What is an NFT? The digital asset that is transforming the collecting of the virtual world.

Non-fungible tokens or NFT's by their acronym in English (non-fungible tokens) they are probably one of the cryptoassets that are creating the most controversy in the digital world. A controversy generated by their subjective value, the millions of dollars they move in their transactions and the speculation surrounding them. In this article, we will talk to you about this new cryptoasset, how they work and its main examples.

NFT's are a digital asset that promises to be the 2.0 art of today's world.

As we mentioned at the beginning of this article, the acronym NFT stands for non-fungible token, which means that it is a cryptoasset (mostly intangible) which is unique and exclusive worldwide. In other words, it is a digital asset that cannot be modified, divided or copied.

To get a clearer idea of the sector NFT is usually related to art as we know it. Let's give a clear example, Leonardo da Vinci's Mona Lisa is unique in the whole world and is located in the Louvre Museum in Paris, so if someone wanted to own the famous painting of La Gioconda they would have to buy the canvas (if it were for sale) or buy a copy, it would be precisely in this second example in which the “asset” would lose total value as it was a copy.

In this regard, an NFT is identical to the example of La Mona Lisa, since it is a unique asset owned by a person, although it can be copied, it will never be the original because its owner has a contract that certifies him as the sole owner of the asset.

Mark Cuban: “Anything driven by documentation could potentially be transformed by non-fungible tokens, or NFTs.”

How do these cryptoassets work?

Nowadays, thanks to the blockchain Practically everything we know can be done Tokenize, since Tokenization of real estate, company tokenization and even video tokenization. This occurs mainly thanks to smart contracts, or in Spanish smart contracts, since they provide the owner of the asset with a series of metadata that indicates their right of possession, the initial and current price of the asset, as well as all the transactions that have been made with the asset in question.

The smart contracts on which these are based cryptoassets They are the standards of the Ethereum network ERC-721 or the most up-to-date ERC-1155.

In this sense, NFT's have great potential for entertainers because not only would they receive the capital of the initial value of the work, but you could also receive commissions for each of the transactions made.

And you may be wondering: Where do you buy these NFT's? Well, you can find them in marketplaces dedicated exclusively to this digital asset or in official stores such as the NBA.

Main characteristics of NFT's

Beyond your exclusivity and the fact that they are unique, these cryptoassets are also related to security. This security is provided thanks to the blockchain, so that since the information is in the different nodes of the blockchain, the information about the possession of the asset is unshakable, making it an attractive aspect for investors.

At the beginning of the article, we mentioned that one of the most controversial aspects about these digital assets is their worth, well as in art this is subjective. This means that if a series of users are willing to pay €3000 for a specific avatar, that avatar is worth €3000. With this scenario, NFTs are positioning themselves as an asset to speculate on or where. Safeguard value. Always thinking about its future revaluation thanks to its characteristics of authenticity, and easily verifiable uniqueness in the blockchain. This digital goods market has moved so far billions of euros, simply with digital assets without any connection to the physical world.

As was the case with the Bitcoin At the beginning of its popularization, the large amounts of money moved by the market of NFT's The “experts” of the traditional sector are beginning to worry, who are describing this new trend as a speculative bubble that will explode, as some of the same nature have done in the past. Obviously, there are opinions of all kinds. What is certain is that if it provides value it will continue to grow without obviously ignoring the volatility of this type of investment. Each one you value according to your investor profile.

Examples

Obviously, we can't talk about NFT's without mentioning CryptoKitties, which were part of what is known as the first cryptoasset project, the one that gave rise to the scenario in which we currently find ourselves. In the beginning, these “cryptocats” had a utility, that is, they could be used within the game created around these characters, for which amounts have been paid that exceeded 100,000€.

Another of the projects that boomed the most in this market is that of CryptoPunks, in this sense, the main difference they had with the above-mentioned CryptoKitties was that they did not have a utility as such, they were simply avatars. This project took users a little closer to the current market, as the exclusivity of avatars stood out, which was valued or measured according to the accessories that the avatar had, whether they were earrings, hats or sunglasses, there were a few of the same depending on their rarity, which multiplied their value.

If we were to mention a project that marks a before and after in the cryptocurrency market, it is the sale of Everydays: The First 5000 Days, a work by Mike Winkelmann, better known in the market as Beeple. This artist sold a collage of digital images chronologically from the last 5000 days. This work represents a change in the industry since it was sold by an auction house, which gave it a certain trust and seriousness, and was sold for the amount of 69.3 million dollars.

There are currently numerous projects dedicated to this market, from avatars on Twitter profiles, objects in video games or digital works by different artists. As we mentioned at the beginning of the article, even the NBA has its own NFT market, in this case it sells highlights of the best plays of certain players or teams, so a person can own a video of Lebron James or Michael Jordan's best play.

In conclusion, we would mention that despite the opinions of the experts, it is still a very young market and can pivot in many different directions, so we will see what the future of this sector holds, the different applications it can give it or how it will affect other markets, including physical art.

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