What are Non-Fungible Tokens (NFTs)?

Non-Fungible Tokens (NFTs) are codes that prove the authenticity of digital art and can be traded for thousands of dollars.

NFT or non-fungible token (Non-Fungible Token) is a code associated with certain digital art, identifying it as original and exclusive art. The artwork can be an image, GIF, song, or other type of digital file.

The term has grown in popularity and has influenced several markets, such as visual arts and musical compositions. For artists, NFTs are a new way of guaranteeing the authorship and exclusivity of their work, as well as monetizing it and engaging the public. For investors, Token are digital assets that can be perceived over time and collectively. For the environment, it is another source of impact, with high energy costs and greenhouse gas emissions.

What are Non-Fungible Tokens (NFTs)?

A “token” is like an electronic key, a physical device that generates temporary passwords that allow individuals to conduct operations such as financial transactions more securely. In the context of NFTs, “token” refers to the digital art registration name. “Irreplaceable”, in turn, means that the commodity is unique and irreplaceable.

therefore, non-fungible token It acts as an encrypted seal and can be used to prove the authenticity of goods in a virtual environment. Some define an NFT as a contract on the blockchain that guarantees that a certain document is original and that a certain person is its official owner.

many people compare non-fungible token Collection cards, such as those on sports fields or cartoons. Once you have a card, you can collect, sell or trade it. It all depends on its rarity and the value that society at the time gave it.

At first glance, this is a somewhat abstract and complex concept, so we also need to understand its technical foundation: blockchain.

blockchain

NFTs are based on blockchain, the same technology that makes cryptocurrencies such as Bitcoin secure. Blockchain was described in 1991 as a way of verifying digital documents over time, preventing them from being altered at a later date, and making them immune to forgery. It was used in 2009 by Satoshi Nakamoto, who created the cryptocurrency called Bitcoin.

A blockchain is like an unconventional database that can be accessed from any computer. Each new information is stored in a new block, which is linked to other existing blocks. Therefore, a blockchain with data is formed, which is called a blockchain.

Data is stored in a linear and time-sequential fashion, always pointing to the end of the chain. Each block has a code called a hash, and also shows the hash of the block preceding it. A hash is created by a mathematical function that converts numeric information into a series of numbers and letters. So if any block is edited, the hash will change and other blocks will then become invalid.

It’s this hash change that makes the technology harder to steal — but not impossible enough that cryptocurrencies have already been stolen. For a hacker to change a block, he needs to change all the other blocks in turn, and he needs a computer more powerful than blockchain technology.

Most NFTs use names called Ethereuma platform in which the cryptocurrency (Ether) is equivalent to 11,944.04 BRL.

crypto art

According to Jason Bailey, creator of the blog Artnome, blockchain impacts the art market in four ways:

  • Drive digital art sales through scarcity;
  • democratizing investment in the arts;
  • reduce counterfeiting;
  • Create a more ethical way to pay artists.

you non-fungible token Also spawned a new universe: crypto art, rare digital artworks associated with unique NFTs.

This leads us to question what the real value of an image is in a digital environment, as we can reproduce it countless times, even through screenshots. NFTs are based on the idea of ​​digital scarcity, allowing you to buy and sell commodities as if they were physical objects. Non-fungible tokens put people as owners of digital assets. And this “property” cannot be copied because it is protected by blockchain technology.

In the physical world like artwork, it’s like having the original copy of the work or the artist’s signature. Everyone can have a copy or reproduction, but only one person has the original of the work.

Several marketplaces have emerged for people to sell NFTs, such as OpenSea, Rarible, Grimes, and DADA, which act as online art galleries that allow works to be commercialized.

song

NFTs have expanded to other types of commercialization, not just visual art works. For example, music artists are also starting to use non-fungible tokens in their songs, albums, releases and many other possibilities.

In Brazil, musician André Abujamra sold one of the first Brazilian music NFTs and is an ambassador for the Phonogram.me platform. It allows anyone to buy NFTs of sound recordings that will be provided by musicians.

When buying an NFT for a phonogram, that person starts getting a pass to earn income on top of the part he participated in. In other words, it’s an investment in music. If the sound recording is played on some online platform or broadcast, the person who owns the NFT will receive a portion of the proceeds.

age of memes

Non-fungible tokens are also used in memes.famous Meow catFor example, its gif was sold for 300 ETH, equivalent to nearly $450,000.

Other memes are trading for thousands of dollars, which makes Meow cat Create an event called “Memeconomy” which basically constitutes a meme auction.

In short, NFTs have spread among the myriad possibilities of the digital universe, and some markets have taken advantage of Token. These games have not been ruled out either, and are already rehearsing for the possibility of collectibles that can be valued over time.

CryptoKitties is an already quite successful and controversial game. In it, users can buy unique digital cats and breed them on the blockchain. One of the most expensive cats costs around $170,000.

you non-fungible token Bringing reflections on the true value of digital goods, after all, what makes us want to have something that can be easily replicated? Everything suggests that the value of NFTs is defined by the collective perception of their authenticity. It’s the logic of scarcity and the need to have something real and unique.

While the benefits for the artist are pointed out, new risks also arise: someone could create an NFT for a work before the artist, or even impersonate him.Not only that, but there are serious environmental impacts non-fungible token.

NFTs negatively impact the environment

NFTs consume a lot of power.Major markets – such as Nifty Gateway and Superare – use cryptocurrencies Ethereum It maintains a secure record of transactions through a process called mining, similar to the system used to verify Bitcoin. This involves computer networks and a lot of energy.

Several artists have brought the debate to the fore. Architect Precht created three digital artworks with the intention of selling them using blockchain technology, but gave up when he figured out how much electricity it would consume and found it would be equivalent to 20 years of energy use.

An article published in Quartz highlighted the carbon footprint, showing that over its lifetime, an NFT can accumulate a CO2 footprint of 211 kilograms, equivalent to driving a powered American car about 825 kilometers.

At an event promoted by filmmaker and singer Valérie Lemercier, six of them non-fungible tokenconsuming 8.7 MWh of energy, equivalent to two years of energy use in his studio.

A friend of Lemercier helped her research the impact of NFTs, creating Cryptowart.WTF, which selects a piece of crypto art and provides rough estimates of energy usage and associated emissions.

While accusing artists to some extent has received a lot of criticism, the platform has fueled the debate over the impact of NFTs.As a result, many artists are increasingly seeking and encouraging an environmentally friendly way of negotiating and selling non-fungible tokenand even a guide describing and recommending processes and platforms to reduce the unsustainability of NFTs.

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