Thanks to large auctions, NFT They have become very popular and even a new business alternative for graphic designers. However, it is still unclear why someone would pay 260,000 euros for the drawing of a rock, if the buyer is not going to keep the copyright but an original. It is a new type of art sale that we will explain the details of.
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Let’s start by explaining what NFTs are, their name is formed by the acronym of non-fungible token. For this, it is necessary to differentiate what are expendable goods from non-expendable goods. While the former are those that can be exchanged taking into account the measure of their value based on their number, measure or weight; non-expendable goods are those that cannot be replaced.
A example of consumables It can be the money itself, since if you have a US $ 10 bill you know that you can exchange it for another of the same amount if it loses value, it will be exactly the same and you can consume it when you use it.
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On the other hand, a example of non-expendable good It is a work of art. A sculpture cannot be consumed when used, nor can it be replaced by others that are identical, since it would not be the same sculpture. One work of art cannot be the same as another, it cannot be exchanged like a US $ 10 bill because they are unique.
The works of art respond to a single moment of production, in which the artist made the original. Even if you do a mass production of the same frame, the value of each of these is unique and cannot be replaced by the previous or the next one. They could have a serial number, which would be one of the items that would add value to the first.
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This is where the NFTs come in. These non-fungible tokens are units of value assigned to a new business model that is closely related to the cryptocurrencies. NFTs work using technology based on ‘blockchain’, which guarantees the authenticity of a file in digital format as a work of art, as well as who is its owner.
So unlike most digital items that can be played endlessly, each NFT has a unique digital signature, which means it is one of a kind.
NFTs are generally bought with cryptocurrency Ethereum or in dollars and the ‘blockchain’ keeps a record of the transactions. While NFTs can be viewed by anyone, the buyer has official owner status, a kind of digital “bragging rights”.
What types of NFT are there?
There are all kinds of digital objects – pictures, videos, music, text, and even tweets – that can be converted to NFT.
Digital art has had some high-profile sales, while in sports, fans can collect and trade NFTs related to a particular player or team.
For example, on the National Basketball Association’s Top Shot platform, enthusiasts can purchase collectible NFTs in the form of videos of game highlights.
While these highlights can be viewed for free on other platforms like YouTube, people are buying the status as the owner of a particular NFT, which is unique due to the digital signature.
NFTs can also be parcels of land in virtual world environments or exclusive use of a cryptocurrency wallet name.
How did the NFT market grow?
Marketed since around 2017, NFTs have increased in 2021. Monthly market sales for NFT OpenSea reached $ 95.2 million in February, up from $ 8 million in January this year.
In March, total NFT trading volumes on Ethereum amounted to more than US $ 400 million. For example, NBA Top Shot, which is not included in the NonFungible.com data, has 683,000 users and has seen $ 396 million in sales, of which $ 232 million were in February.
Why are NFTs so popular now?
Some attribute it to quarantines forcing people to spend more time at home using the Internet. But NFTs are also a way to have possessions that the owners’ online friends can see.
For others, the appeal lies in the rapid rise in prices and the prospect of big profits. The last few years have also emerged many crypto millionaires with Ethereum to spend.
Enthusiasts see NFTs as the future of property. All types of property, from event tickets to houses, will eventually have their property status ‘tokenized’ in this way, they believe.
For artists, NFTs could solve the problem of how they can monetize digital artworks. They can receive more income from the NFTs as they can earn a royalty each time the NFT changes hands after the initial sale.
NFTs could also transform music. For example, the “Kings of Leon” NFT allows buyers to access limited edition vinyl or seats at future concerts.
What is the risk of buying NFT?
Since anyone can create an NFT, the scarcity of each part does not guarantee its value. Losses can pile up if popularity dies down.
In a market where many participants use pseudonyms, fraud is also a risk.
Can NFTs affect copyright?
With everything we know to date, no, since that Punic piece of art will always be valued as the author’s intellectual property. That is to say, if tomorrow someone were to buy Michelangelo Buonarroti’s David, it would not cease to be a work by the Florentine artist.
In the universe of NFTs, the author of the work still owns the rights on this, the original, unless at the time of the transaction expressing otherwise in the link with the buyer. If there is no such specification, the person who buys only has a hyperlink to the file of the work and a unique hash.
With information from Reuters.
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