One of the new and influential types of technology introduced into the crypto world this year is NFT (Non-Fungible Token). If you’ve been keeping up with the crypto industry, there’s a strong chance you’ve already heard of them… and their prices, but we’ll look into that later.
Now while NFTs have escalated in popularity in recent months and have the attention of tycoons, it’s interesting enough to learn more about what NFTs are.
Today I’ve decided to give you a run-down into the fascinating world of NFTs with their different aspects of the use and the impact they have on the virtual world and reality.
What is NFT?
Just as the name suggests, Non-Fungible Tokens (NFTs) are digital units that cannot be interchanged with one another. Each one of them has its own special and unique identity. Think of it like this, you can purchase a print of the Mona Lisa painting or even take a photo of it but there will only be one original ‘Mona Lisa’ in existence.
NFTs too, are unique assets individually and can be bought just like any other product but without being substantially real. You can look at them as ownership certificates for any available digital file.
The working of NFTs
Art is quite probably the most popular aspect of NFTs as of now. As crazy as it may sound, some buyers have bid and paid millions of dollars for them.
NFTs allow buyers to have original ownership so no matter how many copies exist, only one person (either the purchaser or artist) can possess true ownership of the file. The transaction as well rests on the blockchain ledger; maintained by computers globally which shows who owns the original file while also preventing any tampering with the records.
As of now, NFT exists largely on the Ethereum blockchain which means smart contracts can be incorporated into the scene as well. This enables the artist to get a “cut” for any future transactions.
NFTs and Security
Apart from all the advantages of NFTs, there have also been potential frequent hacks. This gives NFTs and blockchain technologies a big setback since numerous users misuse the option of anonymity to steal and commit fraud on its platform. Additionally, there is no central authority that can resolve these problems of digital thefts, complicating the matter.
NFTs and the Environment
NFTs are booming and becoming more known each day but with a price too, and just like other technologies NFTs also utilize massive amounts of electricity, since they rely on the PoW models of most cryptocurrencies — notably Ethereum. In their defense, however, NFT apologists argue that the harm is only temporary and state that blockchain technology will soon advance to tackle such issues of high energy uptake.
I don’t disagree.
Plus, we are trying to switch to reduce this effect. Like in Ethereum’s cases, which is transitioning to a system that will lower the energy consumption rates.
When you perceive NFTs as a whole, they certainly have huge impacts (bad and good) and their potential is quite wide since they’re easy to trade and currently are soaring in the financial industry. Moreover, the hype of digital assets and tokens is at its peak hence NFTs are key elements in the crypto space.
Alternatively, there are a few issues regarding potential hacks and cases that have been reported by artists. Fake NFT accounts sold items belonging to the real artist, without their consent.