Monday , 6 December 2021

What Are Non-fungible Tokens (NFTs)?

NFT stands for “non-fungible token”…[and] hundreds of millions of NFTs are bought and sold each week. Last March, for example, an NFT for a work of art called “Everydays: The First 5000 Days” sold …for $69 million…The buyer did not receive a canvas-and-paint piece of art or…exclusive ownership over the digital image [but, rather, an electronic record corresponding to an image that lives entirely in the digital world or, to put it differently, someone paid $69 million for a picture on the internet] so what’s this “token” that was purchased and what does the “non-fungible” part of NFT mean?

This post by Lorimer Wilson, Managing Editor of munKNEE.com, is an edited ([ ]) and abridged (…) version of a article by Timothy Taylor

Well, according to Steve Kaczynski and Scott Duke Kominers, authors of a primer on “How NFTs Create Value”,  as the name “non-fungible token” suggests:

  • “each NFT is a unique, one-of-a-kind digital item;
  • they’re stored on public-facing digital ledgers called blockchains, which means it’s possible to prove who owns a given NFT at any moment in time and trace the history of prior ownership;
  • it’s easy to transfer NFTs from one person to another — just as a bank might move money across accounts — and it’s very hard to counterfeit them and, because NFT ownership is easy to certify and transfer, they can be used to create markets in a variety of different goods…
    • Because blockchains are programmable, it’s possible to endow NFTs with features that enable them to expand their purpose over time, or even to provide direct utility to their holders. In other words, NFTs can do things — or let their owners do things — in both digital spaces and the physical world and, in this sense, NFTs can function like membership cards or tickets, providing access to events, exclusive merchandise, and special discounts — as well as serving as digital keys to online spaces where holders can engage with each other.
    • Moreover, because the blockchain is public, it’s even possible to send additional products directly to anyone who owns a given token. All of this gives NFT holders value over and above simple ownership — and provides creators with a vector to build a highly engaged community around their brands.
      • It’s not uncommon to see creators organize in-person meetups for their NFT holders, as many did at the recent NFT NYC conference.
      • In other cases, having a specific NFT in your online wallet might be necessary in order to gain access to an online game, chat room, or merchandise store.
      • Thus owning an NFT effectively makes you an investor, a member of a club, a brand shareholder, and a participant in a loyalty program all at once.
      • At the same time, NFTs’ programmability supports new business and profit models — for example, NFTs have enabled a new type of royalty contract, whereby each time a work is resold, a share of the transaction goes back to the original creator.
  • NFTs enable new markets by allowing people to create and build upon new forms of ownership. These projects succeed by leveraging a core dynamic of crypto: A token’s worth comes from users’ shared agreement — and this means that the community one builds around NFTs quite literally creates those NFTs’ underlying value and, the more these communities increase engagement and become part of people’s personal identities, the more that value is reinforced…”

 

Related Article From the munKNEE Vault:

Fandom Sports Media Stock Price Tracking the Esports Surge and New Non-Fungible Token Opportunity

Play. Predict. Get Rewarded. With interest and opportunities in the NFT economy and esports at all-time highs now is the time to look at ways to invest in it, and Fandom Sports Media Corp. is one such way. This article explains what the NFT economy is and why Fandom is an excellent way to “play” it.

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