What is NFT? | Web Moritz.

NFTs have been the topic of conversation in every stadium and in every coffee machine for the past year. At least I suppose, because even on the World Wide Web one rarely talks about anything else. But what are these NFTs, what do they have to do with cryptocurrencies and the blockchain and why do people want to give up their annual or even college salary for it?

Aren’t NFTs a thing of 2021 again?

If Google Trends can be trusted, NFTs are more popular than ever. This, however, means nothing, because the principle of NFTs first appeared about a year ago, and they haven’t really hit the mainstream yet.

But what are NFTs actually?

An acronym that stands for NFT non me Funacceptable TOK, i.e. “non-replaceable” or “non-replaceable unit of value”. The word “unit of value” can be a bit confusing here, because NFTs are actually guides above all else. Evidence of possession of something. and this is some They are digital “objects”.

Objects in quotes, because what sets NFTs apart is the ability to explicitly assign any numeric “objects” to a first-time owner. But into the details a little later.

All NFTs accordingly Not replaceable (Eng. “non-replaceable”). Unlike cryptocurrencies such as BitCoin, which are completely exchangeable, that is, exchangeable. Accordingly, the value of one BitCoin is the same as the value of any other BitCoin, while the NFT does not have a fixed value, or the value of each NFT is caused by the amount anyone is willing to pay.

And what exactly can you do with it now?

The basic idea behind NFTs is to use blockchain technology (if you want to learn more about blockchain and cryptocurrencies, you must over here look) to clearly demonstrate possession of digital “objects”, similar to possession of cryptocurrencies. To do this, the blockchain identifies through the hands of whom the object was previously passed. This can be traced back to the originator, clearly identifying the origin with no chance of forgery or fraud.

What is the technology used?

Here we meet the first metaphorical stone on the path to a truly promising technology, because the market for NFTs currently seems nothing but revolutionary. The majority of use is in the digital art trade. Because a clear allotment to one owner is what makes NFT trading so attractive. Similar to the trade in material art, it is exclusivity that creates desire and therefore irrationally high prices. With the difference in the case of NFTs, you are not buying an oil painting on canvas, but pixels on a screen.

Who makes sure I don’t take a picture of the NFT and use it for myself?

Nobody, because that’s your right. Owning an NFT does not come with copyright or anything like that. You can download as many images from your favorite NFTs as you want and use them as wallpaper or something else. You may not sell these copies because they are not your property. In addition, as we have already demonstrated, an asset can be uniquely allocated due to the blockchain and differs from each copy in this respect.

But NFT doesn’t have to be just images. There are no limits to imagination. One of the first known sales of NFT is the first-ever Twitter post, which was auctioned by Twitter CEO Jack Dorsey for nearly $3 million. However, this also means that Jack Dorsey has lost all rights and title to this explicit publication.

Another example is the NBA, which captures iconic moments in the NBA in the form of mini videos with their trading card game Topshot. Fans who want to collect these moments, or just see the monetary value in them, are willing to pay up to $200,000 for one clip.

In general, it can be said that the NFT market is not safe and predictable. The monstrous amounts currently being paid for digital art cannot be explained from a rational point of view. Often the reason for the awards is not the art itself, but the investment in technology. Inspired by the massive rise of the Internet that has radically changed our lives today, many buyers of NFTs see the endless potential in technology and want to be the first.

Is everything that glitters really golden?

Not at all, because when there is a lot of money to make, there are often many scammers looking for the big money. And fraud is easier than you think in a new, unregulated market like NFTs. In a video, YouTuber and NFT user Brett Malinowski describes one of the simplest and most common types of NFT cheating. so called pull the rug Or roughly translated as “pull the rug out from under your feet.” For those who find the video too boring, here’s the short version:

1. First you have to buy a relatively expensive NFT and use it as a profile picture on the social media accounts you created specifically for it. So people think you know something about NFTs because you obviously own an expensive one.
2. You are advertising a big NFT project, which is the next big thing, to generate interest and make people believe that they can only make a profit from the investment.
3. What you ultimately sell is inspired as much as possible by what is currently in the trend of NFT. If you’re not talented enough to create it, hire an amateur artist and promise him a small share of the profits.
4. You make big promises about the future of your project and long-term support on your part. This is usually a prerequisite for the significance and longevity of NFT.
5. On the so-called launch day So on the day when your project is open to the public and available for purchase, you hope that your marketing efforts will be sufficient and your project will generate significant profits.
6. You are now deleting all your traces on social media so that you are not responsible for the consequences.

But cheating isn’t the only battle NFT has to deal with. Because even more inconsequential than the prices of some of the NFTs are the energy required to keep the store running. As we have already explained, the technology behind NFTs is strongly related to the blockchain. To be precise, it is based on the Ethereum blockchain. Ethereum is a cryptocurrency, just like BitCoin, and also the currency used for NFT trading. To keep the Ethereum blockchain and its connected systems running, small computing operations are performed by computers in huge data centers, every day, all day long. This costs an incredible amount of energy, because even if the cryptocurrency market takes a break (which it never did), these systems continue to function. On the Ethereum side itself, the organization compares the power consumption of each transaction between Ethereum and BitCoin. This should show that Ethereum does not have even a tenth of the energy consumption of BitCoin. A few lines later, at the latest, it turns out that this is not the place to be covered in glory. It is clear here that it was possible to execute approximately 200,000 Visa transactions for the price of a single Ethereum transaction. To be fair, it has to be said that the data comes from May last year and that Ethereum is already working on a more environmentally friendly solution.

conclusion

In my opinion, NFTs are undoubtedly a milestone in technology and have the potential to fundamentally change our lives. What other possible applications hide is beyond my imagination and it is clear that many others are as well. However, I can imagine that we will soon be able to prove ownership of a house or car with the help of NFTs and in the digital world we will find more than enough application areas in metaverses like Meta (formerly Facebook) and now Microsoft is working on.

But it is also clear that the technology is currently in its infancy and there is still a lot of work to be done.

Cover photo: Andrei Metelev
Featured image: Taylor Vick

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