NFT: what are these digital assets and what are they for?

The new asset attracts investors to the NFTs, who obtain a unique asset that is stored as digital certificates of ownership on a blockchain network.

Nft 1
NFT buyers obtain a unique good that is stored as digital certificates of ownership. Photo: Composition LR

The NFTs are called non-fungible tokens. In other words, they are digital assets that differ from their peers because they use blockchain technology, the same as cryptocurrencies. This can be understood as an account book with copies distributed by a large number of computers. On each page, operations that depend on results obtained in previous procedures are recorded.

In this way, it is almost unfeasible to alter the records, since a modification in a note of a page, supposed to change all the following ones. For that to happen successfully, it should be done on all copies of that book that are spread across countless computers. In addition, the use of cryptography means that it is not possible to know who the author of the transaction is or where it is from, thus guaranteeing the privacy of users.

As the Xataka portal indicates, digital assets have existed since the beginning of the history of the internet. This is not a novelty and the most common example to understand it is when someone buys the domain of a web page. There is a market in which for several years these have been traded for huge amounts. That is why the novelty of the NFT is its technological base, but it is not as peculiar as it seems. It is a code that makes a product have a monetary value because that specific asset becomes unique.

That something digital is unique is paradoxical, since everything can be copied. With a similar example, an art painting can be copied and photographed. However, according to El País, the image itself has a monetary value that others do not. And at the end of the day, the value of the said object is determined by appraisers who are the ones who decide that this painting is authentic. Similarly, blockchain technology gives an NFT a value that makes it unique.

The use of blockchain technology allows NFTs, be it a GIF file, a post on social networks, an image, to have unique properties and its original is not replicable.

NFTs are a digital revolution. Artists, companies, influencers, and any figure that has some kind of digital right can exploit this figure through digital property certificates.

It should be noted that NFTs are traded and prices are constantly rising.

The dangers of not regulating it

The essence of blockchain technology and the assets that circulate in it is decentralization. However, it is a scenario that presents difficulties. There are various cases of scams and thefts carried out by hackers. Also, constant technical disruptions, impending price changes, and myriad NFTs do not guarantee that tokens can be translated into cash.

In conventional stock markets and with a regulatory structure, this scenario would be understood as wash trading. It is prohibited because trading with oneself can be a way to inflate prices and simulate that there is a greater demand than is actually handled.

That is why it is necessary to be cautious when choosing NFT if we decide to invest. It is highly likely that some are worth little, as has happened with many cryptocurrencies that have been forgotten.

NFTs are still a volatile market for the amount of money circulating. However, the hunger for these is latent and some earn considerable amounts with them.

Famous NFT Sales Cases

On November 18, Willyrex, the Spanish YouTuber launched his NFTs and he himself confirmed through his Twitter account that they were sold out in a matter of a few seconds. The logos and images marketed by the streamer are considered limited edition.

Similarly, on March 11, Beeple auctioned one of his works for $ 69 million. With this, the digital image was delivered through a virtual certificate that validates its ownership: an NFT.

Likewise, investor Pablo Rodríguez-Fraile bought a 10-second video, an NFT art piece, for $ 60,000 and resold it for $ 6.6 million. Another similar case was seen with Elon Musk, who shared a meme that captured his interest on the networks. Within hours, the creator sold it as an NFT at a price of $ 20,000.

The Cryptopunks are designed by Larva Labs and are one of the first collections that were presented NFT. These are bit drawings of a modern zombie and a monkey with a hat. The most important CryptoPunk (seen in the cover photo) is an alien with a mask, hat, and earring. It sold at an auction house for almost $ 12 million. The Alien collection is the most exclusive because there are only nine for sale.

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Written by Christina d'souza

Proofreader, editor, journalist. I have been doing my favourite thing for more than six years.

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