How Blockchain-Based Digital Asset is Transforming Digital Artwork Transactions
Key Points:
- Non-fungible token (NFT) transforms how people buy and sell digital artwork.
- NFTs are digital assets that represent real-world objects like art, music, videos, or in-game items.
- An NFT functions like a digital trading card that people can buy or sell at its core.
- While the NFTs seem to be everywhere, many people are still wrapping their minds around the technology.
- The technology is garnering popularity — with many other industries starting to adopt it.
NFT is a non-fungible token — a digital asset that represents real-world objects such as art, music video, or in-game items. NFTs use the same blockchain technology that cryptocurrencies use to prove providence. The NFT technology is vital in establishing that a person owns something.
While NFTs have been around for a while, many people struggle to wrap their minds around the technology. Many have been skeptical about NFTs and compare the technology with the dot-com boom and bust. Some people see the ascendence of NFTs as a fad, but others identify the potential of generating a new revenue stream from the technology.
How NFTs Work
Since NFTs are not fungible — it’s ownership can’t be altered or changed. No two people can own similar NFTs. However, there are unique collectibles that people can buy and sell.
NFTs have mostly been seen in artwork, especially digital artwork. For instance, when someone creates a digital piece of art, they can embed an NFT into the art. Whoever buys that artwork is the owner and can prove it because there is a chain of custody from the artist to the buyer. NFTs are not replicable—if anyone tries to copy an NFT embedded item and post it on their Facebook, Instagram, or anywhere else, the owner can legally go after them.
The other advantage of NFTs in the digital art industry is that they allow artists to store information in the metadata. For example, an artist can write into the contract that they get royalties if someone else buys the piece of art.
When artists sell artwork to a gallery or an individual, they lose all control of the piece. The gallery or the individual can sell it to anybody. Even when they sell the art at a double price, the artist won’t get even a penny from the sale. NFTs provide a way for artists to continue to earn royalties on their work if the artwork increases in value and gets sold to other buyers.
NFTs Shifting to Other Assets
While NFTs started with digital art, the technology is shifting to other assets — like tangible properties. There’s a move afoot where you can provide an NFT in your deed of trust for a piece of property. The NFT will be proof of ownership that no one can alter.
Since NFTs exist on a blockchain — a distributed public ledger that records transactions, they are created from digital objects that represent both tangible and intangible items, including:
- Collectibles
- Music
- Graphic art
- GIFs
- Designer sneakers
- Video and sports highlights
- Video game skins and virtual avatars
The NFT protects property from anyone taking it away from you or property fraud since exclusive ownership rights belong to the buyer. NFTs can have only one owner at a time. Since the technology is on the blockchain, verifying ownership and transferring the tokens between owners is easier.
You can turn all types of digital assets into an NFT. The value of such assets improves because you can prove that the asset is an original work of art, not a copy or a ripoff of the original artist.
NFTs are Different From Crypto Currency
Many people think that NFTs are cryptocurrencies. While NFTs use the cryptocurrency ecosystem, they are not cryptocurrency. An NFT is also not a currency. You can’t buy or trade it as you would with bitcoin.
Bitcoin, like physical money, is fungible. You can trade bitcoin and exchange it for another. One bitcoin is always equal to another bitcoin. The crypto fungibility makes it a trusted means of conducting transactions on the blockchain.
NFTs, on the other hand, are unique. Each digital signature on NFTs makes it impossible to exchange them. If you sell NFTs, you can’t own the same NFT. Each of the NFTs has a notable change of custody that proves where it came from and who owns it.
Like fingerprints, you can use NFTs to represent assets — from artwork, virtual real estate, and collectibles to in-game items. Because of their unique nature, you can store NFTs on the blockchain, which allows you to sell or buy them on a decentralized platform.
Storage on the blockchain allows NFTs to be immutable and can’t be counterfeit.
What Can You Use NFTs For?
NFTs and blockchain technology provides artists and content creators unique opportunities to monetize their art. Artists no longer rely on auction houses or galleries to sell their art. Instead, they can sell their art directly as an NFT, which is more profitable. However, art isn’t the only way to make money with NFTs. You can use NFTs to represent physical objects, digital content, and intangible concepts like intellectual property.
For instance, everyone in the entertainment industry claims to the NFT technology. Even Hollywood is beginning to explore how to include NFTs that act as tickets or subscriptions. Shortly, NFTs might replace parking passes and other industries that require a unique ID to access a restricted area for validation purposes. With their growing popularity, it’s safe to say that NFTs are here to stay.
Alvarez Technology Group Will Help Your Business Understand the Emerging Technology Better
Emerging technologies are forecast to reform how businesses operate in the coming years. New technologies are increasing and hitting the market. You need to understand how to leverage the latest technology to help your business stay ahead of the competition.
Alvarez Technology Group will help your business grapple with the impacts of technology that will shape your business in the future. Contact us today to understand technologies that are starting to go mainstream.
