While recent years may be remembered as the pandemic years – disrupted in many spheres both personal and professional by Covid, it has also been a time when people started thinking much more creatively about technology and its interplay with economic value. This can be seen in the emergence of non-fungible tokens (NFTs), a unique blockchain-based digital asset that has further transformed how we understand the digital world.
NFT are digital assets tokens which represent ownership through the ‘tokenising’ of items like collectibles, real estate, art etc. These NFTs are secured by the blockchain network, usually Ethereum, and can have only one official owner. No one can modify the ownership of the NFT or copy to create a new NFT.
NFTs take various forms- from digital images to video clips- and they also have many uses.
- NFT as collateral in decentralized loans – Some decentralized finance providers will offer loans set against collateral. If you don’t pay back the loans, the NFT will be sent to the lender as collateral.
- Maximising earnings for creators – NFT earnings are directly transferred to the creator when sold on the marketplace and might even receive royalties. This stands in contrast to artists / creators publishing artwork on social networks where the platform selling ads to followers of the artist make the money, while the creators just get the exposure
- Tokenisation of gaming items where money can be recouped though selling any NFTs bought when you’re done with the game
- Tokenisation of physical items like NFTs of deeds of property or cars which can be used to secure loans
There has been a dramatic increase in the use and adoption of non-fungible tokens (NFTs) over the past two years with transactions reaching over $250 million in 2020 alone, and it shows no sign of slowing down anytime soon.
As the markets for NFTs continue to grow, we are likely to see the creation of more platforms to showcase them and manage transactions. An example is Crypto Currency exchange giant Coinbase, which recently announced its own plans to launch a marketplace that lets users mint, collect and trade NFTs – a sure sign of the appetite in the market if ever it was needed.
Beyond the impact on consumers and investors, NFTs are set to disrupt our notions of copyright and ownership. With transaction history permanently tracked and readily available, it will be easy to identify creators, buyers and purchasing history of digital products, thus further disrupting the creative marketplace.
Not only are NFTs are a glimpse into the digital landscape, they also are a major economic innovation because they allow a merging of creativity, technology and currency.
I’m watching this space like a hawk. So should you.