If you remain sort of “passively” in the loop about NFTs, you may think they’re just one big meme — and to be fair, in the last several months of 2021, the Reddit community absolutely made them into just that. That’s because on the surface, NFTs seem silly — you pay hundreds or thousands of dollars to have ownership of something that anyone can access for free. But NFTs, or non-fungible tokens, have a few more significant implications than just “digital bragging rights” that tend to get glossed over by the folks of the internet. Let’s take a closer look at exactly what an NFT is, and why there’s more to them than what meets the eye.
So, What Does ‘Non-fungible’ Mean?
In the simplest terms, a non-fungible token is a completely unique asset that cannot be exchanged for anything else. To help put this into perspective, the dollar bill is a fungible asset — you can trade one dollar bill for another, and both bills have the exact same value. Land, on the other hand, is non-fungible. No two parcels of land are identical, and each parcel has unique features that change its value: A 100-acre oil field has a lot more economic value than a 100-acre forest, even though both lots are the exact same size.
Why Does Digital Ownership Matter?
An NFT can be just about anything digital, but they have made their biggest splash in the creativity scene with art and music. Pre-NFT, traditional media artists would create a piece and perhaps sell prints, but digital art was very hard to make into a lucrative pursuit. Most people weren’t going to pay good money for something they could right-click and save without paying a dime.
But NFTs have made it much easier for digital artists to monetize their work. When an NFT artist creates a digital work, it gets authenticated and logged to the blockchain. Once it’s on the blockchain, every transaction and sale tied to that piece is recorded. This is where it becomes important: Because of this record, every time the piece is sold, the artist gets royalties.
This is a major protection, and a level of control that has never existed for artists before.
Applications Beyond Art
We mentioned earlier that NFTs can be just about anything as long as it’s digital, and it’s true. Jack Dorsey, the CEO of Twitter, sold his first-ever Tweet as an NFT for $2.9 million on Cent. But, we’re seeing NFTs creep into many categories: loans, custom game content, collectibles and sports memorabilia, coupons, and memberships. The world of NFTs is even becoming more accessible to a younger demographic with the advent of NFT games, such as Doge Dash. The implications of NFTs are making it possible for artists and young people to create wealth for themselves that they would not have had the opportunity to create otherwise. NFTs’ possibilities are endless, and are only on the path to continue to grow exponentially.
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