What is an NFT?
NFT or Non Fungible Tokens are basically digital certificates that live on the ethereum blockchain.
Many artists are using NFTs attached to digital art they create as a means of attributing value, as well as an immutable form of authentication, to their art.
While this is simply one example of the many and growing number of use cases for this type of blockchain technology, we’re focusing on NFTs attached to digital art for this explanation.
Okay hang on, let’s back up for a second. Because in order to understand a token that lives on the blockchain you need a bit of background on what a blockchain even is.
(If you’re a seasoned veteran you can skip this bit.)
Blockchain is most easily explained by separating the two words BLOCK and CHAIN.
A BLOCK is made up of individual transactions, one wallet sending money to another that are collected as a group or data set. Once a data set hits a predefined number of transactions, say 10,000 then the set is closed and it becomes a BLOCK.
The completed set is then added to the CHAIN of other sets as a block.
The blockchain is therefore made up of the whole chain of blocks of all the transactions way back to the start of a given cryptocurrency network. (*In this case the ethereum network)
Okay cool now that we’ve covered some blockchain basics let’s talk more about those NFTs!
As we mentioned earlier, artists are using NFTs to authenticate digital art (images, videos, digital renderings etc.) that can then be sold, and stored or resold by the holder in exchange for cryptocurrency.
The exciting part for artists is that this technology allows them to add some key features into the immutable code that makes up the Token.
For example, if someone else were to make a bunch of copies of the art they bought from you and try to sell them the code attached would have their address as an origin point and not the artist who created the image or file so it would be easily identifiable as a fake. This offers an opportunity to create verifiable art!
There’s also an opportunity for measurable rarities. Let’s say a photographer makes 50 prints of an image. Now imagine each image has a certificate attached to it with the artist’s unique signature and a number 1/50. Finally imagine that the certificate isn’t just attached to the back of the painting but it’s part of the print. We’re essentially talking about the digital equivalent to this scenario.
Another exciting opportunity is one for residual income, which is very difficult to come by as a creative who may sell a piece of art once or 200 copies of a CD for $10 each.
With an NFT you have the ability to assign a residual percentage to the Token so that any time it changes hands, a percentage of the sale price will go back to the creator.
This is HUGE! The ability for artists to capitalize not only on the work they just put out but on their entire catalogue of releases is a complete game changer.
As an artist grows in popularity, so will the value of all of their art pieces, driving people who own them to either sell because of increasing demand, or hold them because of increasing value. Remember though, any time a piece of art changes hands, the artist feels the benefits directly!
It’s easy to see how a technology like this has the power to be a major disruptor in the future of industries like art, music and film.
The major hurdle towards wider adoption at this stage remains education. In order to understand where the benefits lie in something like this, people have to do a significant amount of informational work to get caught up with the conversation.
Here at Pluto Labs we’re committed to helping as many people as we can to get the information they need, in a form that’s easily accessible, so they can make confident, well informed decisions about how to get involved in blockchain technology!
Whether you’re an artist looking to mint your own tokens or just wondering what an NFT even is we’re here to fill the gap between crypto novices and blockchain brainiacs. Stay tuned for more articles like this one!
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