The non-fungible token (NFT) confirms that a digital asset is unique and therefore not interchangeable. This system is a unit of data stored in a digital ledger in a blockchain structure. NFTs are used to represent virtual items such as photos, videos, audio, and other types of digital files. However, access to any copy of the original file is not limited to the recipient of the NFT. While copies of these digital items can be copied and acquired by anyone, NFTs can be tracked on blockchains, which provide a separate proof of ownership from the copyright to the person/institution that acquires ownership of the work through NFT.
2021 was the year when NFTs exploded. Blockchains like , and have their own standards for supporting NFTs. But each of these chains works to ensure that the digital item represented is truly unique. These copyrights are revolutionary in that their owners can “make a living” off their work. Because NFTs now take all middlemen out of the equation for digital assets. It is used to commodify art, music, sports and other popular entertainment. It is part of many of the currently popular NFT Ethereum ecosystems. However, other blockchains can also produce their own versions of NFT.
NFT is a brand new revenue sharing model for artists, content producers and digital content platforms. For this reason, its market capitalization tripled in 2020 to reach $250 million. Of course, this situation brought with it criticism, especially in terms of environmental sensitivity. Because NFTs require high energy costs. It does this with blockchains used to prove authenticity. The carbon emissions generated by the energy required to sustain these blockchains are forcing key players of the NFT market to “rethink their carbon footprint”.
Can you explain what NFT is in a little more detail?
We can say that NFT is an “Immutable token”. It confirms that any digital file is unique. And it is a unit of data stored in a digital ledger called a “blockchain”.
An NFT is similar to cryptocurrencies in terms of functionality. But unlike cryptocurrencies, they are not mutually interchangeable. So in other words, it cannot be changed.
How is NFT Created and How Is It Related to Copyright?
NFTs can be generated in accordance with previous records on the associated blockchain of a set of character cryptographic hashes that verify that a dataset is unique. This cryptographic transaction process provides a unique digital signature used to track NFT ownership. It also provides authentication of each digital file. However, data links pointing to where the digital artifact is stored with NFT may disappear over time. Also, ownership of an NFT does not entail ownership of any copyright in the digital asset it represents. A person can sell an NFT that represents their work. When ownership of NFT changes, the buyer does not have copyright privileges. Therefore, the original owner is allowed to create more NFTs from the same work. In this sense, an NFT is a commodified value as proof of ownership separate from copyright.
What Kinds of Works and In Which Media Has NTF Been Used So Far?
We can compare NFTs of artworks to signed works. The unique identity and ownership of an NFT can be verified with the blockchain ledger. For this reason, it has started to be used at an increasing speed and variety, especially for digital works. Let's put together several examples.
Digital art has become a natural habitat for NFTs. Because the flexibility and capabilities of blockchain technology have secured ownership of NFTs. And digital artists formed the most widely used and accepted community.
Mike Winkelmann's digital artwork "Everydays - The First 5000 Days", also known as Beeple, sold for $69.3 million in 2021. Another Beeple piece called "Crossroad" sold for $6.6 million on Nifty Gateway. The work is a 10-second video showing moving pedestrians passing in front of a Donald Trump figure. Also, Nifty Gateway is an online cryptocurrency marketplace for digital art.
NFT’ler, kart koleksiyonları gibi eserleri, dijital bir formatta temsil edebilir. Örneğin Şubat 2021’de, NBA Top Shot platformundaki bir LeBron James smaç kartının NFT’si 208.000 dolara satış gördü.
NFTs can also be used to represent in-game assets in any part of a game. This provides a unique opportunity to sell and market in-game assets. In user-controlled parts, of course. Because NFTs allow in-game assets to be traded in third-party markets without the consent of the game developer and the need for bureaucracy. Axie Infinity, for example, made a sale of $1.5 million “for title deeds to its digital land” in a single sale in February 2021.
On March 3, 2021, rock band Kings of Leon announced plans to release the debut album as an NFT. At the same time, rapper Lil Pump has partnered with NFT platform Sweet to release his exclusive NFT collection.
The movie industry has technical challenges of storing on blockchain technology. These technologies are designed for smaller file sizes. It is adopting NFT much more slowly than digital art or music. On March 13, 2021, Adam Benzine's Oscar-nominated documentary Claude Lanzmann: Spectres of the Shoahi was auctioned as NFT on the Rarible platform.
Athletes are also starting to benefit from this NFT boom in various ways. NBA player Spencer Dinwiddie tokenized his contract representing his career, royalties and income. Thus, it paved the way for others to invest as well. In other words, we can say that it has positioned itself as a company and offered its assets to the public. In addition, Dapper Labs is a blockchain technology based company. He collaborated with the NBA to create NBA Top Shot, a marketplace for his digital clips.
In March 2021, professional tennis player Oleksandra Oliynykova offered the lifetime rights of part of her right arm to NFT buyers. Yes, you heard right. Sounds like something straight out of the Cyberpunk universe, right?
Proof is required to regulate and verify blockchain transactions involving NFT sales and purchases. This consumes a huge amount of electricity, which releases huge amounts of greenhouse gases. Take, for example, the Nyan Cat's NFT that everyone knows. This created a carbon footprint equivalent to two months' electricity use by a European resident.
This gave rise to a very serious discussion and demand for regulation. For this reason, some NFT markets have announced their commitment to sustainable practices. And, in some cases, it will offer buyers the option to contribute to carbon emissions offset programs at checkout. There are also artists who have announced that they have withdrawn from NFT markets due to this issue. They stated that they did not see any significant improvement and that they did not want to accelerate global warming with carbon emissions.
Like the “Proof of Stake” model currently, they need to freeze some of the cryptocurrency tokens on the network to ensure users have a stake in keeping the ledger correct. And there are some regulation models that penalize users who violate the system with token loss. However, it is not widespread yet. But some economists say that there are deficits in the Proof of Stake setup; He made some statements about the potential for collapse of NFT markets and the threat of destabilization. So this situation is highly controversial and any model that will provide a general solution in the near future is not yet on the horizon.
We are curious about the comments of BTCIX.io users. What do you think about NFT?