Why is Non Fungible Token (NFT) very Important 2022

Non fungible tokens represent a significant innovation compared to the rather simple nature of the so-called cryptocurrencies. Financial systems as we know them today allow for the exchange of currencies and loans for various types of assets such as real estate and art. Non-fungible tokens represent a major milestone towards reinventing this industry by providing a means for physical assets to be represented digitally.

One of the main advantages of non-fungible tokens is undoubtedly the efficiency of the market. Moving from a physical asset to a digital asset streamlines the process and reduces costs by cutting out the middleman. This is how artists, in particular, find their place in the NFT industry by cutting out the middleman in the sales process and allowing them to be closer to their fans.

Non-fungible tokens can also bring innovation to the investment sector. Indeed, in some situations, splitting an asset can be complicated. Take the case of real estate: it’s much easier to divide a digital property between multiple owners than a physical property. This notion of tokenization of an asset can be defined far beyond real estate and can affect a wide range of asset classes. Works of art or land are a good example. For example, a hectare of land can have multiple owners.

Therefore, the success of non-fungible tokens lies in the wide range of possibilities for creating new markets and new forms of investment. The division of a property is a perfect example. Each part has different characteristics. Depending on its characteristics, each division is unique. This mechanically implies that its price is different. Therefore, each part can be simplified by incorporating metadata into each unique NFT.

non fungible token examples

Best Examples of Non Fungible Tokens (NFT)

More expensive, stranger, more surprising, here are the top 3 NFTs sales that made the news. Launched in 2014, NFTS sales have been going crazy for only a few months. However, going as high as over $2 billion, according to the British specialty site NonFungible.

“Everydays: The First 5000 Days” by Beeple – The record of the moment – $69.3 million

Mike Winklemann, known as Beeple, holds the record for most records. His work “Everyday: The First 5000 Days” was sold at Christie’s for $69.3 million. As it was the first digital work sold by the illustrious auction house, this historical sale propelled the artist to 3rd place on the podium of the most expensive living artists in the world, behind David Hockney and Jeff Koons.

The collage of 5,000 drawings and animations, the fruit of the digital artist’s daily creation, is resolutely the most famous and most expensive NFT of the moment. During this time, he quickly became known as one of the world’s most important contemporary designers. Art collectors and NFT collectors alike are snapping up his creations for crazy amounts of money. Another of his works, Crossroad, sold for $6.6 million. His prolific work has earned him numerous collaborations with prestigious brands and leading artists.

CryptoPunk #7804 – A pixelated punk at $7.5 million

CryptoPunk #7804, one of the 9 aliens in the CrytoPunks collection, was sold for 4200 ETH or about $7.5 million by its lucky owner, Dylan Field, CEO of the successful design software Figma and NFT collector. All the crazier when you know that these pixel art characters were randomly generated in 10,000 versions with different attributes (zombie, beard, glasses…). 

Developers Matt Hall and John Watkinson of Larva Labs are behind these successful collectibles (collectible characters), which were distributed for free at launch to anyone who provided an Ethereum public address. CryptoPunk is among the first works minted in 2017 on the Ethereum blockchain.

NBA Top Shot – 500 million dollars in total

The NFT fever has also spread to the corridors of the NBA. Created a few months ago, the NBA Top Shot platform offers virtual trading cards. These are nothing more nor less than video excerpts of basketball games hit in the blockchain in NFT format. The result is a record enthusiasm for this version 2.0 of the Panini album and nearly 500 million dollars in sales generated by the end of March 2021. A single key moment of LeBron James in NFT brought more than $200,000 to the specialized platform.

nft non fungible token

 

Advantages Of Non Fungible Token (NFT)

Unlike cryptocurrencies that are exchangeable because they are equivalent – they simply depend on a multiplier. So if we look at this from a positive point of view and when used rationally, this technology has several advantages. 

Best Points Of Non Fungible Token (NFT)

Authenticity, traceability, transparency:

Blockchain allows for seamless upstream traceability, the effectiveness of which has already been demonstrated in the agribusiness industry. In a fragmented and historically opaque sector like fashion, this tool is revolutionary. Associating an NFT to each product would make it possible to know its composition, the place of manufacture, all the parties involved in its production chain, and the parameters of its second, third, and nth life.

The information of the final consumers:

The system of crossed data coming from various sources (decentralized metadata) puts the information directly in the hands of the customers.

Valuing the multiple lives of an object:

The overproduction of clothes and objects, in general, is the primary source of pollution in the fashion industry. By creating a digital passport, the hypothesis of multiple lives of an object is envisaged from the outset, and value is created through use rather than possession. NTFs could allow us to authenticate our goods quickly and facilitate their circularity.

A Revolution For Artists

One of the biggest benefits of NFTs is that it allows digital artists to be compensated for their work by offering them the ability to authenticate digital objects with a title. But NFTs do not only benefit digital artists. With this technology, artists can earn a larger percentage on the initial sale as well as royalties (about 10%) on each resale.

Another advantage of NFTs: is traceability. Blockchain technology allows knowing all the transactions linked to a digital object. Thus, the original can be distinguished from copies, and the work’s origin can be assured. Thus, the entrepreneur and author Gary Vaynerchuk assures that the revolution of NFTs lies not in work itself but the underlying contract. This smart contract broadens the definition of a property title because it can include any clause offering infinite possibilities for the art world and other fields.

In other words, the art market must adapt to the new mediums proposed by artists. The history of art is made of perpetual revolutions that challenge the existing artists. And NFTs technology undoubtedly opens new doors for artists, and the art market will have to follow.

Disadvantages Of Non Fungible Token (NFT)

NTFs have many flaws. Each of the counter-arguments in their favor can, of course, be debated, but when trying to assess the balance of utility or public good vs. disadvantage, here are the reasons why people prefer not to use them:

Widening inequalities and political chaos: 

In Kazakhstan in January 2022, the explosion of mining activity, making the country the world’s second-largest miner, was responsible for political chaos after numerous power cuts and a major increase in fuel costs. The situation was resolved by a police crackdown and the intervention of Russian-led troops.

Social isolation:

The harmful effects of excessive activity on video games and social networks have been demonstrated. Sedentary lifestyle, behavioral, psychological, sleep, cognitive and developmental disorders in children, addictions… What will the world look like when all our interactions are digital, the only interest in social moments being limited to demonstrative parades of our virtual possessions in a video game?  

Speculation & dirty money: 

Cryptocurrencies like NFTs are volatile markets with very high risks. A viral Tweet, fake news, and the costs soar or plummet, especially in the art, as many people put their money there without mastering their operation. In February, RTFKT raised $3.1 million in seven minutes via crypto sneakers designed by artist Fewocious. On the other hand, unreported and opaque money in/out. NFTs are a common way to launder money.

non fungible token stock

What is Non Fungible Token (NFT) in Stocks?

Stocks and real estates are likely to become part of tomorrow’s non-fungible tokens. The general enthusiasm for this new sector has been enough for non-fungible tokens (NFTs) to land on Wall Street. Just a few months ago, the New York Stock Exchange (NYSE) didn’t do things by halves and just created a collection of NFTs on the Crypto.com/NFT platform. According to the official website of one of the world’s largest exchanges in trading volume, 6 NFTs representing a notable IPO have been forged on the Crypto.com blockchain.

Previous Post
Next Post

Leave a Reply

Your email address will not be published.