The start of 2021 was marked by unprecedented interest in non-fungible token technology, or NFT, in various fields, which peaked in March. Nowadays, information about artistic agreements with NFTs appears every day. What’s more interesting is that NFTs are becoming all the rage among people who were previously unaware of crypto.
Examples of how the NFT mania reached its peak can be seen through Beeple selling his artwork for nearly $ 70 million and the Hermitage Museum in St. Petersburg, Russia, announcing that ‘it will hold an NFT art exhibition in 2021.
What is the reason for such interest in NFTs, besides the hype generated by celebrities supporting the tech? Can an ordinary crypto enthusiast really engage with NFTs in a user-friendly way?
So why are NTF platforms growing so quickly, and what exactly are they? Here’s why NTF platforms are becoming crucial in attracting the arts community, how these platforms actually work, and what they can offer their users besides just being a type of market.
The whole point is in the NTF itself, in its uniqueness. It cannot be replaced, rigged or split. The originator of the token can prove their ownership or that a transfer of said ownership has taken place. In other words, the owner of such a product can tokenize it by publishing an NFT, assigning a price to it and putting it up for auction. The buyer of these tokens is given the right to own and dispose of the goods, while information about it is recorded on the blockchain.
Trading with tokens is obviously cheaper, easier, and faster than trading with real items, although NFT’s build and sell platforms are just starting to develop. However, NFTs are not fully covered by law and it can be difficult to prove ownership in terms of intellectual property rights. Yes, unfortunately not everyone accepts that blockchain is a legal method of record keeping.
What are the rights of the buyer who spends their hard earned money on the author’s token? If there is no legal agreement between the creator and the buyer of the NFT, the exclusive rights are not simply transferred to the buyer when purchasing the token.
Other rules can be established by the platform, but today the standard terms of the biggest platforms do not contain such rules. It is likely that the platforms will give the creators of NFT the right to choose the license terms themselves.
Of course, no financial instrument can survive for long without state regulation. Here, NTFs are likely to go the route of conventional cryptocurrencies, and some believe lawmakers will step in eventually.
The first is security, the second is NFT
NTF platforms offer content in a variety of formats, so that everyone can choose which artistic sphere they want to enter. But before entering the industry, it is worth understanding how they work and if they are safe, with regard to potential risks.
For example, an NFT exists on the Ethereum blockchain. After choosing the NFT platform, the user will need to create an Ethereum wallet, from which unique tokens will be bought and sold. Wallets help authorize users on platforms, in most cases without entering additional data such as a username or password, as the wallet identifies the user using their wallet address. Some platforms require users to purchase a native token and then purchase the artwork.
The principle of operation of any NTF platform is simple: users come to the platform in order to secure the right to the content created or purchased, and as a confirmation they are given a token, which can be freely exchanged with another user. From a security perspective, the NTF itself already acts as a collateral, as the blockchain contains information about the owner, whether creator or buyer.
But that doesn’t mean that by purchasing an NFT, users can relax, as they are not immune to theft on NFT platforms. For example, in March, the Nifty Gateway trading platform reported that some users have experienced account hijacking, theft and purchasing NFT using a credit card without their knowledge. However, it turned out that neither of the accounts had enabled two-factor user authentication.
This is not about poor security of the NTF platforms, but rather a lack of knowledge on the part of the users. All valuables should be stored securely and NFT tokens are no exception. It’s not enough to just buy a token and store it on the platform – users need to protect their account and enable two-factor authentication, keep their passwords in a safe place and, in fact, most platforms offer such opportunities. Every owner of a valuable NTF should understand their responsibility and protect their item.
An ordinary person will usually buy NFTs on special platforms – marketplaces, where tokens can be bought or sold. One of the biggest and most popular markets is OpenSea. This site contains thousands of different NFTs, from playing cards to paintings by contemporary artists. The platform also maintains their ratings and tracks the most popular tokens.
Another market is SuperRare, where digital art can be bought and sold but cannot be traded directly between users. On this platform, artists validate their work by creating a tokenized certificate. They set a selling price and allow potential buyers to bid on their parts. The investment aspect of SuperRare is its secondary market. Anyone can resell a purchased artwork as if it were part of a regular auction.
In sports, the most interesting platform to date is NBA Top Shot. The concept of the project is to publish and sell digital basketball trading cards. However, instead of static images of players, NBA Top Shot cards contain video clips from previous games. Each token is truly a unique item.
But is there anything other than the markets? Is the NFT industry limited to such projects with a buy and sell concept? Of course not. Today, interesting projects are emerging, representing a variety of financial opportunities.
Some platforms mainly focus on making NFT shopping easier, where a user can purchase an item they like with a regular credit card. For example, Crypto.com’s NFT project does this by attracting as much unique content as possible, not only in the gaming arena, but also popular artists, musicians and athletes – multi-faceted. It will be possible to buy valuables on the platform using cryptocurrencies.
The Rarible platform has become very popular, as it allows artists to collect royalties whenever their work is resold. Rarible has introduced a governance token called RARI and is taking steps to develop into a decentralized autonomous organization. RARI token holders, which include NFT creators and collectors, can vote on platform updates and participate in market moderation.
The developers of the project are also planning to launch an NFT index – a special search engine for those who want to invest in the NFT market but don’t know which works of art to choose.
For those who love creative design, there is a project called Art Block. It is one of the first platforms focused on the automatic generation of programmable content stored on the Ethereum blockchain. The uniqueness of the platform lies in the creation of an endless amount of content that can be bought and sold as NTF.
Platform users can choose whatever art style they want and pay for the labor, and the platform will randomly generate a piece of content in the form of an image, 3D model, or interactive design.
In general, it seems that crypto enthusiasts need a lot more than just markets to buy or sell NTFs. This is where multiplatforms come in, allowing its different user groups to both create unique content and invest in art. NFT platforms are no longer just a place to tokenize digital art and various collectibles, they are also a mechanism for attracting users.
“Tehn,” a community manager at Blockchain Cuties Universe – a game that runs on four blockchains at once and stores game inventory in the form of NTF – believes that NTF platforms can potentially offer a much more approach. interesting than simple markets:
“I think the vast majority will be at the start of the markets. But there are more uses for NFTs. Games are already using them to store value in game assets and give players full control of their inventory and even monetize their playtime. That’s the beauty. Blockchain allows developers to create great assets and allow players to play their game, while having full control of their account. “