Is an NFT the Same as a UFO?
Updated: Nov 16, 2021
So, what is an NFT? Some of you have probably heard about NFTs and may even be trading in them. NFT stands for non-fungible token (not able to be interchanged with goods or
services of a like kind). For example, a penny is usually interchangeable with another penny, but a 1942 Lincoln Wheat Penny is rare and non-fungible. You cannot interchange it for any other penny and still have the same thing.
Now I’m going to get technical for a moment. NFTs are usually part of the Ethereum blockchain (“Blockchain is a type of database composed of a growing list of records, individually known as blocks, that are chained together through computer cryptography. The goal of blockchain is to allow for the recording and distribution of digital information that is unable to be tampered with.”). https://tinyurl.com/yt67jvpy Ethereum has its own cryptocurrency, Ether, (bitcoin is the name of the most well-known cryptocurrency) that is used an any transaction occurring in the Ethereum network.
An NFT is a way to own an artwork in a digital form. In other words, if I take a digital photograph of one of my paintings, I can then use an app to mint an NFT of it and then sell it. If someone purchases the NFT, then they will own that particular digital asset. I can still take other pictures of the same painting and mint them into NFTs and sell them, and I still own the physical painting.
NFTs can be minted from anything in a digital form (for instance, drawings, music, films, tweets, etc.) Most often they're used to mint photos of art works. NFTs are frequently sold or traded in a secondary market. The original creator of the NFT usually receives a 5-10% royalty on any future sale.
There are both benefits and shortcomings with the creation and sale of NFTs. Here are some of the advantages:
NFTs with royalty contracts can provide new revenue streams for artists. Contracts make automatic royalties possible for the original author any time the NFT is sold.
NFTs are a means by which patrons of the arts can support artists and also create unique collections for themselves.
Unlike physical collectibles, each NFT is comprised of differentiating information that makes it unique among all NFTs and easily authenticated.
Some of the pitfalls include:
The market for NFTs is new, speculative and risky. “NFT, or nonfungible token, trading volume surged in the third quarter of 2021 to $10.67 billion, a report by analytics platform DappRadar found. That’s a 704% increase from the previous quarter.” https://www.cnbc.com/2021/10/06/nft-trading-volume-hit-10-billion-2-reasons-why-people-are-buying.html
NFTs can be stolen when an exchange has outmoded or ineffective security practices.
Creating and selling NFTs can be an energy drain causing harm to our environment. Newer apps are addressing this issue.
Minting (creating) an NFT will normally cost from $30 to $100 although there are platforms that allow you to do this for free. I recently was able to mint an NFT of one of my pieces free of cost. You can find it here, https://beyondmars.art/nft/rorU8To4X0BuI0VKFp1s
Please let me know if you’ve had experience with creating, buying or selling NFTs or if this is an area that interests you. In 10 years, they could be as ubiquitous as were trading cards when many of us were young.