Non-fungible Tokens: A Beginner’s Guide of NFT
What ? NFT?, It’s your fortunate day if you’re reading this. Rarely do you hear about a 21,000% return in 2021? No, it’s not a typo or about crypto.
Last year, Solana and Terra increased 11,000% and 12,000% respectively. Now that I have your attention, let me tell you about Non-fungible Tokens (NFTs), which produced USD 5.4 billion in earnings in 2021. To reassure you that this is not a Ponzi or Pyramid scam, a BNP Paribas-owned research group expects that trading in NFTs would reach USD 17.6 billion by 2020, up from USD 82 million in 2015.
Listen quietly as I unveil the all-new virtual platform, a genuine silver lining in the cloud. Let’s start with real-world auctions.
Provenance is the ancestry or history of a bequeathed item. Sotheby’s or Christie’s maybe the current owner and have given it to Sotheby’s or Christie’s for an open auction or private sale.
Physical auctions are losing importance in the post-pandemic era of contactless purchases (except in instances such as the recent IPL bidding). A non-fungible token (a unique digital identity that cannot be duplicated, subdivided, or replaced) is provided for viewing and verification in all other scenarios, and its truthfulness has been recorded in a blockchain.
NFTs are a whole new asset class edging out bitcoin. Although early adopters of crypto are laughing all the way to the bank, this narrative will demystify NFT and provide you with enough information to enable you to decide whether to join the bandwagon or not.
As a starting step, let us be inspired by celebrities and artists we like and trust. Firstly, Amitabh Bachchan. Last year, the Bollywood actor worked with Guardianlink to develop an NFT line.
Celebrities and rappers from all around the globe have created their own NFT collections, from Big B to Salman Khan and Sonu Sood to Dulquer Salmaan in India.
In November, his digital asset, like many of Mr Bachchan’s big films, sold out in only four days. On Guardinalink’s website Beyondlifeclub, an online auction fetched Rs. 7.18 crores. Among the pieces were his father’s renowned poem “Madhushala” and seven signed vintage posters of himself (from films like Deewar and Sholay).
Mr Bachchan’s poetic recital, packaged as an audio NFT, sold for $756,000. Each owner has exclusive ownership of the Hindi and English audio files. Over 300,000 admirers worldwide have signed up for the collection’s lesser works.
Unlike a stock market IPO, an NFT collection (for example, a limited edition of 10,000 tokens) may be sold online in less than an hour or even less than a day. On International Women’s Day, Guardian link sold out of an NFT dedicated to Kalpana Chawla, the astronaut who perished in the Columbia space shuttle accident.
The closest word to ‘Offer Opens Today’ is “NFT Drop,” a non-fungible token project release. The creator and collector care about the date, time, and price.
Minting? In the same way as a commemorative coin, a token must be produced as a virtual asset. This is the NFT creator’s task, but let’s explore all facets. The owner of a piece of art, music, or a poster wants to digitise (tokenize) it. The “gas fee” balances the marketplace’s computational energy needed to complete the transaction on the blockchain. Every token sold earns the inventor a royalty fee.
Let’s face it, most of us are investors and punters, not makers or art collectors. Remember that non-fungible assets like photographs, videos, and collectables are recorded in the cloud.
The NFT owner may keep the token forever or sell it for a profit, much like blue-chip stocks. In brief, the owner chose to stay a collector or become a dealer.
The token may be downloaded online by choosing Save As. You can only do so because you are not the digital owner of the NFT.
Liberation from centralised control (for example, the material on a social media handle may become null one day if the government prohibits the platform (like TikTok) or the platform shuts down the individual’s handle) (happened to a former US president).
Do NFTs develop quickly? Faster than you can say, Jack Robinson! There was USD 20 million in 2020, USD 24 billion now, and the sky-high amount beginning with T is not far away.
Unlike Bitcoin, which has about 3,000 active users and only approximately 100 active NFTs, practically any product, an art form, or business document may be converted into an NFT. Remember, this is very early and use and utility will develop soon.
More online auctions from non-celebrities will be revealed in the coming months. Artists, painters, and sculptors may sell their work, as well as a whole NFT film. His first tweet sold for $2.9 million and he gave the earnings to charity, signalling the medium is available to all messages.
Now is the time to go into NFTs. But, before you invest, be aware of the following pitfalls:
For an NFT auction, you must first fund a crypto wallet. In India, the government is wary about cryptocurrencies and believes that private mining should be prohibited.
Smt. Nirmala Sitharaman, Minister of Finance, has formed an expert working group to advise the government on virtual currency regulation.
Also, keep in mind that every new business opportunity has risks. Verify provenance before purchasing an NFT, and avoid fake Drops by sticking to genuine markets.
The good news is that subsequent auctions will allow both advanced collectors and novices like me to possess tradeable tokens. It’s worth the wait. You just need enough gas to go to Cloud Nine, if not the Moon.