How NFT works? Why NFT is the future?
Begining in 2021, NFT became one of the most trendy keywords on the internet. To my surprise, Nas Daily, one of the most-watched content creators in the world, published a video “He Sold Art For $69 Million On The Internet!”
At first, I was retrospective about the technology. I thought it might be a scam. But when I saw another success story published by Coindesk NFT caught my attention.
I started researching How NFT works? But I had no clue whether it has any future until I got an offer from one of my Upwork clients to write a book on NFT.
What NFT Mean?
NFT, also known as a “Non-fungible token” is a digital form of art, music, or anything that can be bought and sold in the marketplace using a Blockchain network.
NFT is a powerful tool in the digital arena since most digital creators find it difficult to monetize their digital creations. For instance, many digital arts can easily be stolen and sold by scammers around the world.
Since “Non-fungible” means you can’t replace it with anything else so NFT’s give additional power to the creators to keep earning from their creations even though it has been bought and sold by other parties.
In short, an NFT creator will have the power to earn millions of dollars from one digital art using the power of blockchain.
How NFT was Created
Before the NFT became a reality there was a market for Crypto Arts. Jason Bailey published the article “What Is CryptoArt?” in 2018 before the rise of NFT.
Jason pointed out that there’s a big market for digital artists when they utilize the power of blockchain technologies like “Ethereum.”
However, we need to go well before 2018.
In 2012, colored coins were introduced which is known as the first form of NFT creation.
The first NFT was minted on May 3rd, 2014 by Kevin McCoy called “Quantum.” It was a form of a pixelated image with different shapes like circles, arcs, and others.
There was also a project called ‘Cryptopunks” in 2017. It was a collection of unique characters on the Ethereum blockchain
After years of failure finally, NFT got the attention of mass people in 2018. The last 3–4 years saw a massive explosion of NFT’s, according to this article.
How NFT Works Technically
Technically speaking NFT works on an Ethereum blockchain network. But those who have an idea about Ethereum powered tokens, NFT is not similar to ERC-20 tokens.
An NFT simply gives the digital creator the ability to claim ownership of his/her creation. However, Ethereum supports the NFT creator to track the creations using their public ledger.
According to the Ethereum website, there are the following forms of digital data that can be created under an NFT. These are:
Real-World Items:
- Deeds to a car
- Tickets to a real-world event
- Tokenized invoices
- Legal documents
- Signatures
Digital Art:
- GIFs
- Collectibles
- Music
- Videos
Source: Ethereum.org
With the help of the Ethereum blockchain, an NFT can do the following works:
- Any NFT holder can easily prove that they are the actual creators. Hence, there is no issue with ownership.
- When a buyer purchases an NFT, he/she gets the ownership via a unique token.
- Whenever there’s a question about the actual ownership only the holder of the token will be known as the original owner of the digital art.
- An NFT can be sold but the original creator will get royalties every time it is sold
How NFT Will Change the World
Can we say that NFT will change the world? At least for creators, musicians, and artists, NFT brings the immense potential to their own industry. For instance, Twitter CEO, Jack Dorsey, sold his first tweet using NFT at $2.9 million.
Nowadays, many content creators are looking for NFT as an opportunity to make big business out of it. Another example of changes that NFT can bring to the world is solving digital copy/paste issues. Now creators can earn money and stop worrying about giant online copycats.
On the other hand, game creators are also using NFT to boost up the “game economy.” Since metaverse is becoming a reality in the future so many game creators will try to utilize NFT to claim ownership of their own digital products in their own game or future metaverse industry.
Conclusion
In this article, we’ve seen - How NFT works and Why NFT is the future. It is impossible to say how much NFT will impact our future. But we can assume that the impact will be in billions or even trillions.
As the world is moving towards the Decentralized Web or Web 3.0 we must adhere to the changes now or regret it later. If you want to become an expert in the world of NFT please keep reading my future blogs.
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