NFT is one of the most popular terms in technology (and not only) in recent months. We keep hearing about someone buying an NFT and someone selling something there called NFT. Time to ask what is NFT anyway?
Increasingly, we’re hearing about shockingly high amounts of money someone bid on the Internet for a celebrity’s body part, work of art, or even digital love. To put it mildly, it seems strange in the minds of the peasants to pay huge sums for something intangible and incomprehensible. NTF is shocking and gaining popularity. But is this really strange? Can you make money on NFT? What is NFT? Let’s check.
What does NFT mean?
Let’s start from the beginning. NFT is an acronym for Non-transferable Token, which we can translate as Non-Transferable and Non-Transferable Token. To understand this, it is best to compare the transferable and non-convertible tokens to each other. To understand the difference between non-convertible and convertible token, let’s use some examples.
Convertible tokens can personify cash, which is generally exchangeable, and therefore are exchangeable and transferable. For example, all 5 zlotys have the same face value. Having a 5 zloty coin, we can exchange it for another one of the same and still have the same amount of money. There are countless of the same five zloty coins in the world and each has the same face value of 5 zloty.
The best example of something inalienable and irreplaceable would be a unique and original painting by a painter, such as Edvard Munch’s “The Scream”, Van Gogh’s “Sunflowers” or Leonardo da Vinci’s “Mona Lisa”. Although each of the world’s most famous paintings has received many copies, there is only one original of each work, each of which is valued in enormous amounts.
What is NFT?
NFT is a digital work held in the blockchain. It is a certificate confirming that a particular file exists in only one copy and that it is original. Of course, there may be copies of it on the Internet for users to download, but the first original file is only one.
NFT tokens are entries in the blockchain network that contain individual identifiers. Previously known files can be copied on the Internet, stored on disks, and transferred. NFTs cannot be copied and can only be moved between virtual user wallets.
One of the world’s most famous NFT deals was the sale of Mike Winkelmann’s Everydays: The First 5000 Days Digital Art by Christie’s in 2021. Indian investor Vignesh Sundaresan for $69 million. He bought an NFT token, which confirms the authenticity and ownership of the business.
When you buy real-world artwork, you get proof of ownership on paper. And what does it look like when the work was created in the virtual world and is it, for example, a drawing, a 3D model or a digital sculpture? Then it is the NFT that works, because by purchasing it, the buyer of the purchased work is assigned as the owner and anyone can verify it in the blockchain network.
Owning an NFT does not necessarily entitle you to ownership of the original work.
How do you trade NFT?
NFT, just like cryptocurrency trading, is traded via the blockchain network. NFT transactions, information about the buyer, seller, the amount of the transaction is public. However, the NFT code cannot be copied or transferred without the consent of the owner. NFT tokens are the fastest growing in the digital art market. Today, virtual artworks with NFT certificates are offered by prestigious auction houses, such as Christie’s or the aforementioned DESA Unicum, and the staggering amounts of transactions aren’t as shocking as they were a year ago.
However, NFT is not just about virtual art. Tokens are also used successfully for example to authenticate collectors and exclusive items such as handbags and luxury cars.
NFT and legal regulations
The NFT industry is developing rapidly, and as is usually the case in such cases, legal regulations have to be awaited for a while. According to the data of Nonfungible.com, the turnover of the son of NFT has already reached more than 17 billion US dollars, which, of course, makes legislators increasingly interested in this market. To prevent the risks associated with NFT transactions, individual countries want or have already begun to introduce regulations primarily aimed at increasing the security of trading crypto assets. Regulations should focus, for example, on issues of intellectual property law, verification of transactions in relation to combating money laundering (money laundering and terrorist financing) or introducing a licensing requirement for intermediaries. The vast majority of countries have not yet established regulations regarding crypto assets, including the NFT, and comprehensive regulation of this issue will be very difficult due to the continuous development of new technologies.
NFT and copyright
Buying an NFT may mean buying the copyright to the work, but it doesn’t have to be. Owning an NFT does not necessarily entitle you to ownership of the original work. This could run the risk of being misled if the buyer purchased an NFT into thinking they had the copyright to the original work, which is not the case legally because the seller didn’t say so. Keep in mind that some NFT sellers sell it by copyright, while others only sell a digital title certificate for a specific version of the work. Work within the meaning of copyright law is any manifestation of creative activity of an individual nature, which is defined in any way.
Risks of investing in NFT
Keep in mind that investing in NFTs is not without risk. Let’s illustrate this with an example of investing in art. Investing in works of art that have been on the market for some time involves less risk than completely new works in the market, because they have a history of purchase and are just as recognizable as their authors. Usually, it would be a good and safe investment to buy a work by a famous artist that is no longer alive because such works are gaining value.
When it comes to investing in NFT, the situation becomes more complex as the buyer has to know if the value of the business he wants to invest in is likely to increase. In addition, the investment in NFT hopes that blockchain will become more popular and that the overall trend of NFT will continue to grow.
nft is spun?
NFT has as many supporters and opponents as it is. One of the biggest criticisms of this technology is its negative environmental impact (which, according to the developers, will change in the future). The NFT shows the number of areas in which blockchain technology can be used. There is no doubt that NFT tokens have the potential to redefine the concept of ownership, especially digital ownership. If this technology spreads widely in the future, it means a revolution.