What is an NFT?
NFTs, which stands for Non-fungible Tokens is a digital asset holding a unique identity. It simply assigns a value to a data which can be an image, an art, videos, gifs, any in-game item, even a tweet. Non- fungible simply means that an asset which is of the same type is non interchangeable ( for example: your owned car or furniture).Whereas fungible means a data or an asset of the same type and is interchangeable.
You can also take the example of cryptocurrencies to understand it. They are quite different from each other while both are based on blockchain technology. A cryptocurrency is first of all, a digital currency and unlike an NFT it is fungible; which means it can be traded with same kind of data which holds same value. But every non-fungible token has a unique value which makes it non-interchangeable as it can’t be traded with an NFT of same value.
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Ownership of an NFT
Anything of them can be converted into an NFT. Then they can be traded online using cryptocurrency. It works on blockchain technology. An NFT gives its owner a complete ownership of their digital asset. For instance, if you are an artist and your created art piece is changed you into a digital asset in NFT, the you can get the full ownership of your creation which is backed by blockchain.
The only prior condition to own an NFT is that anyone who holds a cryptocurrency wallet can purchase NFTs. It is not necessary to get KYC to purchase an NFT. All that is need is a cryptocurrency wallet back by Metamask, and an NFT marketplace where you can trade NFTs.
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Increasing Interest in NFTs
The growing interest in NFTs is visible easily as more people are getting aware of the term and its meaning and uses. These are becoming popular because of the proof of ownership it provides to its users on digital assets. It is also because it assigns a unique value to each NFT. Also they can be use in various fields of applications which can be trade in an NFT marketplace easily. It really supports many business models and is providing a possibility for them to expand.
The popularity and growth of the NFTs has mainly expanded due to the value the NFTs get in a marketplace. It’s also because they have expanded the scope of NFTs and they can now be a digital art piece or any other digital asset and not just a video or an image.
Uses of NFTs
There are more and more growing uses of NFTs in the marketplace which you can also acknowledge. Here are some of the uses they hold:
- The foremost common use they have is for trading the digital artworks. In-game digital characters can also be trade with cryptocurrencies.
- They can also be use to store information about the process, ensuring that everything is fair trade.
- Many companies are also using the NFTs for industrial design purposes.
- They could be use to trade assets like land which can provide proof of ownership. Using timestamped NFTs, it can also keep track of the changes in property value over time.
- NFT digital ledgers can be use to keep a person’s medical history and all records also without any risk to their privacy.
- They are also use for the protection of any person’s intellectual property which can provide them a way of proving their ownership on it.
- NFTs are also a way for the game developers to expand about their business brand and could generate a revenue system for them.
Issues with NFTs
Because of the rising value of the NFTs which includes the trade of millions for the owned NFTs. Which signifies the large potential it has for the digital estate holders and digital artists, intellectuals also. There can be certain cyber risks also which should be consider.
Hackers can just attack a decentralized finance network to steal out the cryptocurrency. There are certain scenarios of this happening as well. The smart security contract should be maintain and adequate to protect the cryptos.
The principal task confronted within the NFT marketplace is the uncertainty in figuring out the rate of the NFT. Now, the rate of any NFT will depend upon the creativity, uniqueness, shortage of the shoppers and owners, and plenty more. There are good size fluctuations within the charges of NFT due to the fact there may be no constant well known for any precise kind of NFT.
Since, there is not any legal definition of NFT known anywhere in the world. It also puts up a demand for a regulated body for providing rules and framework which can provide a definition of the NFTs and regulations regarding it.
While there are these issues, the most common issue of online fraud is also a reason of concern. There could have been scenarios where people possess the fake ones of an NFT and they are able to trade it.