The world today has effectively made the shift to a metaverse – an entire universe of people and products that exist in digital form or over the internet. With the creation of this new world, come concepts to explore – such as the ownership of digital items. In the physical world, any item in your possession is effectively yours, assuming you’ve acquired it through legal means. People can’t walk into your house, see a painting of yours, and instantly produce a copy that’s worth the same as the original.
The digital world, however, faces exactly this problem – digital assets can be instantly downloaded, saved, and shared – diluting value and blurring the lines between legitimate ownership and theft. Have you ever shared a picture or artwork over WhatsApp or a social media site? On how many of these occasions did you stop to wonder who created this picture – and if they’re okay with you viewing and sharing it at your discretion? The rules and etiquette of the metaverse are still being developed and discussed, but attempts are now being made to bring clear ownership, and the rights associated with it, to digital properties.
Of these attempts, NFTs are by far the most popular and talked about concepts to hit the market, with artwork worth millions of dollars being traded on NFT exchanges at this very moment. NFTs, in simple terms, are proof of ownership of mostly digital property – allowing us to identify ownership of each piece, and therefore adding to the potential to regulate the transfer and sharing of digital artwork and the like.
But let’s take it a step further back, and break down NFTS:
NFT stands for Non-Fungible Tokens.
Non-fungible is a term used to describe items that are one-of-a-kind, or unique. Therefore, replicating their value with a similar object is impossible; Think of a photograph you’ve taken. That photo is unique – and while people can copy it, the original photo and value belong to you. Any copies of it, logically, should be worth only a fraction of the original, if anything at all. You wouldn’t pay for a picture of the Mona Lisa on someone’s phone – but the original artwork itself is priceless.
Tokens imply proof of ownership – similar to the ticket stubs you get at a cinema, or a receipt on purchase.
So to sum up, a ‘Non-fungible Token’ is essentially proof of ownership of a unique, one-of-a-kind product – such as an original work of digital art. An NFT will help identify the original artwork and prove that it belongs to you – giving it value over any copies that may eventually find themselves online.
How do NFTs work?
NFTs are a crypto tool and are secured by a blockchain – a group of blocks of information shared between multiple systems or computers. Any changes in a block reflect across the chain, allowing people on the system to spot and prevent unauthorized change.
Blockchains are decentralized – meaning no one person has complete access or authority over the chain – thus providing added security.
Therefore, we can summarize that NFTs are secure tokens that help prove ownership of unique products and property – and help differentiate them from cheap replicas!
Do note that while NFTs are based on a secure system, cyber breaches have led to NFTs being stolen – and millions of dollars worth of content lost. Like any new feature being developed, it comes with its problems and bugs to work out – and people sometimes question the inherent value of an NFT as they are ultimately worth the price people are willing to pay for them, even if the original owner has priced his art for thousands of dollars. Their non-tangible nature means this price can never be verified or set in stone – leading to massive debates over the value of individual NFTs and whether these prices are justified.
What is certain, however, is that there is merit in NFTs as a simple tool for identifying ownership. How the world uses this tool is yet to be seen – but the potential is there for all to see. We’re keeping our eyes peeled on the NFT craze – and we suggest you do the same. As with any new fad, exercise caution, and enjoy the show.