What do Big B , Snoop Dogg and Rihanna have in common?
Three simple letters, NFTs- Non Fungible Tokens. While the Big B was the first Indian celebrity to launch his NFT Collection which included an audio file of the legendary poem Madhushala and autographed film posters, the NFT industry has already captured the attention of several superstars globally. NFTs may be in a nascent stage in India, however globally it is a 2.5 billion dollar industry.
If you, like these stars, are looking to step into the Metaverse and create an interesting avatar for yourself, well then you should probably get acquainted with the term NFT.
For most people when they hear the term NFT what comes to mind is digital art. Some may even know the full form of NFT (Non Fungible Token) but have little understanding of what that means and what is the difference between fungible and non fungible in the first place.
First of all NFT is not just about digital art. It is understandable to think so as most of the media coverage of the NFT space has focussed around digital art and the mind boggling millions digital art has sold for of late. So if it’s not just about digital art, what does NFT include?
What can be considered an NFT?
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.
Mohit Goel, CEO and Co-Founder of Metalok Solutions Private Limited further explains, “Anything that can have a digital form can be an NFT. Domains are an NFT, virtual land is also an NFT. Even a meme, a GIF or a GIPHY, a conversation or an audio or a video file can be considered an NFT.”
Essentially an NFT can be almost anything unique that can be stored digitally, from art to action figures, memes to tweets and pretty much anything else your imagination can stretch to. McDonalds recently introduced its first NFT to celebrate a fan favourite sandwich while designers like Karl Lagerfeld have had NFT collections that have sold out in seconds. So now that we know what all an NFT encompasses, how does it differ from fungible items?
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.
Mohit Goel, CEO and Co-Founder of Metalok Solutions Private Limited further explains, “Anything that can have a digital form can be an NFT. Domains are an NFT, virtual land is also an NFT. Even a meme, a GIF or a GIPHY, a conversation or an audio or a video file can be considered an NFT.”
Essentially an NFT can be almost anything unique that can be stored digitally, from art to action figures, memes to tweets and pretty much anything else your imagination can stretch to. McDonalds recently introduced its first NFT to celebrate a fan favourite sandwich while designers like Karl Lagerfeld have had NFT collections that have sold out in seconds. So now that we know what all an NFT encompasses, how does it differ from fungible items?
The difference between fungible and non fungible:
A fungible item is like a ten rupee note, it is interchangeable for another ten rupee note as it has the same purchasing power. In a blockchain, even cryptocurrency like Bitcoin is a fungible token as it can be exchanged with another Bitcoin because both will have the same value.
A non-fungible item, on the other hand, is unique and can’t be copied or substituted. For example Twitter’s ex CEO Jack Dorsey’s first tweet sold as an NFT for $2.9 M. The tweet fulfills all the requirements of an NFT. It’s obviously unique, authenticated and cannot be replaced.
Image Courtesy : (Beeple NFT- Google images)
Another example could be Beeple’s “Everydays: The First 5000 Days “. This was the first purely digital NFT piece of art that was auctioned by a popular auction house for a jaw dropping $69 million.
Image Courtesy : (Open Sea)
How does one buy an NFT?
To buy an NFT first cryptocurrency needs to be purchased and linked to a cryptocurrency wallet. Once your wallet has been set up you will need to choose an NFT marketplace, place your bid and voila you will be the proud owner of an NFT.
OpenSea, Rarible, BakerySwap, AtomicMarket and SuperRare are some of the NFT marketplaces. With time many more new market places are being set up to buy/sell NFT’s.
It is important to note that before you sell an NFT, you should have complete authorisation to do so.
For example, unless authorised you cannot sell the work of a previous employer, a collectible or an artwork made by more than one artist if you don’t possess their full consent to sell.
Also, if you decide to sell your NFT on one platform, do not list or try to sell it on another platform as well. This could lead to severe consequences such as the platform banning you or even going so far as to burn your NFT .
How can you make your own NFT?
As mentioned above, anything can be an NFT. Your audio, video, art, anything you can imagine, can be an NFT.
To make your own NFT, select your item/file. Choose your blockchain and set up a cryptocurrency digital wallet. After that you need to select an NFT marketplace and connect it to your digital wallet so that initial fees (called Gas Fees) can be paid and proceeds from the sale can be received. Once this is done, you need to follow the steps to upload your file as an NFT. You will need to clarify in what manner and at what price you would like to sell your NFT.
Image Courtesy : (Beyondlife.club)
Why has NFT suddenly become popular?
Ever since NFT’s have been sold or auctioned at eye watering prices, many brands and celebrities are making their own NFT’s and trading the same.
In India, Amitabh Bachchan, Rajnikanth, Sunny Leone, Yuvraj Singh and many other Indian celebrities are following in the footsteps of international celebrities and selling their NFT’s for crores.
Some celebrities are selling signed posters as NFT collectibles, others their audio files or other expressions of their creativity.
Designer Manish Malhotra recently sold digital sketches of his famous work for $4000.
Can you resell an NFT?
Yes, one can re-sell an NFT provided one has the authorisation to do so.
It is important to note that NFT Collectibles cannot be resold unless authorised. A fan can mint it in other ways like charging a fee to view the collectible, but cannot resell an artist’s NFT because it’s not his intellectual property.
For example a fan who has bought Amitabh Bachchan’s Madhushala NFT cannot resell it as he has no authorisation or copyright to do so. This is because Amitabh Bachchan has sold the NFT without selling the IP rights or the authority to re-sell it. One has to show complete authority to sell when listing an NFT in a market place.
If one doesn’t have the authority to sell an NFT, yet is trying to do so, one can be sued for enormous sums.
Image Courtesy : (twitter)
Brands entering the NFT space:
It is not just Indian celebrities who have jumped on the NFT bandwagon; several Indian companies such as T-Series, Mahindra & Mahindra, MG Motor India, MakeMyTrip and many more have started selling their NFTs as collectibles. Recently Mahindra & Mahindra sold their Thar’s NFT and raised 26 lakhs to help an NGO.
So with actors, artists, musicians on the NFT bandwagon will it be your turn next?
Hopefully you now have the ABC of NFT down pat to take that step into the Metaverse if you’d like.
Disclaimer:
NFT is traded using Cryptocurrency which is an unregulated digital asset, not a legal tender. And is subject to market risk. Trading in NFT’s/ Crypto assets may not be appropriate for all investors and you should seek independent financial advice if necessary.