Non-fungible tokens (NFTs) are rapidly taking over the digital marketplace as artists, musicians, and other creators strive to authenticate their virtual works.
Media outlets and digital entrepreneurs like Gary Cork Kids Bicycle Shop Vaynerchuk rave about NFTs becoming the “next big thing” in terms of tracking ownership of digital assets.
In this blog, Signature W Studio explores what exactly NFTs are and how marketing agencies can use them to better track virtual assets on the blockchain.
What Is an NFT & How Do They Work?
Economically speaking, a fungible asset is a unit that can be interchanged, such as money. For instance, if you have a $20 bill, you could exchange it for two $10 bills and be no poorer for the transaction. By contrast, a non-fungible asset is one that is so unique that it can’t be exchanged for something else.
Such examples might include Andy Warhol’s Campbell’s Soup Cans or Vincent Van Gogh’s Starry Night: These artworks might be duplicated or sold as prints, but there is only one original.
In this way, an NFT is thought of as the “original” version of a digital asset. Possession of an NFT acts as a certificate of ownership, which is logged on the blockchain.
The blockchain ledger is impossible to forge because it is maintained by thousands of computers worldwide. NFTs can even contain smart contracts that allow artists to receive royalties for future sales of the token.
Why Are NFTs So Popular?
Headlines touting first-ever Tweets being “tokenized” and sold for $2.5 million have many scratching their heads over this sudden surge in popularity. But NFTs have offered a unique opportunity for artists to prove true digital ownership of their work.