What is NFT? Learn about this digital token technology
NFT - Several translucent cubes that are connected and form a Blockchain!
Known as the “Disaster Girl”, the image has illustrated many memes across the internet. In April 2021, the original photo was sold for about US$500,000! With so much digital content being reposted on the web, how can an image that illustrates so many memes sell for such a price?
The answer is less complicated than it sounds, thanks to the NFT Certification.
A code earned by a digital item to ensure its uniqueness. The simplicity ends there, and you need to dig deeper into the term. Check it out!
What is NFT or non-fungible token?
The last word in this acronym requires an explanation.
Fungible is any item that has an equivalence. It has a value that allows it to be compared with another one. In other words, it’s not unique.
For example, clothing: You can buy an outfit that can be replicated, if it hasn’t already.
Therefore, non-fungibles are unique. Take art as an example. A painting by Leonardo Da Vinci is unique, no matter how many reproductions one can make. They will never be the original.
Therefore, these items have higher, if not incalculable, values.
The image of the girl in front of a burning house has countless reproductions, but none are the original. This is precisely what the NFT certificate guarantees, giving unique codes to gifs, photos, digital art, etc.
But how can you guarantee this? This is our next topic!
How does NFT work?
You’ve seen that the NTF is a digital certificate. It uses Blockchain security, the same security used in cryptocurrencies.
This mechanism ensures that something is unique and original and can be used in photos, gifs, images, podcasts, e-books, games, etc.
Blockchain is a system that allows the tracking of everything related to your security, i.e. the sending and receiving of information over the internet, being widely used in cryptocurrencies. This system is precisely what allows the valuation of these items.
As you may know, cryptocurrencies are fungible. For those who have NFT, the blockchain technology ensures exactly the non-fungible nature of something by tracking its transactions.
How was this technology developed?
Interest in NFT probably began with the sale of the artwork called Everydays: The First 5000 Days, by artist Mike Winkelmann, for almost US$70 million!
From then on, people started to get more involved with NFT, but the emergence of this technology is from before this sale.
NTF came about in 2012, with the introduction of Coloured Coins. It was supposed to be a cryptocurrency, but it didn’t pan out. Since then, this certificate wasn’t discussed much, until recently when Winkelmann’s artwork and “Disaster Girl”, which we mentioned earlier, were sold.
In addition to these two, even the first tweet made on the social network was put up for sale by its owner, Jack Dorsey, co-founder of Twitter. His NFT was sold for $2.5 million!
There’s also the case of the Nyan Cat, the famous 8-bit cat meme that sold for half a million dollars.
How does the buying and selling of NFTs work?
This is where everything becomes more intriguing.
Every transaction involving NFT is performed by Blockchain technology. You already know this, right?
As you have seen, Blockchain involves a complex chain of data that guarantees the authenticity of something. They are easily accessible and, for this very reason, make them almost impossible to defraud.
This ensures that someone’s digital work of art is protected by copyright.
Okay, and how do you buy or sell something with NFT?
Everything happens within the Ethereum chain, the same as for cryptocurrencies. However, before you can even sell your asset, it is necessary to issue an NFT.
To do so, you need to make a big investment and know whether it’s really worth linking this certificate to your work.
This is done on specialized platforms such as Rarible. There, you register your work and upload the original file.
You then set a price and describe its main features. After that, you pay for the issuance – don’t be startled, as mentioned earlier, the amounts can be truly high. All this with the Ethereum digital wallet.
To sell works that already have the NFT certificate, there are auctions, and, as is well known in this type of sale, the highest bid wins.
But, what can you add to an NFT?
Practically everything! An e-book, a podcast, a gif, image, tweet, song… you’re only limited by your imagination.
How can brands use NFT in their business?
Now that you’ve learned about NFT and how it works, you’re probably wondering how your business can benefit from this technology.
The first advantage is the possibility of adding your brand awareness strategy, i.e., recognize your brand for a specific work, so to speak.
A unique NFT-certified item your company owns may have its value measured by how much people recognize your brand. This metric is constantly debated when it comes to digital businesses.
Also, when a digital item is NFT certified, this means that there’s a certain demand for it. Having a work of art established as unique creates a sense of scarcity, which helps increase the item’s valuation.
Finally, the NFT guarantees copyrights on the creation, protecting it from improper and unauthorized copies. Such a certificate can be as profitable as a trademark since it provides a certificate of originality.
Is NFT here to stay, or is it just a hype?
This question can only be answered in the future, but NFT is indeed reshaping the digital market.
Keeping an eye on this trend is necessary, especially since it can provide new features to your digital strategies.
This whole discussion is just getting started, and trying to get ahead and learn all the information about this topic can be decisive for your business.
If you want to know how, why not find out more about digital marketing? Take the opportunity to read this content and learn how to fit NFT into it!