Most certainly everyone has heard about NFTs at this point. They became some sort of global phenomenon at the start of the new decade, with a lot of different digital media investors, creators, and enthusiasts keying into the topic with the aim of benefitting squarely from it in any way possible. They have been a source of wealth creation for all the parties mentioned above and seem to be moving in an even higher gear in this new year.
But as much as NFTs are popular in the internet space, along with the already in town cryptocurrency, a lot of people still do not understand what they are all about, and why there is so much fuss about them. Musicians and digital creators alike have seen some of their counterparts make millions of dollars from it in recent times and are thus willing to understand this technology that seems to be a breeding front for extra creative income.
The mechanism behind NFT is a fairly very simple idea: a unit of data or a unique non-duplicatable code exists and gives buyers an opportunity to own a specific digital asset verifiable through the blockchain and buyable through several cryptocurrency platforms with terms outlined in a “smart contract”. In simpler terms, an NFT is a digital asset that represents actual objects like art, music, in-game items, and videos. They are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos.
NFT means Non Fungible Tokens. They are a one-of-a-kind crypto token that cannot be replaced or replicated and cannot be traded for another identical object. Because each token is uniquely identifiable, NFTs differ from blockchain cryptocurrencies, such as Bitcoin. A digital item with multiple limited copies can be created and sold to different owners, whose ownership can be verified by the unique encoding of the version of that digital asset the owner possess.
Assume for instance that you want to buy Merchandise from your favorite artist. A copy of that merchandise that has the artist’s autograph is most definitely more valuable than the other versions available without an autograph. So if a limited autographed edition goes on sale, those few people who get to own that merchandise will have a unique sense of ownership in comparison with other ordinary merchandise owners. This is essentially what happens in the digital space with NFTs. A piece of art or digital asset is sold to buyers who get to own that limited copy and have a verifiable means for identification of their ownership.
Although they’ve been around since 2014, NFTs are gaining notoriety now because they are becoming an increasingly popular way to buy and sell digital artwork. According to Forbes, NFT sales volume totaled $25 billion in 2021, compared to just $95 million in 2020. The first known "NFT", Quantum, was created by Kevin McCoy and Anil Dash in May 2014, consisting of a video clip made by McCoy's wife, Jennifer. McCoy registered the video on the Namecoin blockchain and sold it to Dash for $4, during a live presentation for the Seven on Seven Conference at the New Museum in New York City. This is really a long distance away from the current trends of NFTs in the cryptocurrency space.
When an NFT is sold and the transaction is verified on the blockchain, the new owner has digital evidence of the purchase. This purchase and proof do not mean that he owns the copyright of that asset. He only has ownership of an NFT version of it, which is verified and can later be sold by him. The blockchain verifies the transaction, which acts as a digital receipt that validates the ownership of the NFT, but the original creator of the NFT is permanent.
In the case of traditional artwork or the sale of other content, artists or creators only receive payment at the moment they sell the object. With NFT this is different, as every time an NFT is resold, the original creator of the NFT receives a royalty payment, which is a portion of the profit. Potentially more could be earned from royalties than the initial sale of the NFT.
This brings to mind the possibilities of NFTs in the music space. Music NFTs are music tracks recorded on a blockchain in the form of unique non-fungible tokens that belong exclusively to the owner of the NFT. However, unlike MP3s you download onto your smartphone, music NFTs can also be sold on and allow musicians to earn royalties for every secondary market sale.
This projects a lot of benefits to musicians in the real sense when the thought of the modern-day music industry compensations in mind. For one, artists can sell copies of any form of digital items, including cover arts, merchandise, event tickets, visuals, exclusive notes, lyrics, and so on as they wish, alongside their music directly to their fans without the need for digital aggregators and middleman distribution chains. In essence, musicians generally have an opportunity to be fairly compensated for their content, and as well not relinquish ownership of their rights.
NFTs also have the capability to create collaborations between musicians and creatives from other digital industries. Imagine a music artist and a visual artist working together to release an NFT project together, creating different forms in which both pieces of art can be appreciated as a collective. The idea of upgradable NFTs also creates room for remixes and collaborations to be easily done in this new age without the cumbersome intermediaries and legal obstacles that are usually involved in the creation of such recordings.
The advent of NFTs also allows a chance for artists to be able to build an active fanbase. This can easily be carried out by creating a space where fans can access unique NFTs to their favorite artist’s works, and also capitalizing on the opportunities to give their fans a unique engagement experience. And since NFTs have a low barrier to entry, new musicians can easily get into the space without having to go through so much hassle. NFTs are generally valuable with a sense of scarcity around the digital items being created. This ultimately enables musicians to capitalize on appeals to scarcity in different amazing ways and create ways for fans to develop more profound connections with their favorite musicians.
NFTs are sold in places called marketplaces such Opensea, Eulerbeats, Rarible, etc. They are made and listed in these marketplaces via a process known as minting and stored in a cryptocurrency wallet capable of holding NFTs. NFTs are minted and sold with cryptos like Etherium, so minting one requires you to buy crypto into your wallet.
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