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What is all this hype NFT
12/27/2021, 10:24 AM
Non-fungible tokens (NFTs) are no longer just exciting the crypto world. Football stars and other longtime celebrities have jumped on the bandwagon. With the help of these proofs of ownership and authenticity, which are based on the well-known blockchain of cryptocurrencies such as Bitcoin, digital artwork or pieces of music are sometimes sold to collectors for several million. But the assumed value can quickly fade.
What is NFT?
NFT is a type of digital proof of authenticity and ownership. For example, a video is recorded on the blockchain. For this purpose, owners as well as purchases and sales are entered. This gives the NFT a unique digital signature, even if the underlying work can be reproduced millions of times. However, NFT is unique and can be traded through certification. The NFT blockchain is free to access. This allows the official owners of digital artworks to freely and openly show off their ownership. However, legally enforceable claims to the base item are not usually associated with this.
What types of NFTs are there?
In principle, any digital object – photos, videos, music, texts or tweets – can be converted into NFTs. For example, fans can purchase and trade NBA Top-Shot clips with game scenes from the NBA on the NBA website. It can be viewed for free on platforms such as YouTube. However, NFT fans consider themselves the owners of the original. NFTs are also very popular for portraits of soccer stars, which are published by clubs and are intended to have a similar function to classic collector’s cards. With the help of NFTs, users can also secure land or shapes in virtual game worlds. Jack Dorsey, co-founder of Twitter, sold the world’s first tweet in the name of NFT for $2.9 million in March.
How do you buy NFTs?
NFTs are traded on specialized platforms. But classic auction houses like Christie’s are also jumping on the bandwagon. Payments at auctions are usually made in Ethereum, the second most important cryptocurrency after Bitcoin, or in US dollars.
How is the NFTs market developing?
NFTs have been around since 2017, but they really picked up speed earlier this year. According to an industry chain analysis, nearly $27 billion has been traded in NFTs since the beginning of 2021. The trading platform Opensea accounts for the lion’s share of $16 billion.
Some blame the epidemic for the boom. Since many people have been sitting at home due to the lockdowns, they are spending more time on the internet. NFTs are also a way to display your properties online. Others see the hope of staggering speculative profits driving the boom. Many NFTs doubled their prices within weeks. In addition, the hype surrounding Bitcoin & Co has produced many crypto-millionaires in recent years who want to spend their newfound fortune.
What makes NFTs so special?
Proponents see NFTs as the future of ownership. Every possession, from concert tickets to your home, will eventually be stored on the blockchain. NFTs offer artists the opportunity to monetize digital art – through the sale itself and possibly additional commissions if the NFT accompanying the artwork changes. Other business models are opening up as well. The band “Kings of Leon” is marketing their album “When You See Yourself” as NFT. Buyers get a limited edition vinyl or they can watch the concerts from the front row.
Increases in value are not guaranteed by anything. If the noise wears off, NFTs can lose dramatically in value. In fact, the majority of NFTs, when resold on the relevant platforms, are in circulation for less than when they were issued. Buyers have recently taken a heavy toll, especially with the many NFTs posted by pop musicians and other celebrities. Critics also suspect that the exciting prices of some NFTs are based on targeted manipulation through so-called wash trades. Buyers and sellers cannot be identified on anonymous and unregulated trading platforms. This makes it easy for publishers to inflate the price of their NFTs through fictitious transactions. In addition, it is difficult to calculate the costs of registering an object as an NFT, since “fuel prices” fluctuate significantly. In technical terms, this is what is called a fee for coding and processing a transaction in the Ethereum network. It depends on the use of the computers involved.