There’s a very good chance that you’ve heard the term “NFT” being thrown around in the last few years. You may associate NFTs with digital artwork in the Bored Ape Yacht Club or CryptoPunk collections.
But it seems that many people won’t actually be able to tell you what an NFT is. Due to their increasing popularity and investment potential great way to make money, lets have a quick look into them.
What are NFTs?
NFTs, or non-fungible tokens, are digital assets that are stored on a blockchain. Unlike cryptocurrencies, which are each interchangeable with one another (fungible), NFTs are unique and cannot be replicated (i.e., non-fungible). This makes them ideal for representing unique items with inherent scarcity, such as art or collectibles.
The largest NFT exchange is Opensea. Whilst Ethereum has the most NFTs on its network, many other blockchains are popular as they offer cheap minting fees.
Why buy an NFT?
While some NFTs may be valuable in themselves, such as a piece of digital art, they often come with special features or privileges too. For example, an owner might receive the ability to access a certain area of the Metaverse, or it might let you communicate directly with the project creator.
NFTs can also give you real world privileges too. Kings of Leon released their 2021 album “When You See Yourself” with a series called “NFT Yourself”. Depending on specifically which one you bought, fans were given access to perks ranging from album audio-visual artwork to front row tickets for life.
How are NFTs benefiting society?
While in many ways it’s still early days for NFT application, there’s a lot of optimism about how it can be used commercially.
Real estate has been stated as being perfect to mint as an NFT by several publications, since the two are already similar. By digitalising real estate, it would also simplify a lot of issues people currently have when trying to buy or sell a house, such as finding out information on the property, or the long process of dealing with a myriad of middlemen.
With an NFT, you could instantly find out any information you want on the house, such as when it was built or what renovations it’s had. It would also be much easier to transfer ownership of the house and much harder for someone to steal ownership of it.
Some medical organisations are already looking into how they can utilise the technology. By making a person’s medical records an NFT, it would be easier to check and verify their medical history, give out birth certificates, and store sensitive medical data without the risk of any of this information being lost or destroyed – all while keeping patient confidentiality.
Further, they could be used to improve the voting system. Many people don’t own physical ID and proof of residence, which can hinder their right to vote. By making IDs into an NFT, this problem is eliminated. It also helps to eliminate voter fraud, as there would be a blockchain record that is immutable and cannot be adulterated.
As we can see, there’s a whole lot more to NFTs than just digital apes! The technology has opened up a whole host of possible solutions to important real-world problems, meaning that lots of people are going to be keeping a close eye on the digital asset space as a potentially great investment and source of innovation.
Disclaimer: Nothing within this article should be misconstrued as financial advice. The financial techniques described herein are for educational purposes only. Any financial positions you take on the market are at your own risk and own reward. If you need financial advice or further advice in general, it is recommended that you identify a relevantly qualified individual in your Jurisdiction who can advise you accordingly.