Currently, it’s hard to get past them in the tech press: the NFTs. From niche marketplaces to celebrities to the world-famous auction house Christie’s, they’ve all jumped on the NFT bandwagon. But what does that mean exactly?
What does NFT mean?
NFT stands for “non-fungible token.” Anyone who has dealt a little with the topic of blockchain in recent years will have heard at least the term token a few times in the process. Tokens denote ownership of a (sometimes non-tangible) asset. For example, a bitcoin in one’s wallet is the marker of ownership of that asset. So a token is a digital asset that is stored transparently and securely on a blockchain and is uniquely assigned to an owner.
Now this is where NFT comes into play. Fungible refers to easily exchangeable assets, such as cash. Exchanging money for products or services is an old and universally known principle, but this is where NFT comes in. While fungible tokens are barter, like exchanging eggs for flour between neighbors, NFTs are unique assets that are not easily exchangeable. A work of art by a famous artist is usually unique and not quickly replaceable. It is precisely for these exchanges that NFTs are currently being used. For example, the artist Beeple recently sold 21 artworks on the digital marketplace Nifty Gateway for a total of $3.5 million. He sold another artwork at Christie’s for 6.5 million. All about NFT.
Art is one of many examples. Whether it’s pieces of music, collectible cats, or one-of-a-kind items, anything with a limited quantity or uniqueness can be sold through NFT.
Through, for example, the Ethereum blockchain, the security and also the changed ownership is secured. Users are primarily concerned with secure and traceable proof of ownership.
Currently, of course, as with all new technologies and processes, there are also some problems. For example, the NFT market has very high transaction fees, as the network on which it is built is currently mostly Ethereum. In the near future, however, the plan is to adapt the architecture so that smaller businesses can also consider an NFT solution, because the real added value of the NFT movement is that artists who specialize in digital art forms and often have to deal with piracy and unauthorized downloads can now find a way to be compensated for their work, since they cannot protect the work, but they can clearly sell the ownership rights to one person. More and more marketplaces are therefore setting up such stores and aiming to revolutionize digital commerce in the long term.