The creator of the cult animated series Rick and Morty, Justin Roiland, sold a collection of 16 pictures in the form of NFT tokens for more than $1.5 million, and an NFT canvas by American digital artist Mike Winkelman, better known under the pseudonym “Beeple”, was bought for an astronomical $69 million. What are NFTs and why are they so expensive? Let’s look into this phenomenon and find out how digital tokens have changed the way modern society thinks about property and value. Then we’ll tell you how to become part of this exciting digital revolution.
Content:
- NFT - let's put it simple
- How does the NFT mechanism work
- Pixels for Millions: Why is Digital Art So Expensive?
- From art to real estate: analyzing the types of NFT
- Conclusion
NFT. Let's Put It Simple
How much do you think white balls on a black background could cost? That's right. Almost 92 million dollars!
And a piece of prime real estate in the virtual metaverse of Decentraland? TWO MILLION FOUR HUNDRED THOUSAND dollars! If you've caught your eye, keep in mind - it's not for sale. It's already been bought!
What would you do if you were offered to invest in virtual land in a blockchain game that doesn't exist yet, but is about to appear? Don't rush to answer. It's already been sold for $52 million!
It's unbelievable, but today, almost every day, if not hour, someone issues, buys, sells, and makes money on the new oil of the 21st century - NFT. This acronym has already become the main word of 2024. So what the hell is this "eNFT"?
Expert opinions
- Book author, entrepreneur and popular YouTube blogger Marina Mogilko: “NFT is something like a Rolex or a Bentley.”
- Author of men's magazine Esquire Russia: “NFT is digital art.”
- Popular host of the YouTube channel "Redaktsiya" Alexey Pivovarov: "NFT is a pure experiment in the world of cryptocurrencies ."
That NFT has become the word of the year is not a metaphor, but a fact. According to the authoritative British dictionary, known for its accuracy, relevance and wide coverage of vocabulary, the abbreviation NFT, which stands for Non-Fungible Token, has become the word of the year in 2021. This is stated in a BBC article dedicated to this topic. Since then, the trend has only intensified.
NFT Token – Your Unique Digital Masterpiece
As mentioned above, NFT is a non-fungible token. What does this mean in practice? There is a $100 bill – it is fungible because it can be easily replaced with any other non-counterfeit and non-torn $100. And nothing will change. As they say, $100 is $100 anywhere. You can also go to any store and buy something with it. No one will ask you: is this the original $100 or a replacement?
On the other hand, there is, for example, Leonardo da Vinci's "Mona Lisa", which no matter how many times you copy it or print it on T-shirts, it will not become original. Everyone knows that the only authentic, and therefore unique, copy of this painting is kept in the famous Louvre in Paris.
So, no matter how many copies of this famous masterpiece you make, the original canvas painted by da Vinci himself will remain unique forever. And it cannot be replaced by any other reproduction or copy. And here an interesting question arises: how to find out the true owner of the original painting?
So, NFT is a unique digital certificate stating that a certain picture, meme or virtual land belongs to a specific owner. And this certificate cannot be forged because it is on the blockchain .
Why is blockchain so important for the development of NFTs?
If someone gets the crazy idea to change the information stored in the distributed ledger, it will not be possible to do so. This is because to change any data in one specific block, it will be necessary to change it in all other blocks of the blockchain, and this is impossible to do, no matter how much someone wants it.
Blockchain records are not stored in one separate book, but on millions of computers that are independent of each other and united into a single network. Such distributed data storage provides a high degree of data protection, since to change information, it would be necessary to simultaneously forge records on many network nodes, which is practically impossible.
How does the NFT mechanism work?
NFT operates on the Ethereum network, the second most important cryptocurrency after Bitcoin . In order for all this to function: the necessary calculations to be carried out, transactions to be carried out, funds to be transferred between people, etc., every hour all the computers on our planet make calculations and consume as much energy as would be enough for a small country.
And all these expenses are made with one goal in mind – no one should penetrate the blockchain chain, and the guarantor of this is all those computing powers that were mentioned above. The advantage of such a decentralized system is that there is no single “switch” that could turn off the entire chain.
Therefore, everyone who invests in memes, pictures, virtual land, etc., does so with the confidence that in the near future they will be able to resell it very profitably. And no one will take this property away from them.
Pixels for Millions: Why is Digital Art So Expensive?
Before we talk about the cost of digital art, we need to understand how creativity is valued in the first place. Why would someone spend $141 million on an obscure sculpture of a rather dubious appearance?
No, it wasn't the prisoners who made it out of bread crumbs. This is the most expensive sculpture in the history of Mankind - "Pointing Man" by Swiss sculptor Alberto Giacometti. On May 12, 2015, it was sold at Christie's for $141,285,000.
Against this background, the question of why invest in virtual land looks absolutely innocent. Apparently, someone is counting on the fact that over time, the metaverse or blockchain game will become mega-popular, and real estate in it can be resold in the same way as they do now in any city with new buildings.
One thing is certain: our lives are confidently moving online. And the most enterprising businessmen have already started looking for assets there. Just like people once tried to mine gold in Alaska or California, and then started looking for "black" gold all over the world. Therefore, looking at the "madhouse" going on around the NFT topic, we need to clearly understand that its main value is not in memes for several million dollars, but in the fact that this is our alternative future.
In the conditions of total surveillance of their users by large companies, the NFT environment allows a person to feel absolutely free and independent: there is no one to call to have access restricted or an account blocked, there is not a single “switch” or “valve”.
In the NFT world, each item belongs to a specific user, not the creator of the app or game. Any item can be resold on the exchange and get real money for it. This can be a great chance to earn money in poor countries, where people have very little chance of financial success in real life. It is much easier for a resident of Brazil or Indonesia to earn money in a blockchain game than in hard work in their own country. All this supports and actively develops the NFT economy, increasing prices, including for art objects.
From Art to Real Estate: Understanding Types of NFT
PFP collections
Beyond art and collections, there are a few other types of NFTs to be aware of. NFT tokens have long since moved beyond art and have become something much more. Thanks to such tokens, a full-fledged market for digital creativity has emerged, with the same auctions, exhibitions, and galleries as in traditional art.
OpenSea, Rarible, SuperRare, Foundation, and Nifty Gateway help digital artists find buyers for their art efficiently. However, the most popular collections today are PFP collections, which stand for “Profile Picture” – a digital avatar. Having such a token means that you are trendy and part of a certain community, and also have access to certain games, avatars, limited edition merch, and early access to other collections.
Virtual Earth
The piece of the map that you own is virtual land. At the beginning of this review, we briefly touched on the Decentraland project, where some have already bought themselves millions of dollars worth of real estate. In addition to this project, there are others: Sandbox, Axie Infinity, Somnium Space and Otherside. In them, users can buy virtual real estate, build houses and even create their own worlds.
You can make good money on your virtual land, for example, by renting it out to big brands. For example, if you bought a plot of land in a popular area that attracts a lot of visitors, you can charge for placing advertising banners, just like in the real world.
Games
This type of NFT has not yet become mainstream due to the slowdown in the development of this segment by leading gaming platforms like STEAM. However, this NFT sector exists and is gradually developing. Every day, there are more and more games related to cryptocurrencies. In the games themselves, NFTs are represented by avatars, game equipment, cards and lands. In short, everything that can be put in a game backpack. In addition, NFTs in games can increase the value of the gaming experience. In fact, this is what can convert the efforts and time of players into real value - USDT, BTC or ETH.
App Subscriptions
Having certain NFTs, you will be able to access paid content in closed Telegram channels, services that are more expensive or not available at all with a regular subscription. Considering that the number of NFTs is limited, you can resell subscriptions to these services and make good money on it.
Music
The ecosystem of music NFTs is growing every day. There are projects like sound.xyz, royal.io and others that help artists raise money for their future albums. The main difference between these platforms and regular streaming services is that musicians share their royalties not with the labels that released their album, but with the owners of NFTs who invested in this musician. In this case, the musician gets quick money for his creative development, and the listener with the NFT gets a share of the future profit from the track of his favorite artist.
Conclusion
In a short time, NFTs in cryptocurrency have become quite popular. The scope of tokens is growing every year. Who could have thought a few years ago that you could receive passive income from renting out real estate or an advertising banner in some blockchain game or buying collections of pictures, on the resale of which you can make a fortune? However, today it is a reality. And if you want not only to turn an interesting hobby into a profession, but also to earn decent money on it, we advise you to take a closer look at the possibilities of NFTs in cryptocurrency.
See also:
How to buy cryptocurrency for rubles or dollars
Is cryptocurrency necessary in the modern world?
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