NFTs or non-fungible tokens are unique digital products and assets that are minted and has verifiable ownership. Living on the blockchain, these metadata cannot be erased, and these assets cannot be copied or have counterfeits.
NFT collectibles may include limited edition digital artwork, photographs, memes, tickets, virtual real estate and paraphernalia, video clips, and the like. Since NFTs penetrated the mainstream market last year, many types of people have flocked to the NFT collectibles and art industry.
No longer just a place for those in the underground, entities from the corporate, entertainment and tech world—even charitable organizations—have enthusiastically entered and dabbled in NFTs, hoping to strike while the iron is hot.
Benefits and Risks of NFTs
For sellers, NFTs create a new avenue for creators to earn, and for some, even get rich. Traditional galleries and middlemen are not required to sell NFTs, so both the young and the old may experiment in this new crypto market.
Artists and producers of NFTs, whether they are famous or not, may sell or place their authenticated work in auction or online marketplaces and offer it for a certain price directly to interested collectors, investors and ready supporters. A percentage will also be paid to original creators upon reselling—if they can be resold as each NFT is governed by smart contract rules, which can be personalized depending on the wishes of the creator.
For buyers, the proof and transfer of ownership are crystal clear, as NFTs are digitally processed and securely recorded through minting, which serves as provenance. The NFT process and transactions are transparent and unchangeable, and there is a smart contract for each sale.
Those who acquire NFT collectibles may buy them for investment or mere enjoyment, and there are real-world perks included in these assets. But they may also trade and make big profits by reselling NFTs.
Not that anyone can immediately earn from this, but most, if not all, investments carry this risk. And the NFT market, though growing, can oscillate. Another issue with NFTs is that as everything is done digitally, there are still fears in terms of security that digital assets may still be stolen, like physical art. There are also sites that scam and phishers that target creators and buyers.
The same way people fought and out-bid each other over physical art, today, they are also competing to purchase NFT collectibles. This is not surprising, for NFT transactions have reached billions in sales, reaching a total of 25 billion in 2021 alone. And while it may slow down at times, it is still skyrocketing.
For instance, graphic designer Mike Winkelman, also known as Beeple, sold his NFT for $69 million at Christie’s, while Noora Health sold “Save Thousands of Lives” for $4.5 million, the proceeds used to help improve and save lives in South Asia. To celebrate the success of his song “Blinding Lights” Canadian musician The Weekend also released a seven-piece animated collection and autographed trading cards, which were auctioned for $2 million in December last year.
These show that even though assets are in digital form, there is still value in them. Obviously, buying and selling NFTs have its pros and cons, and some may say it is a passing fad. But as time has proven so far, it can be profitable not only to its creators, collectors and fans, but also benefits charities and other recipients of the proceeds who are in need of assistance, which are good things indeed.