Vratislav Holub The NFT phenomenon has literally taken over the internet in recent months. What exactly is it and why is it so popular? You've probably heard that it's a digital art form that makes a lot of money, and it's also an interesting form of investment. So how does it all actually work?
NFT, or non-fungible token, has been with us since 2014, but it was only in the previous year that it managed to gain the most popularity. And it looks like the enthusiasm isn't going to die down any time soon. In its core, it is also very similar to cryptocurrencies, as in both cases they are so-called digital assets. But don't get confused - they are certainly not one and the same, but on the contrary, we can see interesting differences between the two. The NFT represents a unique piece of art where its owner is the sole holder of the rights. In addition, the famous "eneftéčka" can be divided into several types. It's not just about digital images, it can also be music, for example, with some people even selling their best tweets from the social network Twitter.
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Flying around the world with Apple For those who are not at all interested in the world of NFTs, the information described above can be very confusing. Why would anyone pay for an image when they can simply download it? Here we encounter an interesting issue. By downloading an image, you do not become its owner, you do not hold the necessary rights, and you cannot sell the art, for example, because it is simply not yours.
How NFTs work
But let's move on to the most important thing - how does NFT actually work? It is a part of the so-called blockchain, just like, for example, cryptocurrencies. In the vast majority of cases, non-fungible tokens are rooted in the Ethereum blockchain, but other cryptos are starting to support NFTs as well. At the same time, on the supported websites, practically everyone can buy a piece of art that they like the most, or they can even publish their own work and possibly make money from it. You can sell practically anything this way. As mentioned above, some people even sell their tweets. A great example is the head of Twitter, Jack Dorsey, who managed to sell his first tweet in the form of an NFT for almost 3 million dollars.
Jack Dorsey and NFTs
But some people often confuse NFTs with cryptocurrencies. This issue was well described by the portal idropnews.com, which compared the irreplaceable token to rare baseball cards. If you hand over such a card in perfect condition to someone one day, you cannot count on the fact that you will get a card with the same value in your hands. On the contrary, in the case of money, you hand over one hundred crowns on one day, for example, which will be returned to you the next day. Although it is not one and the same banknote, it still has the same value. To distinguish NFTs, they also have a small amount of text and data encoded in them, which is related to their designation unmistakable. It is these differences that can make them rare.
Opportunity and risk
The NFT phenomenon can thus represent a relatively interesting earning opportunity for practically everyone, especially for artists who are already involved in art and would like to monetize their creations. In this regard, the great thing is that you can also earn a smaller commission every time you sell a non-fungible token, and you don't even have to sell it yourself. Of course, it is necessary to be fully aware of the risks. Unfortunately, in this case, no one can guarantee you that you will be able to sell the NFT, which you buy for example for 50 thousand crowns, for the same price.
In addition, according to some fans, it is not even worth keeping the given work for a long time, unlike, for example, a crypt or stocks. After all, if out of nowhere the world decided it was no longer interested in the NFT phenomenon, you would be left with the rights to a piece of worthless digital art. Probably the biggest problem then can be with proving ownership. This is because it may happen that you buy an NFT from someone that never actually belonged to that person. This way you can lose money for practically nothing. Since purchases of non-fungible tokens are made using cryptocurrencies, it is also quite possible that you will never be able to track down such a person.
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Along with NFT comes an interesting opportunity and relatively sharp risks. Some may be able to make millions of dollars in this new world, but that doesn't mean that everyone can. Before you invest your money in something like this, think the given step through and consider all the pros and cons. At the same time, there is an unwritten rule that people should not invest money in something they do not fully understand/trust.
Virtual money laundering. Nothing more nothing less
Digital way of ownership + new way of valuing things. Open your mind
"unless an external agreement is made between the artist and the buyer, the bundle of copyrights to an NFT still belong to the original artist. The NFT purchaser owns nothing more than a unique hash on the blockchain with a transactional record and a hyperlink to the file of the artwork.” So no digital ownership takes place. You own a receipt for an image that you don't own and that is also hosted on a third party site. If they ever take down the page, congratulations. You have an NFT with a link that doesn't refer to anything :D
The fact that NFT gives ownership of the image that represents it is certainly not true information. An NFT is just a random position within the blockchain that is only represented by the given image. I recommend watching this video, which explains NFT in a much more critical and sober way: https://m.youtube.com/watch?v=XwMjPWOailQ