Non-Fungible Token (NFT) Is The Future Of Art?

More and more often we hear about shockingly high sums for which someone has bid on the Internet for the right to a famous person's body part or artwork, or even a digital love. To peasant minds, paying huge amounts of money for something intangible and incomprehensible seems, to put it mildly, strange. NTF is shocking and gaining popularity.

NFT market

NFT exchanges are where art collectors, investors and cryptocurrency players connect. In recent years, non-exchangeable tokens have been dynamically increasing in value. So the group of people who want to earn on them is growing.

What is non-fungible token?

What is NFT? The abbreviation stands for non-fungible token, i.e. a non-fungible token. This tells us that we are dealing here with a unique, collector's asset, one of a kind. No wonder that it aroused the interest of investors who are ready to spend millions of dollars on NFT.

NFT, as a digital asset that represents art, music, film, game items, virtual avatars and video game skins, even tweets, has been around since around 2014, however, it is currently experiencing a renaissance as it becomes more and more popular a way to buy and sell digital art.

NFT can take many forms. It can be a JPG photo, gif, video, text file. It must have a digital record, which is a declaration, a certificate that a given file exists only in one copy. That the investor who decides to buy it will be its sole owner. Each token has a unique value, is not equal to another NFT token and cannot be copied. So they began to be used as proof of authenticity.

Essentially, NFTs are like physical collectibles, only digital.

NFT vs Crypto

Tokens are sold and bought there most often in cryptocurrency. Behind NFT is blockchain technology, one of the biggest revolutions in the world of new technologies. The entire cryptocurrency market also operates on the basis of blockchain. However, this is where the similarities between NFT and cryptocurrencies end.

One Bitcoin is always equal to another Bitcoin. NFTs are different. Each of them can have a different value. Each also has a unique digital signature that prevents NFTs from being exchanged or exchanged with each other. Hence the name "uninterchangeable". However, they can be sold on the secondary market.

The opportunity for artists

NFT is an opportunity mainly for artists. Platforms like OpenSea have become auction houses for them. Although they do not yet reach amounts close to the most expensive works of art sold, their digital paintings reach dizzying sums similar to those at real art auctions. Anyway, NFT has already entered the auction houses.

According to Forbes, in 2021 alone, the NFT market was worth $41 billion. New NFTs entering the market can go up in value in a very short time, giving huge returns to investors. Prices keep going up. Constant demand will shape the price. However, with market dynamics comes investment risk.

The future

It is difficult to say unequivocally what use of NFT technology will be adopted in the long term. Its history is too short to evaluate it rationally.

We can only speculate that it will contribute to the interest in the art market, it is worth emphasizing that the digital one is not accurate. Therefore, artists who create in a digital way can gain not only popularity but also in the form of finance.

The risk

Tokens are also highly susceptible to fashion, which can change from day to day. Other risks associated with the NFT market are fraud and theft risks. As NFT is a virtual asset, it often becomes a target for hackers, impersonators who exchanged and sold their works without the consent of the authors or dishonest operators of cryptocurrency exchanges.

NFT And CO2 emissions

NFT is experiencing its rebirth, it does not mean that participation in this market is right or moral. It is also worth mentioning the controversy and the dark side of the exchanges of non-tradable NFT tokens, which is very harmful to the environment. It is mainly about the appalling consumption of electricity, and thus - a large carbon footprint. Growing demand and transactions only lead to more CO2 emissions.

Modern, capitalist techniques of generating wealth, such as Bitcoin or NFT, further deepen the problem of global warming, rising temperatures, extinction of species, etc. Statements about the harmfulness of blockchain technology are therefore gaining strength. For now, however, this does not affect the decline in the popularity of NFT, although its future is difficult to assess.

NFT and copyright

Buying NFT may mean buying the copyright to the song, but it doesn't have to be. Owning an NFT does not necessarily mean owning the rights to the original work. This can run the risk of being misled if the buyer buys NFT thinking they are acquiring the copyright to the original work, which legally is not the case because the seller did not specify it. Keep in mind that some NFT vendors sell them along with the copyright, while others only sell a digital certificate of ownership for a specific version of the work.

Source: investopedia.com