As the popularity of NFTs continues to rise, it might give rise to more complex tokens.
Dubai: Recent statistics are an indicator of how the popularity of NFTs (or non-fungible tokens) and its related digital art forms have catapulted particularly over the past year.
In the entire year of 2020, total NFT sales value was $250 (Dh918) million, but in just the first few months of 2021 it crossed $2 (Dh7.35) billion.
But how does one make money through NFTs and let’s say you were an entrepreneur looking to raise money, is there a way to go about it through NFTs? If yes, then how?
NFTs (or non-fungible tokens) are simply a way of making digital art unique, and therefore, also making it more valuable.
(Digital art is an artistic work or practice that uses digital technology as part of the creative or presentation process. Since the 1960s, various names have been used to describe the process, including computer art and multimedia art.)
Normally, digital art is very easy to replicate due to the very nature of digital information. So, crypto art (using NFTs) is a way of making digital files one-of-a-kind.
Technically, it’s not the art that isn’t replicable; it’s something that’s linked to the piece of art, called an NFT (non-fungible token). NFT, or non-fungible token, is like a unique ID number assigned to the digital crypto art.
The unique number is checked against a distributed database updated and shared across a network of computers, also known as a ‘block chain’. The database is set out in a number of ‘blocks’ of data, each leading sequentially to the next – hence the ‘chain’.
This is why ‘non-fungible’ is in the name. The simple definition of non-fungible is goods or assets that aren’t interchangeable. It’s creating or having something that you can’t replace with something else. On the other hand, fungibles are those that you can interchange, one for another.
So what are non-fungible tokens? They are simply units of data stored on a block chain and certifies a digital asset as unique and, accordingly, un-interchangeable. You can look at them as a digital equivalent of private collectibles where each piece has a different value.
Surprisingly, creating an NFT isn’t complicated. NFTs are built and supported by a particular block chain, with Ethereum NFT being the most popular.
You need a crypto wallet and cryptocurrency, mainly Ethereum, to transact. You can sell NFTs for cryptocurrency or fiat money through smart contracts, and the transfer is recorded on a block chain.
If you have been wondering how people make money with NFTs, there are several ways to do that.
Individual NFT artworks are among the most popular and valuable non-fungible tokens created so far in terms of profitability.
NFTs, give the right of ownership to the artist such that when you create a digital asset, you’re able to show proof of authenticity and profit from your work.
If you happen to be a digital art creator, you get to benefit when it circulates. Looking at it from that perspective, NFTs are a revolutionary technology for art creators.
Tokenising collectibles is among the best niche application of NFTs and feels like it’s the most obvious way to deal with collectibles. People already in the sector dealing with physical collectibles such as memorabilia and other items now only have to sell the same as digital assets.
With NFT’s capability to prove uncommonness, the value of the collectibles can be significantly higher than their physical counterparts. The most popular collectibles so far are sports cards.
The National Basketball Association (NBA) has also launched its collection of NFT cards. There’s a high likelihood that other sports will follow suit, and collections will have a wider variety of sport NFTs to buy.
Other collectibles are doing well as well. As mentioned, physical collectibles can be turned into tokenised assets and bought, traded, or sold as such.
While physical trading and handling can damage the collectibles, NFTs never lose their quality as they only exist in digital form and are securely stored on the block chain.
Video game NFTs are also taking shape as block chain allows you to turn the games from paying to win to playing to earn.
For the games to engage larger audiences and increase revenue opportunities with high-demand rewards, NFT game development is the way to go. The games have functions that allow buying, selling, trading, or exchange of your collectibles.
Although so far there aren’t any games that have gained high popularity, the potential is enormous.
With games being well-known huge spenders on virtual items, video games with NFTs sellable in-game items have a likelihood of becoming a big winner. Notably, NFT video game developers are also ambitious creators of NFTs, which might thrust the NFT technology further forward.
Compared with other NFTs such as artwork, fashion, and trading cards, in-game NFTs are the most advanced of all. This is because there are complex, fully interactive yet keep changing with time by having to be upgraded or to be levelled with the changes in a player’s character.
With its numerous and unique applications, the fact that only simple images are popular right now shows that the full potential of the technology is yet to be explored.
As the popularity of NFTs continues to rise, it might give rise to more complex tokens. In addition, NFT developers are also increasingly coming up with innovations for other sectors. So far, different industries like the real estate, media, and entertainment industries can also benefit from NFTs.
NFTs work because they are a great way to create digital scarcity and are a great way to incentivise users to participate in a platform. The value of NFTs is determined by the market, and they can be traded on exchanges, transferred and kept in wallets.
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