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How NFTs and Tokenisation will disrupt tomorrow's economies?

The evolution of civilization and the creativity of human beings often go hand in hand and as humans have evolved, so has music, art and architecture. Today however creativity has entered the digital age and many expressions of art are now being digitised.

Besides being a new way for creators to express themselves, digitisation technology is crucial to protect creative rights and property. Nowadays when people hear the term digital art for many of them the first term that comes to mind is NFT.

However interestingly art only accounts for a quarter of NFT sales. NFT which stands for Non Fungible Token is a lot more than just digital art. To describe NFT in a nutshell it is a unique digital asset that has a certificate of authenticity and ownership which is created via blockchain technology. The term asset in this case can apply to art, music, tweets, video clips and even real estate.

NFT is actually a contract on the Blockchain network, which is also smart and secure.

Economies based on Distributed Ledger technologies are expected to be adopted by all major investment players in a few years and tokens such as NFTs will be the lifeblood of this system. The most exciting part of a token economy accordingly to experts is that everyone with an Internet connection can interact and contribute in a meaningful way for example instead of paying brokers to invest on your behalf investors can invest directly even in previously out of reach spheres like real estate. Artists don’t have to lose out on half their earnings to streaming sites but instead can be paid directly.

The advantages of NFTs are many but the reason it is truly one of the great economic disrupters is because it has totally changed the global perception of digital copyrights and ownership and has allowed creative people everywhere to get their due financially and also by introducing scarcity in the online world where replication has also been the bane of many creators existence. The ownership pattern of NFTs is most unique, where only the owner can transfer and no one else.

So as you can see from the numerous advantages of NFTs they have the potential to be true disruptors in future economies. But what does that all finally add upto? According to a PwC report blockchain technology has the potential to add $1.76 trillion to the global economy by 2030, and it increasingly seems like NFTs will comprise a significant share of that.

 

But with all the advantages and the arithmetic on its side what are the challenges that lie ahead and how can they be overcome?

The absence of regulations is the biggest challenge in the NFT system. In the current situation, the government of a country has no control over digital currency and NFTs due to which this system becomes a speculative market. This is why caution must be exercised by all individuals trading in cryptocurrencies. However while there are regulatory challenges many experts believe that because of the extreme popularity of NFTs and the fact that huge global brands are now dealing in them from Gucci to Nike governments their popularity among consumers  and brands it is hoped will pave the way for quicker implementation of laws and regulations.

 

However in spite of its challenges the NFT space can, will and has led to the rise of several new revenue streams and has been a boon for creators and collectors alike across various spheres of creativity not just restricted to art and music and will also importantly help to break down barriers of poverty and class barriers offering value to all.