Blog series : NFT for the uninitiated
Warning! Side effects include confusion, dizziness, and Inspiration!
Topic: What is an NFT? When I buy a NFT what exactly do I get?
Before we start delving into understanding what exactly an NFT is, we need to understand why it considered relevant for Creators.
What problem does it address?
“Digital” has not left the world of creators untouched. It has created a completely new world of “Digital artworks” which is a term I use to describe artworks, images, articles, music, videos or any other content that is created, stored and shared in the digital realm.
Digital artworks differ from traditional artworks in a couple of significant ways.
Owing to the way that traditional artworks are made, they are inherently unique and reproducing them is not an easy task. With the right level of expertise one can distinguish the original from the copy. Digital assets by nature can be easily reproduced and shared.
Secondly, the “Value” associated with a traditional artwork is based on both its uniqueness and scarcity. There is only one Mona Lisa or only a limited number of Picasso’s or Rembrandt’s paintings. On the other hand, in general, the value associated with digital artwork is based on how viral it has become or how many times it has been shared. The more it is shared and appreciated, the more value it accrues.
Third, the question of monetization. If I buy a traditional artwork, I can bring it home. It is not available to others. If I make a copy of a Digital Art or Mp3 file, which is the original, which is the copy? When I buy a Digital Art, what am I really buying? Since everyone can save a copy of the artwork, what did I really pay for? How can prove that I own the digital artwork?
Now comes the conundrum. How can we continue to provide the unrestricted access for digital assets to thrive while maintaining control on the right of ownership of these artworks?
NFTs use blockchain technologies to keep track of ownership of digital assets. (Blockchain is a digital ledger of transactions-to put it very simply!)
NFTs, or "Non-Fungible Tokens," are one-of-a-kind tokens that represent a digital asset. They can be created, collected, or traded. Trading NFTs is like trading ownership rights.
Remember borrowing a book from a library? A record of everyone who had borrowed the book is maintained by the library. NFT trades are recorded in a similar fashion on the block chain
NFTs can represent smart contracts that describe exactly what rights you are buying. They can either describe or point to a digital asset and confer specific privileges to the owner of the NFT with regards to the digital asset.
While the whole world has the access to the artwork, only you, the owner of the NFT have the ownership (or other) rights to the Digital asset. That’s what you get when you buy an NFT.
Hence, they are also called “crypto collectibles” which can be bought and traded like any other collectable.
Until next time…..