definition – “It refers to the blockchain-linked piece of digital content. Texts, images, digital artworks, audio recordings, domain names, trading cards, or in-game items can be considered as digital content for NFT” – Source Essential Add Ons
The meaning of the word non-fungible is not interchangeable. For example, currency notes in India 1 note of INR 100 can be interchanged with 2 notes of 50 INR. This implies INR 100 is fungible. A post from the Creative blog explains the process of creating a token using a wallet and an auction platform.
How to generate an NFT?
Let us look at an example to understand it in a simpler manner. Suppose Ram creates a painting. The painting can be digital or canvas (physical). Now ram wants a non-fungible token for his painting. Following are the steps Ram will have to follow to put up his artwork on the ledger.
- Ram will have to create a wallet for cryptocurrency first.
- Then Ram will have to buy some Ethereum or Bitcoins from a wallet often they will use Meta Mask .
- Then Ram will have to register on an auction site or nft marketplaces. Example Rarible nft
- For registration, the auction site would charge a fee.
- Then there will be another fee for putting your artwork or object on the blockchain. This is the fee to generate the “Non Fungible Token”.
- Before selling the painting Ram will decide the percentage of royalty on the NFT.
- Finally Ram will sell the Painting to the highest bidder in the auction.
- The auction site will charge a commission on sale and subsequent sales.
How to create and Sell NFT? YouTube Video demonstration
The same thing one can get in many videos. One such video that I would like to share is shown below. The video guides us through the process of creating a digital art nft and selling it online.
Advantages of NFTs
The main advantage of using these auction platforms is that it becomes super easy for an artist to find a buyer of their artwork. If we look closely at these platforms then we will find that many people are auctioning their images, crafts, visual skills, some videos and mostly digital artwork. So are these platforms only limited to digital assets? The answer to this is yes. Following are the advantages of using the auction platform for generating the Non-fungible token. The source of this information is an infographic from the 101blockchain
- The number one benefit is Ownership claim
- The Ownership is transferable converting into a digital asset that could be traded as and when needed.
- Creating Opportunities for creators and artists for instance nft gaming is one such area where artists can create animation, graphics and convert them into tokens. Music is another such asset.
- Most of the artists complaint of unequal pay and therefore they now have the opportunity of showing their talents. This boosts inclusive growth. As internet is for all and everyone can create, upload find a buyer and get royalty.
- Lastly, since the assets are minted in a blockchain it gives them authenticity. A non fungible token is thus an investment of time and money put together.
Celebrity Non fungible token
If you look at the prominent personalities from the field of sports, politics, movie making, actors all seems to be interested in monetizing their digital assets. Hence NFTs will give them an adequate platform for listing. One such former professional basketball star we recently came across was Shaquille O’Neal
Last chance to bid on my Era of Dominance #NFT collection at https://t.co/LHvEvovMt3, complete with a series of unlockables. Get in before 12pm ET! @EthernityChain pic.twitter.com/UsdHMuq1TD— SHAQ (@SHAQ) October 18, 2021
Disadvantage of Non fungible tokens
Since the entire system works anonymously on a distributed ledger. There are no fixed rules, commission charges of different platforms varies and can go upwards of 50% of sales. Following are the list of disadvantages that a creator might face on nft platforms.
- Lack of transparency on commissions and charges.
- High computing and cooling power.
- Ethical challenge of e-nft if we pay such high value to a piece of art instead of saving human lives in developing nations and under developed nations.
- Global Warming and unregulated black marketing.
Learning lessons from this new technology is that if we have to take the advantage of the first mover then we will have to take the risk. If a person is not comfortable in taking the risk he/she can wait for the regulations to come into force and then enter into the nft crypto space. Most financial markets experts view this phenomenon in the crypto space as just another bubble. What do the technical Indicators suggest about this marketplace?