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Blockchain technology has gained recent traction, particularly among digital creators and crypto aficionados. Central to the rise in blockchain technology is the emerging interest and potential functionality of Non-Fungible Tokens. The rising popularity of NFTs warrants further explanation of both its craze and potential use-cases. By definition, non-fungible means that something is unique and cannot be replaced. In other words, it is one-of-a kind. This differs from a U.S. dollar or a Bitcoin which has the same equivalence as any other U.S. dollar or Bitcoin. The unique NFT and its ownership credentials are stored on blockchains, which cannot be tampered with or replicated. Ethereum blockchain is the most prominent supporter of NFTs.
In theory, NFTs can be applied to anything unique. However, the current frenzy surrounds virtual art and other creative digital assets, such as Twitter Co-Founder, Jack Dorsey’s first-ever tweet, which sold for an eye-popping $3.0 million.
Moreover, a celebrated digital artist, known as Beeple, sold his digital collage for an unbelievable $69.3 million at auction earlier this year. Those spending money on NFTs believe that the purchase of digital assets is the future of exclusive art collecting. Digital artists validate the authenticity of their one-of-a-kind digital assets via blockchain technology. Emerging blockchain technology creates a distinct market for digital artists to monetize their creations and for prospective buyers to acquire digital asset ownership.
As interest in NFTs grow, so has the willingness for digital artists and consumers to establish online marketplaces to auction their assets. OpenSea, the self-proclaimed largest NFT marketplace, is a popular, dynamic platform where crypto collectibles and NFTs can be both bought and sold.
NFTs use-cases extend beyond the digital art world. The tokenization of documents to prove legal ownership of physical assets, like real estate, may become common in the not-too-distant future. For example, the ability to easily validate the chain of title on a home would have a significant impact on the current home buying process.
Along with many emerging technologies that gain attention from a hype cycle or absurd sales prices, NFTs attract opportunistic participants looking to make a buck. At its core, NFTs are a product with a unique following that will likely reshape the market in which consumers can exchange crypto collectibles and acquire digital assets.