NFTs have become the talk of the town in 2021, but what exactly are they? Are they going to revolutionize the world around us? Is there actual demand for this technology? Or is it all speculation?
The numbers seem to indicate an active marketplace for these digital assets. In November 2020, the value of a piece of digital art backed by an NFT was worth $66,666. Come February 26, 2021, the value of the same amount of digital art catapulted to a massive $6.6 million!
For those who aren’t up to date with this rising technology, don’t worry, we have you covered. Sit back, relax, let’s go through what NFTs are and the prospects that lie ahead.
SO, WHAT’S ALL THE HYPE ABOUT?
NFTs or Non-Fungible Tokens are “minted”, or created, on the blockchain, but differ from cryptocurrency and other digital assets because they have a distinct character. No two NFTs are the same and this distinction is what is luring investors in. After all, it’s human nature to allocate value to assets that are ‘rare’- assets like gold and oil have always been highly sought after due to scarcity.
What makes NFTs so special is the fact that they verify authenticity and help prevent piracy. Simply put, they act as digital copyrights on commodities. The notion that you can assign value to a non-tangible asset, be it digital art, a digital meme or even a tweet, is what is driving the value of NFTs.
NFTS AND THE DIGITAL ECOSYSTEM
The rise of NFTs in the digital ecosystem has meant that content creators, be they artists, musicians or even developers, can now auction their products directly to the consumer. Most recently, a digital illustration auctioned off by Beeple was sold for a whopping $69.3 million. Other intangible assets like Twitter CEO Jack Dorsey’s first tweet were sold at a price upwards of $2 million, while a digital illustration by Elon Musk’s girlfriend Grimes sold for $6 million. The athletic industry has also created ways for enthusiasts to indulge in an NFT backed transaction, NBA being the most active campaigner of the technology. An original video of LeBron James slam dunking over a couple of players has been auctioned off for $200,000.
This rise in popularity of NFTs can draw parallels from the fact that consumers were willing to pay large amounts of money to own physical products even before this trend. Blockchain technology has facilitated the shift of these transactions to a digital ledger, where the change of hands between owners is publicly accessible.
And that’s where we come in…
NFTs are the future of digital transactions. They are also the core of the Arianee Protocol, which digitally verifies physical luxury products. The protocol proves what you are holding in your hand is in fact what it purports to be. In addition to this type of assurance, the Arianee ecosystem also opens the consumer to a new way of communicating with the brand of each product. It’s an entirely new and augmented form of ownership, and it’s all verified on the blockchain.
NFTs have become synonymous with art and collectibles lately, but there are countless more applications for the technology. We recently expanded on the various uses of NFTs on Crypto Valley. Check out the article!
The NFT market is growing rapidly and the functionality of the technology is constantly evolving. While the “hype” of NFT art might have calmed down since it’s peak earlier this year, the underlying tech is something that is here to stay.