-[ Narrator] This is Nyan Cat. He’s part cat, proportion 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 auctioneer 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 mimic 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 authenticity. The busines for NFTs bagged in 2020, climbing 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, specially 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 resources of the same value.A simple example of afungible resource is money. Say you have five one-dollarbills in your pocketbook. You may not want to carryaround so much change so you exchange them fora single five-dollar bill. The quality of your moneyis still five dollars regardless of the fact it’snow in a different form. 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 “youve had” this digital signature in accordance with the arrangements that a great work of art might bear the signature ofthe person who made it so you can always go andlook at the original and say, “Yes, this is the realone. This is authentic.” A NFT winds 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 notes 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 fix a difficult problem for digital makes on the internet: how to realise 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 similar because there is nothingsimilar that exists.And so, you wind up coming that dearth and that shortcoming which facilitates drive up some of the prices. -[ Narrator] One of the early applications of creating this scarcity was the digital collectiblegame Cryptokitties, which have appeared in 2017. Users were able to buy, trade, and multiplied digital “cat-o-nine-tail” collectibles. Each brand-new “cat-o-nine-tail” was an NFT which showed itsoriginality and owned. Since then, NFTs have been applied to video games, digitalart, and sports memorabilia. One example is NBA Top Shot, which allows users to procure a collection of digital basketball highlights, like a video excerpt of a posterizing dunk. All spotlights are NFTs andhave become big business. By mid-March, NBA Top Shot had clocked in over $338 million in marketings because it ran live in October 2020. Non-fungible signs are making their way into the mainstream art world as well. Auction house Christie’s opened entreat for its first strictly digital prowes 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 placing expressions within it such as, you are familiar with, the original founder upon each resale of thisasset will get x-amount.Or you can take it and you can have an NFT that itself heaps other NFTs. And it winds up having all of these really untested lotions. The skin-deep has only been scratched in terms of its potential. -[ Narrator] Along withall the hype around NFTs, professionals have raised increasing concern. One issue is that not all NFTs substantiate the person selling a digital skill piece is actually the original founder. This is difficult particularlyin online marts. – One of the concerns isthat anyone can essentially go on a lot of these marts and say, “I am the person who created this token, ” and it can be really hard to verify that, specially if you don’tknow who they actually are or they’re sayingsomeone that they’re not.-[ Narrator] And some are skeptical that ownership alone makesdigital assets valuable. When it comes to digital art, a purchaser owns the original digital painting but the person or persons can’t keepothers from following the idol and sharing or deepening it online. – You have had a lot of scams in cryptocurrencies merely 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 know, there’s always gotta be abuyer for there to be a seller and parties might decideall of a sudden, you are familiar with, “Let me cash in my benefits, ” and someone’s going tobe stuck grasp the pocket. -[ Narrator] Proponents are optimistic on the potential for NFTs but reviewers are cautious that it may be a digital bubble in the making.( suspenseful music ).
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