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NFT Basics

Why are Non-Fungible Tokens Important?

Where there is a trust issue in knowing the provenance and authenticity of a digital asset, NFTs can be used to solve the problem.

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We live in a digital age where any media can be duplicated endlessly. But some digital content such as diplomas, works of art or concert tickets can also be falsified. Where there is a trust issue in knowing the provenance and authenticity of a digital asset, NFTs can be used to solve the problem. Here are some of the reasons why non-fungible tokens are important.

NFTs as Verification of Authenticity 

A common mistake is to think NFTs are acting as a copyright. This isn’t the case, if an image is under copyright and is minted as an NFT by someone else, this is an infringement and the NFT can be delisted from the marketplace where it was minted.  NFTs don’t replace rights surrounding an artwork but allow to identify the NFT creator and the current owner very easily thanks to blockchain

The verification of authenticity is a sensitive issue when it comes to non-fungible goods such as paintings, collectibles, and the like.. It is difficult to verify authenticity without counting on experts. 

In the case of digital art, for example, it is easy to create copies and claim the work as one’s own. There is no way to verify that a digital image is original. This is where NFTs are important. NFTs are used to attest the authenticity and rarity of an artwork. 

NFTs originate as smart contracts to store and record unique information on the blockchain, which means that each time an NFT is created, only one of it exists. In other words, its authentication is validated thanks to the blockchain which gives it its first value by itself.

Thus, NFTs allow you to certify that a digital asset is authentic. For example, you can easily find out when an asset was created and then sold. You can then view the history of previous owners. This way, NFTs mitigate problems such as fraud and plagiarism.

NFTs as a New Revenue Source for Artists

Artists and creators can now craft their work as digitally native NFTs and directly receive revenues from their fans with less friction. Auction houses typically charge commissions of up to 20-30%. Thanks to NFTs, artists do not need intermediaries like auction houses, art galleries, and agents to market and sell their work. They only have to upload their NFTs artworks on blockchain art marketplaces.

Artists can now earn their fair share based on what collectors are willing to pay. In addition, they no longer pay the price for distribution and publishing.

NFTs have also given artists something else: the ability to sell fractions of an NFT. Platforms like Fractional.art allow you to “cut” a work into thousands of NFTs so that more people can access the possession of a well-known work of art. Not only does what was previously accessible to an elite become open to all, but it also makes the estimation of the price of the work in a community way.

NFTs have opened up the digital art sector because of their ability to protect property rights. They facilitate traceability of origin, which plays a significant role in determining the value of art.

Cross-Project Compatibility (Interoperability)

Imagine a world where all NFTs, whether from a video game or a marketplace, are accessible in one place. This world is called a metaverse, a virtual environment where you can walk around and socialize with your friends, go to concerts, meet colleagues in a shared office, or visit shops.

NFTs are the cornerstone of these virtual realities deployed on the blockchain. Due to their unique attributes, NFTs quantify what was previously unquantifiable. 

Just as blockchain interoperability allows users to easily exchange tokens and assets from different blockchains in a matter of moments, it will soon be possible to have interoperability between non-fungible tokens (NFT). For example, if your avatar is an NFT and holds some NFT equipment in a video game, this same avatar could be used in several games while keeping and using this same equipment. 

If tomorrow the administrative services of the whole world were accessible from a single shared virtual world, it would be necessary to have one compatibility standard so that a ‘Metaverse identity card’ would be recognizable by all.

However, a major problem remains to be solved: decompartmentalizing the many autonomous worlds and enabling their complete interoperability.

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