Today, while we are preparing some technical updates for you, the 1MillionNFTs team wants to talk a little bit about how NFTs are changing the market here and now. This is a short piece for those new to blockchain and the crypto industry.
NFT, MP3, and other confusing acronyms
Every time articles explain what NFTs are, they usually start with an acronym. But if I tell you that NFTs are non-fungible tokens, would you understand what they really mean? It’s kind of like trying to answer the question “What is an MP3” by saying “it’s an MPEG Audio Layer-3”.
Well, yes… But that answer doesn’t help to understand the question.
What if I write that mp3 is a file type that has completely revolutionized entire industries by changing the way audio is shared and consumed? Agreed, that way the value of the format becomes more obvious.
Yes, NFT stands for non-fungible tokens. And, of course, understanding what fungibility means is useful. But it doesn’t reveal the obvious value of this asset.
Which answer sounds clearer?
NFTs are the type of tokens that are going to completely revolutionize entire industries by changing the way almost everything is exchanged and consumed.
Okay. Let’s dig a little deeper into the technicalities for a second.
By ‘fungible’ asset, we mean something that is fungible with another unit of the same asset. A good example of an interchangeable asset is the U.S. dollar. If I exchange my $1 bill for your $1 bill, nothing will change. Although they are two different pieces of paper, both bills represent the same value. This is what fungibility is all about.
Conversely, a non-fungible asset refers to something of some value. No two assets are exactly the same. A good example of a non-fungible asset is a house or a car.
And this is where things get really interesting.
What’s up with blockchain
Blockchain technology makes it possible to implement a lot of fundamentally new ideas that were simply unimaginable before.
One of them is the creation and distribution of tokens. It can be rightly called the most popular.
For example, Bitcoin is a perfect example of an interchangeable token. It’s simple: one bitcoin is one bitcoin.
NFT, on the other hand, allows us to create a digital certificate that represents a unique asset. We can attach these tokens to almost anything, including digital files: a photo, a video, an audio recording, or even this article, for example.
This allows us to create evidence of the authenticity of digital content that can be owned, bought, sold, and traded.
Because these tokens are stored on a blockchain (such as Ethereum), their embedded metadata and transaction history are fully verifiable by anyone in the world with an Internet connection.
This means that we can all know which digital wallets hold which tokens at any given time. This is 100% transparent and traceable authorship!
But we’re going by the surface because the real possibilities of the NFT market are much deeper.
Non-fungible tokens are now being used to shape the digital art industry, collectibles, gaming skins, the digital space, and more.
Wait, digital art?
Yes. A great place to start our NFT journey is the booming world of crypto-art.
As we now know, the NFTs were created to serve as proof of the authenticity of any digital file.
Now let’s remember, one of the artworks on our Ethereum board:
The artists created a painting, which is of some artistic value. But once created, however, the authorship needs to be fixed in the digital space. Minting NFT is a great solution!
Let’s imagine you’ve drawn a picture or created a poster in Photoshop or Illustrator. What do you do next? You simply export the image.
Anyone can download it, blur the watermark, and steal your work in any other way.
There could be dozens, hundreds, millions of such works on the internet.
Before NFT, the value of digital files was practically nothing. If everyone owns it, no one owns it.
But NFTs changed the rules of the game. By locking your picture into a blockchain and turning it into an NFT, the following happens.
There is now a certificate of authenticity on the Ethereum blockchain that is securely stored in the author’s digital wallet.
Anyone can verify its authenticity on sites like Etherscan, which collects the transaction history of everything done on the Ethereum blockchain.
This NFT can be put up for sale, and anyone can bid on it or buy it immediately at a specified price.
“But wait! I can still copy and drag this file onto my own computer a million times. Why would anyone want to buy it?”
That’s most people’s initial reaction when they are first introduced to the art of NFT. Why would anyone own digital art when it can be endlessly copied and consumed by everyone?
Now you, as the author, benefit from that. The more popular your image becomes, the higher its value is.
Viral content is the new recognition for the digital artist
NFTs allow us to completely overcome the supposed conflict between uniqueness and virality. Now we can really both have our cake and eat it.
By creating a rare NFT of potential interest to a wide audience, you can get dividends from its popularity. You don’t have to monetize and speculate on every NFT, but the value of your cryptocurrency increases along with its cultural significance. 1 NFT can be sold for millions of dollars.
It’s like sports cards. Let’s say you buy a collector’s card of a newcomer sportsman. The audience watches him play basketball, his stock in sports and culture goes up, and the value of that rookie card you bought for pennies a couple of years ago goes up.
It works 100% similarly with cryptocurrency and NFT.
Another good analogy is Mona Lisa. You can take a screenshot or save an image, you can go to a museum and take a picture of it. But that doesn’t make you an author, and the more people share the picture, the greater its cultural significance. And the higher the cultural value, the higher the value of the original painting.
We just all instinctively believe that the Louvre holds the real Mona Lisa.
“Blockchain is the Louvre”
This means that the open and distributed nature of blockchain allows us to verify and trust the history and ownership of digital content the same way we trust the Louvre, which houses the real Mona Lisa.
A mental leap into a whole new world
All of this is very new to us, especially since we all grew up in the era of the first iteration of the Internet, an era in which we learned to perceive digital content in a certain way.
So in order to understand these new concepts and begin to really feel their implications for ourselves, we all need to make some kind of mental leap.
But be assured, our grandchildren will not have to make the same kind of transition. They will grow up in a world where digital content is no less distinct and tangible than physical objects are to us.
And now you have a unique opportunity — you can be the first and take your place in NFT history!