The Nyan Cat meme was recently sold as a non-fungible token (NFT), for $600,000. Visa purchased a CryptoPunk at $150,000 and Jack Dorsey sold his first tweet as NFT for $2.9million. Sotheby's sold a set of 101 Bored Ape Yacht Clubs for $24.4 million. Christie's sold a collage consisting of 5,000 digital images entitled 'Everyday-The First 5,000 days' for $69 million. These are hard to miss NFTs. NFTs, as decentralized contracts, have spawned a new generation of artists, writers, musicians, and creators of digital content. Like Amazon, which allows manufacturers to directly sell their products to customers, NFTs allow artists to list their work and sell it directly on online marketplaces.
What is NFT?
NFTs can be digital assets with a variety of formats, including images, avatars, and videos. Minting is the term used to create an NFT. You will need a digital wallet that is compatible with the market you wish to 'tokenize or buy from in order to buy or sell them. NFTs are not able to be duplicated. An NFT can only be owned by a person who has a unique code or signature that distinguishes it from other copies. The buyer can prove ownership by purchasing NFTs with built-in authentication. This creates unique artworks. The NFT can be minted once it is uploaded to the blockchain. It cannot be altered. The token is your proof of ownership. NFTs make it impossible for people to fake ownership of art, something that was impossible in recent years.
NFTs can also be considered a decentralized (peer-to-peer) certification, as its file is stored on the blockchain. NFTs are different from Cryptocurrencies because each NFT is unique and cannot be traded. The Bored Ape, Yuga Labs's NFT, cannot be traded with another NFT by the same artist. The same applies to Leonardo Da Vinci's Mona Lisa and his Last Supper.
Some artists think it's crazy to have an exchange value for their work, as it's something that has never been done before. Artists now have the opportunity to trade digital assets online, and earn a living, without compromising their authenticity. Artists can make their lives more democratic with NFTs.
Smart contracts are the utility embedded in NFTs. This self-executing program, built-in code on the blockchain, creates long-term value that goes beyond the NFT. An artist might create an NFT by minting digital artwork. Each buyer will be given a copy of the NFT and all payments will go directly to the artist's digital wallet. If an artist bundles her NFT with smart contracts and the buyers decide to resell the digital artwork, they may choose to pay a portion of the royalties. The creator of the artwork retains all rights. Artists are expected to demand 10% royalty on resale. This is the market standard. Artists can earn a lifetime income with smart contracts.
NFTs could face problems in the future due to cryptocurrency's volatility, carbon footprint, and regulatory challenges. The biggest risk of buying an NFT, like real estate and other cryptocurrencies, is their ability to keep their value. People may decide to sell them if they lose their popularity. NFT transactions, just like other cryptocurrencies, are verified via blockchain to ensure that they are valid. This also consumes huge amounts of energy, with an average NFT generating a carbon footprint of more than 200 kg. There is no international regulatory standard for NFTs and cryptocurrencies.
NFTs can also be problematic if people create NFTs to hold assets that they don't legally own. This is new territory for legislators.
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NFTs offer artists an alternative way to sell their art and another investment avenue for buyers who want to hedge market volatility.
Where can I purchase or sell NFTs
Here's a list of top NFT platforms.