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Why do artists want NTFs, and what can be done with them apart from purchasing and selling? Here’s what the potential of NFTs and blockchain looks like.
The beginning of 2021 saw an extraordinary surge in interest in nonfungible token, or NFT, technology in a variety of areas, with the highest occuring in March. Every day, news about art deals with NFTs emerges. What’s more intriguing is that NFTs are becoming common with people who were previously unfamiliar with cryptocurrency.
Examples on how the NFT craze is peaking include Beeple selling his art piece for nearly $70 million and the Hermitage Museum in Saint Petersburg, Russia, declaring that it will host a show of NFT art in 2021.
Aside from the publicity created by celebrities endorsing the technology, what is the driving force behind the surge in interest in NFTs? Will a daily crypto enthusiast interact with NFTs in a user-friendly manner?
So, what exactly are NTF networks, and why are they emerging so quickly? Here’s why NTF sites are becoming increasingly important for attracting the art world, how they operate, and what they can give their users beyond just being a kind of marketplace.
The whole argument is in the NTF itself, in its singularity. It cannot be duplicated, forged, or split. The author of the token will demonstrate their possession or the fact that ownership has been transferred. That is, the owner of such a commodity may tokenize it by issuing an NFT, allocating a price to it, and auctioning it off. The purchaser of such tokens obtains the right to own and dispose of the items, and this information is registered on the blockchain.
While platforms for making and selling NFTs have only recently begun to emerge, operations with tokens are clearly cheaper, simpler, and quicker than operations with real items. However, NFTs are not entirely legal, and proving possession in terms of intellectual property rights can be difficult. Unfortunately, not everybody supports blockchain as a legitimate form of record-keeping.
What rights would the consumer have if they spend their money on the author’s token? The exclusive rights do not automatically transfer to the buyer with the purchase of the token if there is no legal arrangement between the maker and the buyer of the NFT.
Other rules may be defined by the platform, but those rules are not currently included in the basic terms of the larger platforms. It is possible that the sites will allow NFT developers the ability to select their own licencing terms.
Of course, any financial instrument cannot live long without state regulation. Here, NTFs are likely to take the path of conventional cryptocurrencies, and some believe that lawmakers will eventually intervene.
First is security, second is NFT
NTF sites have content in a range of formats, allowing users to select which area of art they want to explore. However, before entering the business, it is important to consider how they operate and whether they are secure in terms of possible risks.
On the Ethereum blockchain, for example, there is an NFT. After selecting the NFT platform, the user must build an Ethereum wallet from which specific tokens can be purchased and sold. Wallets assist with the authorisation of accounts on websites, in most cases without the need for extra details such as a username or password, since the wallet tags the user with their wallet address. Any platforms ask users to first purchase a native token before they can purchase the artwork.
The operating theory of every NTF network is straightforward: Users come to the site to secure the right to produced or bought content, and in exchange, they obtain a token that can be freely shared with another user. In terms of authentication, the NTF serves as an assurance that the blockchain holds information about the user, whether they are a developer or a buyer.
But this does not mean that by buying an NFT, users can relax, as they are not safe from thefts on NFT platforms. For example, in March, the Nifty Gateway trading platform reported that some users were faced with account hijacking, theft and purchase of NFTs using a credit card without their knowledge. However, it turned out that none of the accounts had two-factor user authentication enabled.
It is not a matter of weak security on NTF websites, but more of a lack of awareness on the part of consumers. NFT tokens, like all precious objects, should be kept in a secure location. It is not enough to simply purchase a token and save it on the platform; users must both protect their accounts by enabling two-factor authentication and storing their password in a secure location, as most platforms offer. Each owner of a valuable NTF must consider their responsibilities and take precautions to protect their piece.
The NTF platforms
A typical user would buy NFTs on specialised markets — marketplaces where tokens can be purchased or sold. OpenSea is one of the biggest and most famous marketplaces. There are thousands of various NFTs on this list, ranging from game cards to paintings by modern artists. The network also keeps track of their scores and the most common tokens.
SuperRare is another platform where digital art can be purchased and sold but not specifically shared by consumers. Artists verify their work on this site by generating a tokenized certificate. They set a purchase price and invite prospective buyers to bid on their products. The aftermarket is the investment part of SuperRare. Anyone will resell a work of art they have bought as though it were at a normal auction.
NBA Top Shot is currently the most intriguing forum in the world of athletics. The project’s concept is to create and distribute interactive basketball collectable cards. NBA Top Shot cards, on the other hand, feature video snippets from previous games rather than static pictures of matches. Each token is a one-of-a-kind piece of memorabilia.
But, apart from marketplaces, is there anything else? Is the NFT industry restricted to ventures based on a buy-and-sell model? Obviously not. Any intriguing ventures are emerging today, representing a multitude of financial prospects.
Some websites are mainly concerned with the ease of NFT payments, in which a customer can order an item with a standard credit card. For eg, Crypto.com’s NFT initiative does this by attracting as many original material as possible, not just from the gaming industry but also from well-known celebrities, singers, and athletes — in order to be multifaceted. Using cryptocurrency, users would be able to buy useful objects on the site.
Rarible has grown in popularity because it allows musicians to earn royalties any time their work is resold. Rarible launched a governance token called RARI and is working to become a decentralised autonomous entity. RARI token holders, who include NFT developers and collectors, have the ability to vote on platform changes and engage in market moderation.
The project’s creators also plan to launch an NFT index — a special search engine for those looking to invest in the NFT market but are unsure which pieces of art to choose.
Art Block is a project for those who like artistic design. It was one of the first sites to concentrate on the automated creation of programmable content for storage on the Ethereum blockchain. The platform’s uniqueness lies in the existence of an infinite quantity of content that can be purchased and distributed as NTFs.
Users on the platform will choose an art style that appeals to them and pay for the job, and the platform will produce content at random in the form of an illustration, 3D model, or interactive design.
In general, it seems that cryptocurrency enthusiasts need much more than basic marketplaces to buy and sell NTFs. This is where multiplatforms come into play, allowing the different user communities to produce original content as well as invest in art. NFT portals are no longer just a place to tokenize digital art and assorted collectibles; they are now a user-attraction tool.
“Tehn,” a community manager at Blockchain Cuties Universe — a game that runs on four blockchains simultaneously and stores game inventory in the form of NTFs — claims that NTF networks will potentially deliver a far more interesting solution than simplistic marketplaces:
“I believe that a vast majority will be marketplaces at first. But there’s more uses for NFTs. Games already utilize them to store value in the game asset and give players full control of their inventories and even monetize their ingame time. That’s the beauty of it. Blockchain allows developers to create great assets, and empower players to play their game, while having full control of their account.”