If you are remotely involved in the world of crypto there is a good chance you have seen the insanity that has been taking place since the summer of 2020 revolving around NFT’s. If you haven't, that perfectly fine you will learn everything you need to know here.
To begin this converstion we need to understand a two basic concepts: what the heck does NFT mean & what is fungibility?
NFT stands for: Non-Fungible Token.
Fungibility is a property of an asset that defines how easily it can be interchanged with another like asset. A token can be one of two fungible properties: fungible or non-fungible.
- A fungible token is very intuitive concept, it is a dollar, a bitcoin, an ETH, and basically any asset that can be exchanged for another like one. Here the forbidden genius of crypto math shines: 1Bitcoin = 1Bitcoin. If i gave you a Bitcoin that was extracted in block #310,000 & you gave me back a Bitcoin that was extracted in block #330,000 there is no difference to our networth (maybe transaction fees but w.e.). Likewise, if I give you a dollar from my wallet & you give me a dollar from your wallet we have no change in our values.
- On the other side of that equation we have a slightly less intutive but ealiy understood concept of a Non-Fungible. As you might have already begun alluding to it is the exact opposite of a fungible; meaning that cannot be frictionlessly exchanged for another one like it. When thinking about a non-fungible value it is best to imagine real-estate. If you have a 5 acre plot of Land with a blue 4 family house & I have a 5 acre plot with a red 4 family house there are so many micro nuances that suggesting trading the two is insane. Perhaps your house had new piping done & mine had new roofing; you have a brilliant garden & I have a tire swing; heck maybe even the fact that they are a block away can influance the properites value. This is non-fungibility.
Non-fungible things have existed for as long as history itself has, however, the key proposition of this new blockchain-based NFT-technology is that is empowers users with self-sovereignty over that asset. The owner of a token NFT cannot be refuted nor can they have their asset forcefully seized. Owning an NFT is like owning Bitcoin; it belongs solely to the owner of its private keys (you).
NFT’s are capable of representing any arbitrary object that is (obviously) not fungible. This includes everything from real estate, to valuable in-game items, to digital artwork, to collectible cards, to land deeds & even identities. An NFT can essentially represent anything of “value”.
One immediately valuable field for the application of NFT’s is in Domain names. A Domain name is a unique identifier for a specific location you want to go to in cyberspace. However, domains are a very centralized business model, a few companies own the entire so-called “Domain Name Space”. If their ledgers are manipulated/erased/stolen/etc, then the website itself will disappear. Poof. Gone. Now, if we restructure Domains as NFT’s then even if those Domain companies collapse, nobody will be able to steal that Domain because it will be pinned to a blockchain address.
There is already a lot of work going on in this space, if you would like to get yourself a customized NFT domain here are a few awesome links:
- https://ens.domains/
- https://unstoppabledomains.com/premium-domains-nft-sale
Initially introduced to the masses during the 2017 crypto bull market in the form of an EIP-721 known as CryptoKitties, Non-fungibles have been an area of ferocious development in the open public distributed ledger industry for the past >4 years. New standards have come out (EIP-1155) & serious sums of money have entered the space. Frameworks to support the tokenization in a sound & secure manner have been shipped. Governments are beginning to recognize the possible implications of NFT’s for purposes of issuing international passports (know as d.ID or decentralized Identity)
While mainstream was hyping & crypto flourished amidst the 2020 pandemic (growing from 139Billion to 1.728Trillion {12.5x} over the course of a year) It brought along with it the non-fungible digital assets as well. Catching some of that DEFI market heat, NFT’s caught the market heat on the tail end & quickly became the next biggest thing. Artists of all kinds, Musicians, Designers, painters began to flock to NFT platforms & mint their own tokens. A digital artist that goes by the name “Beeple” sold one of his creations for $69 million dollars. Here is a link & an image of that wonderous creation:
That is far from all though. That NFT was minted using makersplace & sold through a world renowned auction house called Christie's INC. Mostly making the whole transaction a centralized art play.
Where things really begin to heat up is on the natively decentralized market.
On Ethereum alone, NFTs have turned over north of $540,000,000,000. This is recording as of June 23, 2017 until March 23, 2021. More than 50% of that has happened during the Crypto -Pandemia Bull Market.
NFT’s can & do exist on a variety of chains. Essentially every smart contract blockchain platform that is competing or “cooperating” with Ethereum now supports NFT’s, this includes but is not limited to Flow, WAX, Cardano, EOS, Tomochain, IOST, and so on. Those markets haven't even had the time to be fully audited for their economic imprints (however they have eclipsed into the billions of dollars as well).
Billionaire & world-famous entrepreneur Mark Cuban has become a loud & proud spokesman of the NFT (& greater crypto asset) world. He owns the Dallas Mavericks Basketball team & tokenizes some of their intellectual properties as NFT’s. Moreover, he is a strong investor in many projects such as marketplaces (rarible & opeansea) as well as others, that he prefers not to name so that he doesn't pump the price up of their tokens too much.
Fantastic, so now we know that NFT’s are used in a lot of varying fields & that there are hundreds of Billions of dollars of value already injected into this system & prominent leaders are materially involved.
But what now?
NFT’s haven't even scratched the surface yet. As the world continues to port from physical information into a digital information version of itself & more instruments become tokenized the technology will spread like wildfire.
Soon, people will have their homes exist on blockchains in the form of NFTs & they will interact with them as fluidly as they do with any other app.
If you would like to learn about NFT’s more there are great resources linked thoughout the piece. There is also one absolutely incredible resource that is a must-read for anybody wanting a slightly deeper dive: The Non-Fungible token Bible.
Thank you for reading & may the blockchain be with us all!
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