What is an NFT? How Do Digital Assets Work?

What is an NFT? How Do Digital Assets Work?

NFT technology allows unique and rare works of art that can be transferred to digital media to be tokenized and presented in the markets. While it protects the rights of the owner of the arts, it also gives them freedom and a variety of opportunities. What About the NFT Technology? What kind of works can be displayed in the NFT markets? What will the market value be in 2021?

"An NFT is a digital asset that represents real-world objects like art, music, in-game items and videos. They are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos. (by Forbes)

NFT (Non-Fungible Token) refers to the encrypted and tradable digital assets that represent real-world works of art. These works of art can be classified as GIFs, photographs, pictures; songs, musics or other voice records like vocals; or video games and web sites.

Photos and pictures can be found more than other in this market since their sizes are lower.

NFT (Non-Fungible Token) is a new technology that has gained its popularity recently, protects the artists' rights, and enables the producers to market their works safely. Artists can produce their arts, publish them on the NFT markets, and make sure that their arts are on the market under some conditions.

For instance, a landscape photographer can put the photographs they took on their personal market, and derive a profit from the purchase of this piece. Just like that, buyers in the market can purchase a copy of the copyright of the artwork for the price and conditions that are set by the artist. Yet, in such case, the ownership belongs to the first owner of the artwork.

Additionally, the artists can assign the ownership of their work to the buyer altogether; and the new owner of the art can claim ownership and set their own conditions.

NFT (A Unique Token) Types

Non-fungible tokens, NFTs, can represent many kinds of assets.

1) Photographs&Pictures

Photographs and pictures are the digital assets that can be found in the NFT markets too often. Based on their lower file size, they take a small place when they are encrypted.

Some of the most expensive photographs and images publicly known on the NFT market;

Everydays: the First 5000 Days — $69.3m

CryptoPunk #7523 — $11.75m

CryptoPunk #3100 — $7.67m

CryptoPunk #7804 — $7.6m

All of the artworks on that list are also the ones that have found buyers at the highest price in the NFT market.

2) Videos&Films

Due to their extended duration and hence larger size, movie-length videos are much less common today. Videos that are in the market can maintain their place for 10-20 seconds for the most part.

While the size limit of the NFT videos is 100mb on OpenSea.io, Rarible offers this limit as 30mb. (see also)

Even though this limitation on the size causes a problem for the video and film producers, the possible solutions will be available in the next years.

3) Voice Records

Unique voice records are also marketable in the NFT markets. It is referred to sound recordings as music, vocals, podcast recordings, or any other high-quality sound recording.

You can see a photo of a sample sound recording above. I would like to state that this sound recording that is being shown here is not an advice but an example.

4) MetaVerse Objects

MetaVerse, or virtual worlds, as we've lately heard, has gained a prominent expression in NFT marketplaces in a different way. The objects that are designed for these virtual worlds has their own place in the NFT markets. You can check the photo below to set up an example. As of the date of writing this article, the hot dog stand designed for the virtual world in this photo is for sale for 36 ETH.

5) Sports

In September of 2019, NBA player Spencer Dinwiddie tokenized his contract just for others to invest. (see also) Besides that, the NBA Top Shot platform, which was born as a result of a collaboration between a blockchain-based company and the NBA, tokenized and started to market shots from the NBA's history.

6) Domain Names

Inimitable domain names are in the NFT markets. Alongside the commonly used centralized domain names, decentralized domain names also started to be bought, used, and marketted. (see also)

One of the providers of decentralized domain names is the Ethereum. The domain names that have the ".eth" extension can be marketed in the ENS or various NFT platforms. (see also)

Limitation on Sizes and Supported File Types in NFT Markets

NFT 2021 Market Value

Besides Opensea, Axie Infinity and Top Shot are the most important platforms that contributed to the field. By the end of this year, I expect that Axie is going to be $3,5 billion ($1,7 billion in the last August), and Top Shot is going to be $750 million ($700 million in the last August)." -LoupFounds

The NFT market is expected to reach $20 billion in value by 2021, with the platforms like OpenSea, Axie Infinity, Top Shot, and others. [Graph 1-2]

[Graph 1] (Source: Uncompoftable Profit)

NFTs (non-fungible-tokens), which protect the rights of the artist, the value and uniqueness of the artworks by transferring various types of artworks to digital, join the blockchain network after being encrypted with cryptographic methods, that is tokenized, and wait to meet with their buyers in NFT markets.

[Table 1] (Source: Uncompoftable Profit)

While NFT allows the artist to set various terms for their work, it also protects the copyrights of the work. It will solve the problems it faces with time and enlarge its size even more.

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Blog Author

Ömer Faruk Coşkun
Yazar
@ofcskn

İstanbul Üniversitesi Bilgisayar Mühendisliği Öğrencisi