A Dive Into NFTs & Digital Art
Jul 27, 2022by, Swathy S
Digital art is art created or shown with the use of digital technology. These artworks can now be owned digitally thanks to NFTs. NFTs can be photographs, videos, music, or anything else that can be represented digitally. NFTs are a game-changer for the digital economy because of this.
What are NFTs?
Non-fungible tokens (NFTs) are digital asset ownership and scarcity certificates based on blockchain technology.
What are fungible tokens?
The term “fungible” refers to the fact that the asset’s component units are fundamentally the same. A dollar, for example, is fungible because each bill has the same value and may be used interchangeably. The same is true for bitcoin. Despite the fact that each bitcoin has a unique code, we can trade one for another and get precisely the same thing.
What are non-fungible tokens?
Non-fungible implies that the asset is in some way scarce or unique. That means, even if an artist releases a limited edition of fifty of the same image, each edition remains unique, making it a non-fungible asset. However, all the NFTs are unique, and therefore the asset’s value may not be the same when you exchange one for another.
How Do NFTs Work?
Blockchain is a critical technology for the creation of NFTs. Blockchains are linked lists that include data and a hash reference that links to the preceding block, forming a chain of connected blocks. A cryptographic hash, or a string of characters that uniquely identifies a piece of data, links each block to the one before it. A Merkle tree is a data structure that holds the transaction records of a series of blocks. This enables quick access to previous records. Each user must produce a pair of keys: a public key and a private key, in order to participate in blockchain-based transactions. This approach makes changing transaction data stored in blocks extremely complex.
Although blockchain was designed to support fungible assets such as Bitcoin and other cryptocurrencies, it has since grown to allow users to build a non-fungible crypto asset. Because it supports the ERC-721 token standard, the Ethereum blockchain is the foundation for most of the currently available NFTs. This allows NFT developers to gather information relevant to their digital artefacts and store it as tokens on the network.
As a result, the digital artefact’s identity will be minted on a “token.” The token is not the asset; rather, it functions as a certificate of ownership and authenticity for the artefact that is kept on a blockchain. A token is sent to a network of peer-to-peer computers all over the world to be verified before being added to the blockchain. The token becomes an entry (or block) in an irreversible data timeline (or chain) after it is authenticated.
You gain the ability to transfer the token to your digital wallet when you pay for an NFT. Like owning an original painting, the token verifies that your copy of a digital asset is the original. Anyone can have a digital copy of your NFT, just as anyone may have a digital copy of a magnificent artwork that can be duplicated and distributed as affordable posters.
Proof of ownership of the original is your private crypto key. The content creator’s public crypto key serves as a certificate of authenticity for that particular digital item. The value of any NFT token is essentially determined by this pair of the creator’s public key and the owner’s private key.
Copyright to the digital asset that an NFT represents does not come with ownership of the token. While someone may sell an NFT representing their work, when the ownership of the NFT is changed, the buyer does not always obtain copyright powers, allowing the original owner to produce new NFTs of the same work. In that respect, an NFT is essentially a separate proof of ownership from copyright.
Characteristics of NFTs
Non-Fungible Tokens have the following characteristics that set them apart from other Tokens:
Although the creators of NFTs can create as many Tokens as they want, they often keep them limited so that they can be scarce to increase their price.
NFTs, unlike cryptocurrencies, cannot be broken into smaller pieces and have the same value as a whole entity or token. For example, you can’t have 1/1000 of an image.
The most prominent aspect of NFTs is this. Unlike traditional artworks, where replicas abound and it is difficult to determine which is the original, here the owner can declare that he is the sole and true owner of the original piece, despite the fact that it can be easily shared on the internet(and it does). On their permanent information tab, they can keep track of their uniqueness. This tab functions similarly to an authentication certificate.
Advantages of NFTs
Non-fungible Tokens have given the digital stage a new dimension. The following are some of the benefits of NFTs:
Non-fungible Tokens are purchased and sold in specialised marketplaces rather than on exchanges. The Non-Fungible Tokens’ worth is determined by their rarity.
Non-fungible Tokens are powered by Blockchain technology. Furthermore, because an NFT cannot be copied, it provides as proof of authentication. The blockchain, for example, maintains a history of who has bought or sold an NFT and who is its current (absolute) owner, including the original creator from whom that digital asset was purchased in the first place, making it possible to authenticate something that is much more difficult to demonstrate or certify with topics such as art collecting or stamps.
- Ownership rights
No one may edit or change the information tab of a Non-Fungible Token after it is generated, therefore ownership rights are preserved.
An NFT’s data is kept in the blockchain via a smart contract (Smart Contract), making it impossible to destroy, erase, or reproduce it.
How to buy and trade NFTs?
NFTs, like any other cryptocurrency, can be purchased and traded on a variety of marketplaces. For the time being, we’ll use Ethereum as our base platform. However, unlike other tokens, NFTs cannot be purchased in any quantity; instead, you must purchase a single or complete token.
You must first install Metamask, a browser plugin that allows you to communicate with Ethereum, in order to acquire or trade Non-Fungible Tokens. Metamask is a digital wallet that supports Ethereum and all of its tokens, including fungible and non-fungible tokens.
After you’ve installed the Ethereum extension, you’ll need to purchase Ethereum in order to use it to purchase Tokens. You can purchase them with your debit card or other payment methods such as Google Pay, Apple Pay, and others.
However, you should be cautious about which website you use to purchase the tokens, as it is strongly advised that you only utilise reputable websites. If you want to buy Non-Fungible Tokens, go to “NBA top shot,” and if you want to trade Non-Fungible Tokens, go to “Uniswap.”
Use Cases of NFTs
Non-Fungible Tokens are useful in multiple scenarios, however, here are some of the most prominent use-cases of Non-Fungible Tokens:
Non-fungible Tokens have a significant impact in the game business since they can be utilised to tackle one of the industry’s most pressing problems/issues. It can be used to tackle the problem of exchanging special characters, items, and accessories, among other things. Non-fungible Tokens will make it possible to transfer all of these items quickly and securely.
- Crypto Kitties
Crypto Kitties is a game where you may acquire and breed cute kitties. You can also purchase and sell cats. All of the cats are one-of-a-kind and belong to a single person. As a result, this game demonstrated the most effective use of NFTs.
All of the game’s cats are one-of-a-kind and cannot be duplicated, taken away, or destroyed. The kitties are Non-Fungible Tokens that were generated using Blockchains.
The kitten obsession reached new heights, with consumers spending an estimated $7 million on these felines. A single cat was sold for an astounding $140,000, according to “The New York Times.”
This digital craze gave a boost to the rise of NFT – Non-Fungible Tokens.
- Digital Assets
Jack Dorsey recently sold the first-ever tweet – “just putting up my Twitter” – on a digital auction. This Non-Fungible Asset’s price had risen to $2.5 Million at the time of writing. Similarly, many digital assets can now be owned, and as a result, NFTs have created a new avenue for buying and selling digital assets.
Non-Fungible Assets are regarded as the defender against Identity Theft. Non-Fungible Tokens can be used to safeguard and establish the authenticity of medical data, academic results, and other certificates that can be provided in digital form. It can also be used by artists to protect their work against copyright infringement.
The NFTs can benefit all digital objects that have the potential to become collector’s items. This will make it possible to sell and buy digital assets, which was previously impossible due to issues with copying, theft, and ownership.
Why are NFTs valuable?
When it comes to games like Crypto Kitties, the sole reason for the game’s success and the cats’ high worth is because people are interested in them. They desired fun and unique-looking digital pet with which to interact. The only reason people were willing to pay such high rates for a digital cat is that they were interested.
If you are an NBA fan, you will certainly spend money to have the character of your favourite player in the game; also, because the market for NFTs is global, more people will want to buy the same items, which is why NFTs are so expensive.
- Valuable Things
In some games, there are some uncommon and exceptional objects that must be obtained in order to obtain additional goods or wealth. Because these items are limited, only a select few players will be able to obtain them, and their rarity makes them marketable. Furthermore, with Non-Fungible Token, the item is now yours, and no one, including the game company, may claim it.
Because special items and accessories have such a large impact on the game, they are extremely expensive. Furthermore, they contribute to the character’s overall appearance.
Environmental impact of NFTs
Despite the excitement, others worry that NFTs are not environmentally benign because they are based on the same blockchain technology as some energy-intensive cryptocurrencies. Each NFT transaction on the Ethereum network, for example, uses the same amount of energy as two American families in a single day.
The majority of today’s blockchain networks rely on “miners,” or special computers that compete to solve complicated math riddles. This is the proof-of-work principle, which prevents anyone from manipulating the system while also incentivizing its construction and maintenance. A prize of virtual coins is granted to the miner who solves the math challenge first. Mining necessitates a significant amount of computer power, which increases electricity consumption.
The Ethereum blockchain is changing, and it is becoming less computationally intensive. There are also new blockchain technologies like as Cardano, which was designed from the outset to have a small carbon footprint and has established its own fast-growing NFT platform called Cardano Kidz.
In the short term, the speed with which blockchain technology evolves into a newer, more environmentally friendly variation may well determine the NFT market’s destiny. Because of their perceived ecological impact, some artists who are concerned about global warming tendencies are opposed to NFTs.
The coming crypto-economy
NFTs have already advanced a bigger trend of digital economic innovation, whether or not the current NFT craze persists. NFTs have shown that the general public is growing more receptive to the crypto-economy and is prepared to take short-term risks in exchange for new business prospects.
NFTs have already made significant inroads into the luxury and gaming industries, and there is still plenty of room for them to grow beyond these initial applications. The art sector will remain a substantial component of the overall NFT business, and it is predicted to mature over the next few years, but other digital certificate applications such as trademarks and patents, as well as training and upskilling certificates, are likely to overtake it.
Disclaimer: The opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Dexlock.