Since the beginning of this year, news outlets all over the world have reported on the meteoric rise of the cryptocurrency market. Cryptocurrency trading used to be a wild ride, with many people making and losing money. However, a slew of bizarre and innovative developments has been made possible as a result of the rise of Bitcoin and Ethereum.
NFT, a blockchain-based technology, is one such innovation (Non-Fungible-Token). Coinciding with cryptocurrency is the fact that it relies on blockchain technology to keep track of transactions. In the current digital art market, NFTs are being used extensively to trade everything from a picture of the CEO of Twitter’s first tweet to a video of the most recent NBA dunks. Digital artworks like these sells for millions of dollars, and they’re not the only ones.
There is a lot of confusion about the difference between NFTs and cryptocurrency. So today, we’ll explain the difference between these two terms, and then we’ll tell you about the upcoming trends in the NFT market.
What exactly are NFTs and Blockchains?
Non-fungible tokens are used to verify who is the rightful owner or author of a certain work of digital art. Blockchain technology is used to accomplish this. It’s possible to use the internet as a decentralized ledger to record transactions on a network of computers that are all linked together.
Suppose you have 10 computers maintaining the ledger, and now, if you make a transaction, such as to sell a digital art piece to a buyer, then that transaction and its details will be recorded on this ledger. As soon as an entry has been made, it cannot be changed or deleted until the transaction has been fully processed.
Do you have any questions about the purpose of this? Is it really for naught that data is being stored on multiple computers? Yes, but it’s not quite like that. Because each NFT has a unique code, digital creators can post or publish their work online without fear of piracy or theft. Blockchain servers receive a hash code generated by a mathematical algorithm that is unique to each of them.
Because their NFT doesn’t have its own unique hash code, anyone who tries to sell a copy of the valuable NFT and claim it to be their own will be flagged as an illegal counterfeiter. So, when an NFT is authenticated, the blockchain servers will show that it is not authentic and belongs to another person.
What is the difference between NFTs and cryptocurrencies?
As a decentralized medium of exchange, cryptocurrency records the value of each unit, as well as the identity of the owner, on a public ledger known as the blockchain. Cryptocurrencies such as Bitcoin are interchangeable, whereas NFTs are not. This is the main difference between the two. You can, for example, trade a Bitcoin for Ethereum tokens that are equal in value. In contrast, because each NFT has a distinct dollar value, it is impossible to trade them. It’s possible that some are worth millions of dollars, while others are only worth a few dollars.
NFTs differ from cryptocurrency in that they can be used to monetize art by including additional requirements or values. Let’s say you’ve created a piece of digital art for an NFT. A cryptocurrency’s ability to store information on the blockchain ledger has been superseded by NFT’s. There are details like the original creator’s name, the date the item was created, and even the names of previous buyers who still own it. When an NFT is sold or resold, the original inventor gets a cut of each sale, even though more complicated conditions and terms can be imposed.
A decentralized ledger, like the one used in blockchains, is needed to keep track of intellectual property on the internet, which is a huge problem for digital creators.
NFT market trends to watch in the near future
NFT Market value grew by almost $40 billion in 2021, according to Bloomberg Business. As blockchain technology improves and the world begins to accept NFTs as the new fine art market, we expect it to grow even more. In the following paragraphs, we’ll discuss some of the new developments in the NFT market in 2022.
Branding for a community
Since communities already have their own brands, we don’t mean that everyone will start doing the same thing when we say “community branding.” When a company uses the term “community branding,” it means that the people who use the brand are not in charge of it. This will allow designers and brands to incorporate a piece of their own creative creativity. For example, they will come up with concepts that have never been considered by the original company.
“Bored Ape Yacht Club,” for example, features 10,000 distinct Ape NFTs made by the people, for the people. Until 2021, this brand was completely unknown, but it has since signed deals with major brands like Adidas. All because members of the Bored Ape Yacht Club’s community came up with innovative and original designs.
Web 3.0 and NFTs
As one of the first examples of Web 3.0, Metaverse is an excellent example. Through the use of VR and AR in this web version, we may fully immerse ourselves in a virtual world of unlimited possibilities. In a digital world where you may interact with the environment and the environment interacts with you, there can be a few issues.
In a digital world like the Metaverse, the issue of ownership can arise. Virtual real estate is already being used to advertise corporations around the world. But how exactly does a computer know who owns which digital asset in a collection of possibly trillions and billions? Using the same NFTs that we’ve already discussed, we’ll go through this topic again.
A virtual reality world can maintain a record of sales and purchases made across the Metaverse using blockchain technology without the need for any human intervention. Even if new or additional transactions are made, the blockchain technology will be safe and secure because there will be no human or manual major data entries.
NFTs and music
Artists working in the music industry stand to gain a lot from NFTs’ entry into the intellectual property sector. Considering that NFTs allow you to leave your imprint on your work permanently, music creators will reap the benefits of NFTs’ anti-piracy impact. As a result, musicians will be compensated fairly for every time their work is heard. Music fans will also be able to purchase limited-edition tracks from their favorites without having to worry about the exclusivity of the soundtracks they purchase through NFTs in Music.
If so, have you ever regretted your purchase five minutes later? Maybe it was a mod for a weapon or a skin for your avatar that just didn’t look as nice during gameplay? This is one of the things that NFTs can fix, and that’s barely scratching the surface.
Major game creators like Ubisoft have already invested in blockchain technology that allows their gamers to purchase and unlock items with intrinsic value. Allowing you to even sell these items in a secondary market to earn back some of the money you’ve spent on the game. Furthermore, creating several opportunities for people who want to earn money from playing games. Letting them sell their accrued virtual assets online once they’ve been unlocked and assigned an NFT will grant them this opportunity.
With the advancement of interactive characters, such as Apple’s Animoji, we can rest assured that the entire digital world will begin creating virtual characters for its users. And one way these can be made unique for premium artists is by creating personalized NFTs that display while performing. These NFTs can be anything from a simple image video animation to even alive and interactive characters. This will have implications on how much money is invested in the Music NFT market and could impact several other things that are yet to be discovered.