A symbol is called irreplaceable because it is not equal in value to another symbol (Getty)
“Non-fungible tokens”, commonly known as NFTs, have recently been sweeping cryptocurrency platforms.
What is the nature of this type of digital investment? And how is it different from virtual currencies like “Bitcoin”?
To begin with, a “non-fungible token” can be said to be a financial security consisting of digital data stored in the “Blockchain”, where the digital currencies are located, where ownership is registered, and the owner has the right. to transfer it so that the token can be sold and traded.
Forbes notes that these signs seem ubiquitous these days, and that some of these digital assets are selling for millions of dollars, but are they really worth the price?
Some experts say that these signs are a bubble that could explode, as happened with the “internet bubble”, while others believe that they are here to stay, as well as that their investment will change forever.
Here’s everything you need to know about “non-replaceable tokens”
This sign is a digital asset that represents real things, such as art, music and videos, is bought and sold online, often using cryptocurrencies, and is usually indicated by the same underlying software, like many cryptocurrencies, according to Forbes .
Although they have been around since 2014, these tokens are now gaining in popularity as they become an increasingly popular way to buy and sell digital artwork. Its market value reached $ 15.7 billion in 2021 alone, while it is expected to reach $ 122 billion by 2028.
These codes are generally unique and have identification codes that distinguish them from others.
“Fundamentally, these signs are creating digital scarcity,” said Ari Yu, chairman of the Cascadia Blockchain Board of the Washington Technology Industry Association and managing director of Yellow Umbrella Ventures.
This is in stark contrast to most digital creations that are often unlimited in supply. Hypothetically, the supply reduction should increase the value of a particular asset if required.
But many of the “non-swinging characters” were digital creations that already existed in some form elsewhere, such as popular NBA video clips or closed versions of digital art that already exist on Instagram.
A compilation of 5,000 daily drawings was created by award-winning digital artist Mike Winkelman, better known as Pebble, to create the best-known “non-swinging code” of 2021 called EVERYDAYS: The First 5000 Days, for $ 69.3 million was sold at Christie’s.
Interestingly, anyone can view individual photos or even the entire collection for free online. So why would people want to spend millions on something that they can easily take screenshots or download from the net?
The answer is simple that the “non-replaceable code” allows the buyer to own the original item. And not only that, it has a built-in authentication that is like a certificate of ownership. Collectors value these “digital bragging rights” somewhat more than the item itself.
What is the difference between a “non-swingable token” and a “digital currency”?
“Non-swingable tokens” are generally generated with the same type of programming used to generate cryptocurrency, such as Bitcoin or Ethereum, but this is the only agreement.
Physical money and cryptocurrencies are ‘fungible’, meaning they can be traded or exchanged for each other. They are also equal in value, one dollar is always equal to another dollar, so is its brother Bitcoin, which makes cryptographic exchanges a reliable way to make transactions on the Blockchain.
But this is different from talking about “non-replaceable symbols”, because each symbol has a digital signature that makes it impossible to replace it with another symbol, and its value cannot be equal to another symbol, so it becomes “irreplaceable”, hence the origin of this term on the principle. An NBA Top Shot, for example, cannot equal EVERY DAY just because they are two non-swingable characters.
How do irreplaceable tokens work?
Where these tokens are located by default is the “Blockchain” which is a ledger in which transactions are recorded, and is the hypothetical field in which cryptocurrency transactions move. These tokens are usually held on the Ethereum blockchain, although other blockchain platforms also support it.
Characters are created or “pressed” from digital objects that represent tangible and intangible elements, including: graphic art, GIFs, video highlights, sports, collectibles, virtual avatars and video games, iconic sneakers, as well as music.
The weird thing is that even “tweets” on “Twitter” can be counted. Jack Dorsey, co-founder of Twitter, sold his first tweet as a “non-swinging sign” for more than $ 2.9 million.
In principle, these symbols are similar to the elements of a physical composition, except that they are only numerical. So, instead of getting an actual oil paint to hang on the wall, the buyer would rather get a digital file. It also gets exclusive property rights.
These tokens can only have one owner at a time, and their use of blockchain technology makes it easy to verify ownership and transfer tokens between owners. The constructor can also store specific information in token metadata. For example, artists can sign their artwork by including their signature in the file.
What’s the point of using “non-replaceable tokens”?
Blockchain technology and irreplaceable tokens offer artists and content creators a unique opportunity to earn their wares. For example, artists no longer have to rely on galleries or auction houses to sell their artwork. Alternatively, the artist can sell their product directly to the consumer as a “non-fungible token”, which also allows them to retain more profits.
In addition, artists can program their copyright so that they receive a percentage of sales when their artwork is sold to a new owner. This is an attractive feature because artists usually do not receive future income after their artwork is first sold.
However, art is not the only way to make money with these icons. Brands like Charmin and Taco Bell have auctioned off some of the work to raise money for charity. Charmin called its NFTP “non-replaceable toilet paper” offering, and the Taco Bell token sold out within minutes, with the highest bid coming in at 1.5 WETH encapsulated ether, equivalent to $ 3,723.83.
Nyan Cat, a 2011-era GIF of a pop-tart cat, sold for nearly $ 600,000 in February 2021. The NBA Top Shot generated more than $ 1 billion in sales as of May 2022. LeBron James highlighted one sign that sold for more than $ 200,000.
How to buy “non-redeemable tokens”
If you want to start collecting tokens, you will need to have some basic elements, that is to get a digital wallet that will allow you to store these tokens and cryptocurrencies. You will probably need to buy a few cryptocurrencies, such as Ether, depending on which currencies the non-swingable token provider accepts.
You can buy crypto with a credit card on platforms like Coinbase, Kraken, Netcoins and even Wealthsimple now through the Wealthsimple Crypto platform. You will then be able to transfer it from the wallet to the wallet of your choice.
You will also want to consider fees while exploring options, as most exchanges charge a percentage of your transaction when you buy cryptocurrencies.