In the gaming world, where NFTs can be character tokens or even valuable in-game coins that allow you to make control decisions, the NFT hype is bubbling up. While most of these NFTs are built on the Ethereum blockchain, there are also competing blockchains like Polygon that hope to dominate. Blockchain technology can create NFTs that can be split into parts so that more people can own an NFT. Therefore, some projects jointly own the NFT (10 owners per NFT), but even with multiple owners, the NFT is still unique.
Rather, NFTs have unique data (ie. see them as unique digital art that cannot be copied or reproduced). An NFT is a digital code -like copyright certification- that confirms a given asset is the original. An NFT is a digital token (essentially a coin, just defined differently) that has the same value as the value object. Essentially, an NFT is a digital certificate of title, almost always bought and sold in encrypted currency, to which any digital file can be attached – jpeg image files, videos, songs. A non-fungible NFT token is a unit of information or data stored on a digital ledger called a blockchain that certifies a special, and therefore non-fungible, digital asset.
In the interviews that follow, you’ll learn a deeper definition of an NFT, but essentially, an NFT is a unique digital file that can be identified through the blockchain. This new resource makes many people in the tax community wonder about its impact, especially as some NFTs have recently seen sales in the millions. NFTs are a boon for artists, musicians, and others who want to create impressive digital assets.
Unlike the business model of commercial galleries, NFTs are designed to eliminate the need for art dealers by allowing artists to trade directly online, typically through specialized auction sites. Whenever an NFT is resold, its creator also makes a profit – an integrated royalty system absent from the physical art world, where artists often feel ripped off when their work is resold on the market. Prestigious auction houses such as Christie’s and Sotheby’s have already joined the NFT. Many people are already making a living by digitizing their work and offering it for sale in NFT form from the comfort of their homes.
For example, an artist named Beeple just sold a public, shareable and downloadable piece of digital art -a 5,000-photo collage called The First 5,000 Days- for $70 million in NFTs. The most expensive NFT was a digital collage from Beeple, which sold for $69.3 million at a Christie’s auction in March. We have musician Grimes, who sells his art for millions of NFTs – pictures of children with spears, to be exact.
Here we have an interesting use case of NFTs for music (also for art). Important use cases for NFTs include the authentication and commercialization of digital art, which also applies to other digital works, including original music. This is just one example of how NFTs allow us to digitize assets like a house. NFTs convert resources into tokens so they can move around this system. NFTs ensure that an asset can only have one official owner at any given time through the Ethereum-based blockchain network.
While one bitcoin is directly interchangeable with another, NFTs are the opposite, as the underlying asset is somewhat unique and cannot be traded in a similar way. With NFTs, if you have 10,000 tokens to give, you can get 10,000 different NFTs from each other. NFTs are tokenized versions of assets that can be traded on the blockchain, the digital ledger technology behind cryptocurrencies like Bitcoin and Ethereum. Technically, NFTs have been around since 2012, but the use case for digital collectibles didn’t start until 2017 when a platform called CryptoPunks was born.
After taking a closer look at OpenSea, overall, it’s a worthwhile platform to use for those looking to buy, sell, and create NFTs. OpenSea provides many resources for setting up an account and using the platform properly. Founded in 2017 by Devin Finzer and Alex Atallah, OpenSea has become the largest NFT marketplace in the world with a trading volume of over $3.5 billion last year. As participants seemed to agree that NFTs were the next step in the art world, the OpenSea NFT trading platform expanded rapidly.
Capitalizing on this hype, Pantones has paired the debut of its 2022 digital color Very Peri with the NFT exhibition of Paris-based multidisciplinary artist Polygon1993. Sotheby’s has become the latest name for an art institution to venture into NFTs (non-fungible tokens) through a partnership with anonymous digital artist Pak and NFT marketplace Nifty Gateway. By the end of the year, they had become popular enough for Collins Dictionary to name NFT as its word of the year for 2021. Most commonly, NFTs are used to refer to values such as art, collectibles, or music. Alien Cryptopunks, a unique pixel art created using algorithms in 2017, dominates the list of the most expensive NFTs. In addition to the five NFTs listed below, there are many more that have received high customer ratings.
For those who don’t have that kind of money, NFTs are also used to trade collectibles like baseball cards and PC game items like swords and avatar skins. Since many people think NFTs are more useful for collectors and other such realms, others just want to play them as a sort of “must get ’em all” thing. Also, if we spend most of our lives in virtual worlds in the future, the things we buy there will likely also be bought and sold as NFTs.
It’s important for artists and buyers to keep these concerns in mind as they begin to join the NFT space. Charging more for a painting than for an NFT, and thus valuing physical art more than digital art, could draw the ire of the cryptocurrency crowd. Even Vignesh Sundaresan, the entrepreneur who bought Beeples’ record-breaking art, considers investing in NFTs “a huge risk” and “even crazier than investing in cryptocurrencies”. But for many hip-hop leaders and art lovers, Nas NFTs won’t be their first foray into the fast-paced virtual world. They are useful to artists, musicians, and other content creators by turning their work into original digital products that can be sold.
