Non-fungible tokens: What is it and how does it work? Experts try to explain

If you’ve been reading the news about Vodafone getting set to sell the world’s very first SMS as NFT, chances are you are browsing to find out what NFT is and why there is a sudden hype. around him.

If today is the day you’ve decided to shed some light on NFT, here’s a possible picture of what could happen to you in the next few hours from the time you start reading. You log in, start reading about it, scratch your head a few times, sip a mug or maybe a few cups of coffee in between, but all you get in the end is that NFT MEANS Non-fungible tokens. No intention to judge or belittle anyone’s intelligence here, but that’s what happened to me after I started reading about it.

Blockchain news is all the rage these days. Any information related to this technology immediately makes the headlines and who does not like to ride the wave. If you don’t surf, at least know what the wave is. With that intention (and a pot full of coffee), I began to read, research, and ask people about NFT and how it works. Here is how my efforts went. Before I start reading I want to tell you that if you have no idea about NFT, I hope after reading this you can at least have a chat about NFT over a cup of tea with your dad and if you already know all about it, congratulations on the additional knowledge you have gained after reading this. So let’s go.

First of all: what is NFT?

NFT stands for Non-fungible Tokens, fungible being the keyword here. The Cambridge Dictionary defines fungible as something that is easy to trade or swap for something else of the same type and value. In simpler terms, fungible means anything that is replaceable. Therefore, non-fungible means something that cannot be traded. It is unique.

Non-fungible tokens exist in the digital world.

Sachin Jain, 31, co-founder of Amesten Asset, a crypto asset management investment fund service, tries to explain to me what NFT is.

“To put it simply, it’s a collector’s item. Only one of them exists. There can also be several copies, but then it will be marketed as a limited edition of 5 or something like that, ”he explains.

Not enough. So, I asked for more.

Piyush Gupta, founder of PolyTrade, has his own definition of NFT which is quite easy to understand. “A digital asset that represents real-world items like art, music, game items, and movies is known as a non-fungible token (NFT). They are bought and traded online, often using cryptocurrency, and they are usually encoded with the same software as many other cryptos, ”he explains.

Gupta’s company is a decentralized financial lending platform providing working capital to real-world SMEs using crypto liquidity. So he tends to keep track of that stuff.

“Imagine you are drinking milk. You can drink half a glass, a quarter glass, or whatever fraction of the bottle you want to drink. The milk here could be a cryptocurrency. Fractional consumption is possible. But let’s say you want a baby shark toy. You either have it or you don’t. It’s an NFT, ”Gupta explains using an example.

Ownership is apparently a key element of NFTs.

Debashish Kashyap, a part-time crypto investor, defines NFT as a model piggy bank for art. Once you own it, it will be yours forever, unless you sell it. He thinks NFTs are good for digital artists.

“Until now, only those who had brushes and colors were called artists. Digital artists weren’t recognized for their work. NFT gives them a chance to showcase their work and make money for it, ”Kashyap says, trying to convince me that NFT is a boon for digital artists.

But NFTs are not limited to s. Sameer K Singh, a 26-year-old entrepreneur who bought 5 NFTs, says NFTS is more than digital art.

“NFT basically defines ownership. You may be wondering what is needed for NFTs when cryptocurrencies are already there. The answer is that NFTs are non-divisible tokens. You can break down cryptocurrencies but not NFTs. NFT has a token identifier. You can add ownership to whatever you put in it and not just the arts, ”says Sameer. “You can also expect DFTs on real estate property in the future. “

The craze for NFT

What would you do if you knew someone famous just sold the sound of farts as NFT and made money for it? You will stop what you are doing and search the web to find out how this is possible. Brooklyn-based 36-year-old director Alex Ramírez-Mallis has been recording fart sounds since March 2020, compiled it, and sold it on an NFT marketplace for $ 85. Are there any other shortcuts to making money than this?

No wonder there is a craze for NFT all around us.

You can also thank (blame) the celebrities for all this NFT noise. Hollywood star Lindsay Lohan, in a paid partnership with the Canine Cartel, has announced the sale of her NFT fursona (essentially a furry avatar) and there are buyers for it!

Former Twitter CEO Jack Dorsey sold his first tweet as NFT in March 2021 for more than $ 2.9 million. Bollywood is not far behind. Superstars Amitabh Bachchan and Salman Khan have announced plans to launch their own range of NFTs soon. This trend has spread and is the main reason why NFT is so in the news.

Very first SMS auctioned as NFT / Image: Reuters

The second reason for the buzz, as Sameer explains, is that it’s a way to display your wealth in the digital world. “People buy Rolex or antique items to show off their luxury lifestyle. Blockchain is the new world of the web and it is the future. You can think of NFTs as a way to display your wealth in the digital world, ”he says.

On the contrary, Sachin, who is an investor in the NFT market, believes that there is a hype around NFT and that hype will eventually wear off one day. Sachin is an investor in the NFT market called Kalamint.

“There is an exaggeration about NFT. If someone tells you that’s not true, it means that person is living in a bubble, ”he says.

Who buys these NFTS?

Good question. NFT is a unique digital asset and people who believe Blockchain is the future are buying it.

Investors like Sachin see this as an opportunity to make money, so why not be part of it. “People are willing to spend millions on this thing. Also, I think this will become a real world asset soon. I mean someday you could sell your jacket or your pen as NFT, ”he says.

Sameer owns 5 NFTs and the most expensive cost him $ 1000. “I was offered $ 3000 within minutes, but I didn’t sell it. I am waiting for a better offer to sell it.

Sameer also wants to be part of a community by buying NFTs. “When you buy NFTs, you are part of a community where there are other NFT buyers like you. You can interact with them. It’s like being part of a future, ”he says.

People like Debashish are waiting for that extra cash in their pocket that can buy them NFT someday. “I’ll buy it if I have the extra money.” It’s a smart way to conserve digital wealth and simultaneously encourage our digital artists, ”he said.

Is India ready for something like NFT?

A quick yes comes from Piyush Gupta. He believes India’s cultural inclination is a key factor why NFT will be successful in the country.

“NFTs, as you might already imagine, are unique assets that can be owned by individuals, in layman’s terms. And therefore, the application in art and culture is immense. India has always been a culturally rich country with a heritage of fine art. From Bollywood stars to art masters; from sports figures to fascinating musicians, everyone is looking to leave their own digital signature and legacy for generations to come, ”said Gupta.

Sachin says Kalamint has users in 180 countries today. India has a group of people who love digital collectibles and the popularity of Kalamint is proof of that. “Kalamint was launched in 2020 only. You tell me about a project which, in just one year, has reached people in 180 countries. This Bengaluru-based company now supplies millions of digital artists, so you see how NFT is also opening doors of opportunity for people, ”he said.

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