NFTs have proven to be an explosive store of value as a valued asset and are set to change the world of art, and every industry on the planet. Understanding how this new asset class stormed the markets requires an exceedingly small amount of information and great appreciation for kitties. Let’s begin!
What Is An NFT?
Non-fungible token. Fancy words for saying a piece of digital content is unique and owned by one induvial, or entity. Take a digital file or something we can turn into a file, let’s say the marriage certificate of someone from the Royal Family, digitize it (create a file of the document), and place that file on a blockchain as a token, such as Ethereum, and bam, you’ve got an NFT. Not hard to imagine someone would buy a Royal Marriage Certificate, is it?
Sure, there’s a bit more to create a token, but you get the point. It’s just a digital file on a blockchain, which means everyone can look at it and verify who owns it by checking signatures and other elaborate cryptographic craziness, but we’re not here for that. We’re here for NFTs.
Where Did They Come From?
Depends on who you ask. Some credit Colored Coins for paving the way for NFTs. Think Bitcoin, but a smaller denomination called a Satoshi (think the penny to the U.S dollar), represented on the blockchain as a redeemable asset. These smaller denominations of Bitcoin were to be used for some marketable goods that could be exchanged.
These coins allowed you to store data within a Smart Contract (Contracts or Applications written in code that self-execute), that give ownership of an asset (colored coins in this case), to someone specific with the intention of spending it.
How Did They Go Mainstream?
Funny cat videos have dominated the internet for years, we should have known the kitties would dominate the world of blockchain. CryptoKitties is a wonderful game developed on the Ethereum network that allows you to design and breed cats. All of these feline assets are one of a kind and can be bred towards specific intentions, apparently, those intentions include selling for 170K in 2018. All of these precious meow meows are NFTs and exchangeable, which created a rather lucrative market for a time.
This game brought NFTs to the forefront of everyone’s mind, and the markets had to accept digital art, or assets, held real value.
How Will They Change Art?
Predicting future markets is a bit like starting a Keto diet. It’s fun to pretend, but you’re probably just going to waste your money.
Since NFTs are digital assets issued as a token on a blockchain via Smart Contract, you can write certain parameters into the code. For instance, say you want a 15% royalty based on the sale price every single time it gets sold, that’s passive income from doing nothing. You’re collecting money each time it sells.
Online NFT galleries are in the works, and asset holders would be able to stake their NFTs for profit-sharing, or other revenue models, for being featured in a collection. Movies could be released as an NFT, and the file projected onto a large building to share with a community, but the owner would hold the rights to that movie.
How Will They Change Other Industries?
Mark Cuban is exploring making Mavericks Tickets NFTs. Specific games hold sentiment to sports collectors, so they would purchase tickets from previous games, allowing Mark and his team to profit off the resale of tickets.
GameStop released a job opening for NFT Developers citing “collectors”, making it clear they intend to take in-game items and turn them into collectible NFTs. Imagine “owning” Master Chief’s helmet in Halo!
Now, what if Nintendo and 343 Industries (Halo Developers) partner up, and if you input your NFT from Halo, then you gain a Skin (Cosmetic Appearance for gameplay) that turns any character in Super Smash Bros into Master Chief! These types of collaboration are coming, and it’s going to be a crazy ride.
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