What is an NFT?

NFTs, short for non-fungible tokens, is an irreplaceable token which is linked to a smart contract platform such as Ethereum. More simply put, NFTs make it possible to gain ownership over a digital item. For example, a (digital) work of art, a photograph, or an album by a musician. For example, the Amersfoort-based (a city located in the Netherlands) musician named POSTIE released his new album 'Loopstation leipo' through an NFT. Five albums have been issued and buyers not only get access to the 14 songs, but also all the accompanying videos, two previously unreleased tracks and a song which was made especially for the buyers of the NFT. Mick Jagger of the Rolling Stones also recently used an NFT to raise money for the music industry because of the lost revenue from corona. The smart contracts, which are used to create an NFT, are recorded with ETH (this is the currency) on the Ethereum blockchain. NFTs are currently wildly popular because this new technology allows value to be assigned to digital items. In addition, just like normal art, it can be very profitable to trade the right type of digital art.

Beeple's collage, Everydays: The First 5000 Days, sold at Christie's for $69 million. | Photo: Beeple

What key features does an NFT include?

• Indivisible: It is not possible to divide an NFT into multiple pieces. With bitcoin, for example, this is possible, as you can have 0.001 bitcoin in your wallet.
• Verifiable: The blockchain records who the original and current owner of the NFT is. This eliminates the need for third party confirmation!
• Indestructible: The data of the NFT is stored on the blockchain and the tokens cannot be deleted, destroyed or replicated.

Why do NFTs have value?

With the current technological evolution, it's no surprise that digital items are gaining more meaning in our lives. This is especially true when these items exist as NFTs. This is because the blockchain has a number of high-tech advantages: verifiable scarcity, unique identity and security during trading.

Digital pieces can benefit from characteristics people deem valuable through NFTs that were usually limited to the physical. Such as:

• Scarcity: Smart contracts can determine the maximum supply of an artwork.
• Utility: Rather than simply existing as images on the Internet, tokens can have an extensive range of efficacy, such as items that can also be used in games or apps.
• Demonstrable origin: Blockchain provides a publicly visible value chain.

Digital artist Trevor Jones takes inspiration from the style of Picasso.

The Bitcoin Bull sold for $55,555.55. | Photo: Trevor Jones

What advantages does digital have over physical?

• Convenience: The best feature of operating digitally is that you are not bothered by anyone. Online markets are open 24/7 and continuously available.
• Demand: The demand for digital artworks is skyrocketing due to emerging online platforms. This provides many new opportunities for artists to sell their works.
• Space: A great advantage of digital art is that you can store your entire collection in your pocket!
• Transparency: even if people try to copy an NFT, with a simple search in the blockchain they can find out who owns the artwork.

As you read, NFTs offer many opportunities. Especially for artists who are looking for a new way to offer their works.

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