Non-Fungible Token Definition: Understanding NFTs

5 May, 2021 / Bob

Blockchain has long been expected to revolutionize most of the industries ―  from banking to government and healthcare. Now, it is going to revolutionize the sphere of digital art as well, providing more opportunities for secured and safe transactions between artists and buyers, protecting each of the parties from scams and legal claims. 

It becomes possible with the help of non-fungible tokens, and in this article, we are going to explain the essence of this emerging concept and the opportunities it provides.

 

What Is a Non-Fungible Token (NFT)? 

 

Before dwelling on the question of what NFT stands for, let’s define fungible tokens and draw a clear line between these two concepts. 

Generally speaking, a token is a digital object that is used to represent another object or right. For example, it can be your right to own a house, some of the company’s shares, or…a piece of digital art. 

And here lies the main difference between fungible and non-fungible tokens. When your own fungible resources, you may exchange them for the same resources of the same value, but when the resource is non-fungible, you may exchange it only for something completely different. 

A non-fungible token is unique and one-of-its-kind, and that’s why it is used to represent objects that are completely unique and exclusive as well ―  for example, digital art. 

Crypto art is a new and emerging trend that appeared in the era of cryptocurrencies and the art itself, and in this case, an NFT is used by token artists to state their copyright to the art object. 

Let’s suggest you have created a video. How can you prove that you are its creator and prevent others from claiming their rights to your creative product? You can create a non-fungible token that will be completely unique. Next, you will be able to sell it and even create a stream of passive income by monetizing your video each time when your token will be sold to someone else.

 

The Value-Driving Opportunities of NFTs for Brands

 

What are the reasons to buy crypto art? Does it really portend such a great value to raise unprecedented sums of money? Today’s art collectors are quite sure that this trend is promising, and within several years, the value of NFTs will increase, which will provide a boost to the development of different digital art directions.

Recently, Gary Vaynerchuk, an entrepreneur, business consultant, and opinion leader announced the launch of his NFT collection. While he isn’t an artist, his goal was to help people understand the essence and value of NFTs. The only way to do it, according to his opinion, is to keep up with a trend and promote technology among opinion leaders. 

Below are the main benefits brands may get from creating their non-fungible tokens.

  • This is a new and secure way to copyright the branded artwork.
  • A non-fungible token opens an opportunity to get passive income each time the token is resold. 
  • Creating non-fungible tokens is one more way to keep pace with time and technologies. 

 

How to Create Your Own Non-Fungible Tokens? 

 

Сreating an art token with the help of non-fungible technology is quite a technical process. Instead of diving into technical details, it is better to focus on the piece of art that you want to tokenize with the help of non-fungible technology. It should be a unique and trendy digital artwork, for example, a viral video or an outstanding animation element.

Our video production agency may help you with creating top-notch and one-of-its-kind digital art objects that will have a great potential to be sold as a non-fungible token. 

Look at our space NFT collection we created as an example of WOW digital artwork

 

 

How to Buy and Sell NFTs?

 

To get started with selling your tokens, you need to tokenize your digital art object and make it available for sale on the specialized NFT marketplaces. You can also enable receiving a commission fee each time your token will be resold to someone else. 

The process of buying a crypto artwork is simple as well. To do it, you need to:

  1. Decide on the marketplace you will use to buy digital art.
  2. Have or create a crypto wallet with the necessary amount of gas to make a transaction. Gas is something like an internal currency within an Ethereum ecosystem. To make a transaction, you should pay a fee, which is calculated in gas units and depends on the amount of computational efforts you need to seal a deal. 
  3. Decide on the most promising art token you would like to buy.
  4. Provide the sender with your address to send a token. 
  5. Add the received token to your wallet and your collectibles. 

 

What Is the Future of NFT Tokens?

 

According to Forbes, non-fungible tokens are the future of art. They contribute to digital art development and provide the opportunity to make safe transactions between buyers and token artists. Each of the parties may also expect a rise in the object’s value, making it even more unique and pricey. 

However, such an approach, as well as the cryptocurrency art objects embedded in tokens, go beyond the traditional understanding of art, so some experts are concerned by the fact that the NFT can just disappear. Also, there are environmental challenges related to emissions produced by crypto mining activities. 

 

Conclusion – Are NFTs (Non-Fungible Tokens) Overhyped?

 

No, non-fungible tokens aren’t overhyped. Remember the early days of blockchain ― it would seem that the wave of hype and related concerns will never subside. However, the world has become accustomed to this technology and has opened up lots of promising opportunities for different industries. The same can be expected from non-fungible tokens – soon the hype will subside, and this approach to copyright to creative objects and their sale will become common in the field of digital art.

 

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