What exactly are Non-Fungible Tokens (NFTs)?
We’ve all heard the story of some 12-year-olds making millions with their pixelated jpeg images selling online for the same price as original Monet's or gold-wrapped Lürssen mega yachts; and we instantly question our life choices. Welcome to the wonderfully weird world of NFTs:
A extortionately hyped way of buying art, or a revolutionary Leviathan of technological excellence just waiting to be leveraged?
NFTs are like title deeds. They represent ownership. Whatever metadata (a fancy dev way of saying some art/images/information, et cetera) is linked to it is wholly insignificant. NFTs are merely represented by a few lines of code, secured by a myriad of protocols.
This code is better known as a ‘smart contract’, and its security measures are inherent to the very ‘platform’ that facilitates smart contracts — the blockchain. Blockchains such as Ethereum are merely decentralized (meaning no central authority) ledgers tracking and validating the movement of digital money or tokens (NFTs), as it executes the smart contracts that run on it.
Since validation is done by a hive of computers (nodes) and global networks that track each transaction, it is secure, failproof and surprisingly brilliant at verifying information. A perfect enabler for secure ownership.
Ownership inherently requires a contractual agreement to be met. These agreements can be hardcoded into a smart contract to ensure transactions ‘self-execute’ within the stipulated boundaries — while all being verified and visible on the blockchain.
Okay, enough of all this technical talk.
In essence, what makes NFTs so attractive (and sometimes valuable), is their inherent rarity which ultimately leads to scarcity in the digital world. And as any aspiring economist knows, limited supply breeds surging demand.
Fun fact: NFTs never creeped up on us.
They have been around since 2012 when they were still known as ‘coloured coins’ and used by our CEO, Gert-Jan van Rooyen, in anti-piracy and forensic watermarking. Recently NFTs metamorphosed to take on the shape of a Kings of Leon album, a Jack Dorsey tweet, a rhino adoption certificate, and even sporting moments. Utility NFTs, we believe, will prevail.
This sums up NFTs. Not as the exorbitantly overvalued mediocre MS paint art, but as immutable code living on a secure chain, providing us with secure, high-tech provenance tracking and authentication, as well some nifty methods of creating added utility to ownership.
Now that’s the underhyped bit.
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