What are NFT tokens. And what does Banksy have to do with it?
Throughout February, non-fungible tokens (NFT) have been buzzing around for their use in the arts. We will tell you what it is, as well as what prospects NFT tokens have
Over the past month, interest in non-fungible tokens (NFT) has grown significantly, with a trading volume of $ 340 million in February alone, which is more than the trading volume for all of 2020. Against this backdrop, the American rock band Kings of Leon has scheduled the release of their eighth studio album, “When You See Yourself”, in the form of NFT, according to Rolling Stone.
The burned work of artist Banksy “Morons (White)”, which the blockchain company Injective Protocol bought from Taglialatella Gallery in New York for $ 95 thousand, was also converted into an NFT token. After the print was burned, the blockchain company created a non-fungible token tied to ” digital image of the object of art ”. This is the first known case of turning a physically existing work of art into a virtual asset, said Injective Protocol spokesman Mirza Uddin. The created token is planned to be sold at an auction for cryptocurrency.
What is NFT
Each record on the blockchain is called a token. However, in an open blockchain, all tokens are equal to each other and are fungible. This means that one token can be replaced with another of the same token and nothing will change. But Non Fungible Token (NFT) technology works differently. Each non-fungible token is unique and cannot be tampered with, split, or subtly replaced. Such an organization is ideal for securing your rights to any unique object, be it a work of art in a single copy, an item in a computer game, or even real estate.
NFT technology was created in 2017 based on Ethereum smart contracts. According to the analytical service Nonfungible, 5.35 million tokens were sold during the existence of NFT.
Where is NFT used
In February, non-fungible tokens were actively introduced into the field of art. For example, DJ 3LAU became the first musician to tokenize his own album and sold it in a limited edition. On this he managed to earn $ 11.6 million. The singer Grimes, known as the mother of the child Elon Musk (born in May last year), did the same. She sold 400 NFT tokens, which were tied to four drawings personally created by her and her brother. In just 20 minutes, the token sale brought Grimes $ 5.8 million.
Also, non-fungible tokens are used in the gaming industry to confirm ownership of virtual assets, when registering domain names, as well as in real estate.
How to get started with NFT
Artists wishing to tokenize their work can do so at Rarible or OpenSea. There you can also buy your first token tied to the work of another author. It is noteworthy that OpenSea creates an NFT token only when a buyer has already been found for it. This saves the author from additional fees in the form of a commission on the Ethereum network. Rarible, on the other hand, creates an NFT token immediately upon uploading the work and charges a commission from its author.
Prospects for non-fungible tokens
NFTs can revolutionize copyright control, says Antony Kraffchenko, CEO of Xena Financial Systems. In his opinion, with the help of radio station tokens, it will become easier to obtain rights to broadcast music tracks, and streaming services – to buy rights to show films and TV series.
“Now the market for display and broadcasting rights is not very efficient, there is a certain amount of friction, costs in transferring rights, and resale is often impossible at all. All this can be changed with the help of NFT, but development may take about 10 years, ”said Kraffchenko.
Operations with tokens are obviously cheaper, easier and faster than operations with real objects with which they are linked, said Dennis Vozkvitsoff, head of the fintech company Exantech. According to him, platforms for the creation and sale of NFT tokens have just begun to develop.
2021 will be a powerful breakthrough for a new trend, says Hleb Costarev, director of Binance in Russia and the CIS. He recalled the assumption of Messari Research analyst Mason Nystrom that this year the market capitalization of NFT may increase 3-4 times compared to 2020.