-[ Narrator] This is Nyan Cat. He’s part cat, duty Pop-Tart. The GIF of a rainbow-casting feline was a viral meme back in 2011. Fast forward to February 2021, the original GIF wassold at an online auction for 300 Ether, the cryptocurrency thatpowers the Etherium network. That was equivalent tonearly $ 600,000 at the time. You may be asking how someonecan own the original follow of a GIF that was pervasivearound the internet. It’s because it was sold asan NFT or non-fungible token, which acts like a digitalcertificate of accuracy. The marketplace for NFTs bagged in 2020, clambering to a market capof at least 338 million from about 41 million in 2018. But skeptics are askingwhether these assets are really worth thevalue assigned to them, peculiarly if all it takes to view them is an internet connection. To understand how NFTs work, first you need to understandwhat fungibility is. Fungibility refers tothe ability of an asset to be exchanged or replaced with similar assets of the same value.A simple example of afungible asset is currency. Say you have five one-dollarbills in your wallet. You may not want to carryaround so much change so you exchange them fora single five-dollar bill. The ethic of your moneyis still five dollars regardless of the fact it’snow in a different chassis. Non-fungible assets are the opposite. Each one is unique and can’t be easily substitutedfor something similar. Think of the “Mona Lisa.” It’s an original piece of art. It couldn’t be swapped out for, say, a “Mona Lisa” posterfrom the Louvre gift shop because the poster doesn’thold the same value. – The idea behind NFTs is that you have this digital signature in the way that a great work of art might bear the signature ofthe person who organized it so you can always go andlook at the original and say, “Yes, this is the realone.This is authentic.” A NFT gale up having thatthrough the blockchain where the information is recorded. -[ Narrator] NFTs are cryptocurrencies but unlike fungiblecryptocurrencies like bitcoin, they are completely unique. They exist as a stringof numbers and characters stored under a blockchain record. The information collected can containwho owns the digital asset, who sold it, and when it was sold. This information is also encrypted, ensuring the NFT’sauthenticity and dearth. In doing so, they deposit a difficult issue for digital developers on the internet: how to construct your start-up scarce and therefore more valuable.- So, with NFTs, you windup having the scarcity because they are non-fungibleand because of that, there’s only one of thesetokens that can exist. It can’t be traded for anything same because there is nothingsimilar that exists. And so, you wind up coming that scarcity and that limitation which assistants drive up some of the prices. -[ Narrator] One of the early applications of creating this scarcity was the digital collectiblegame Cryptokitties, which emerged in 2017. Users were able to buy, sell, and spawned digital feline collectibles.Each brand-new feline was an NFT which attested itsoriginality and owned. Since then, NFTs have been applied to video games, digitalart, and boasts memorabilia. One example is NBA Top Shot, which allows users to procure a collection of digital basketball foregrounds, like a video excerpt of a posterizing dunk. All foregrounds are NFTs andhave become big business. By mid-March, NBA Top Shot had clocked in over $338 million in sales since it led live in October 2020. Non-fungible signs are making their way into the mainstream art world as well. Auction house Christie’s opened bid for its first purely digital skill NFT. Bids rocketed into themillions of dollars. – People are really excited about NFTs because, unlike with theblockchain underlying bitcoin, you can do a lot morecomplex things with it. You can wind up adjusting words within it such as, you know, the original designer upon each resale of thisasset will get x-amount. Or you can take it and you can have an NFT that itself mints other NFTs. And it gale up having all of these truly untested works. The skin-deep has only been scratched in terms of its potential.-[ Narrator] Along withall the hype around NFTs, professionals have raised a number of concerns. One edition is that not all NFTs check the person selling a digital art piece is actually the original founder. This is difficult particularlyin online marts. – One of issues of concern isthat anyone can essentially go on a lot of these marts and say, “I am the person who appointed this token, ” and it can be really hard to verify that, peculiarly if you don’tknow who they actually are or they’re sayingsomeone that they’re not. -[ Narrator] And sometimes there skeptical that ownership alone makesdigital assets valuable. When it comes to digital art, a buyer owns the original digital paint but the person can’t keepothers from reproducing the image and sharing or modifying it online.- You have had a lot of swindles in cryptocurrencies precisely historically and so the concern is that, you know, parties are hyping these up. They’re saying, like, “Gobuy these NFTs. It’s great.” But in reality, you are familiar with, there’s always gotta be abuyer for there to be a seller and people might decideall of a sudden, you are familiar with, “Let me cash in my earnings, ” and someone’s going tobe stuck remain the crate. -[ Narrator] Proponents are optimistic on the potential for NFTs but connoisseurs are wary that it may be a digital bubble in the making.( suspenseful music ).
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