What NFT is Really About

As early as 1935, Walter Benjamin, with his essay on cultural criticism, “The Work of Art in the Age of Mechanical Reproduction,” began to wrestle with the mechanical reproduction phenomenon, penetrating the art and undermining the value of the authenticity of the object by depriving it of its “aura” (i.e. uniqueness).

Today, digitalization has exacerbated the situation: one click or code line can make a forgery real in the truest sense of the word. There will be no doubt about the uniqueness. But in reality, it is pure fake. Where’s the solution? While bitcoin solves the “double spending” problem, NFTs bring clarity to the world of increasingly pervasive technologies, where ownership, authenticity, and uniqueness of digital assets are now provable.

What is the NFT really about? It takes a lot to explain how this top-of-mind buzzword — NFT — which has permeated almost every aspect of our lives over the past year, affects the perception of the coming Web3 and the metaverse world, and, actually, the perception of our tech-infused everyday life.

NFT general overview: essence and features

NFT stands for non-fungible token. What does it mean? Okay, to make it easier to grasp the word non-fungible, let’s start with fungible. Just imagine a U.S. dollar bill: exchanging it for the same one maintains the same value, and you essentially have the same type of bill in your hands (the same with Bitcoin, Ethereum, and other tokens that are in-tangible).

The only difference may lie in serial numbers and issue dates, which in itself is an insignificant distinction. The key thing in exchanging one bill for another, that you do not lose a gram of value. That is, paper money along with digital money is fungible.

In turn, vehicles, art, and property are all non-fungible. Imagine two houses next to each other. Even if they look the same, they have different designs on the inside, which makes them different and therefore non-fungible. Moreover, one house, for example, may be closer to the roadway, marginally diminishing its value in contrast to the other.

If we refer to the digital world, the scheme there is about the same as in the “real” one: digital (aka non-tangible) money appears instead of fiat money, and digital objects in the form of pictures, songs, etc. are distinguished by NFTs.

Thus, the NFTs made it possible to determine uniqueness on an internal level between two, for example, perfectly identical images.

What does it mean to determine uniqueness on an internal level? How does NFT make a digital object the only one of its kind? Before we get into the technical part of defining NFT technology, here are the basic and widely-accepted characteristics of NFTs to come up with the general notion of this hyped 2021 term.

Key NFT characteristics

  • Uniqueness

Such a distinctive feature of NFTs as uniqueness proves to be well illustrated from the collection point of view. For example, CryptoPunks is one of the NFT collections where each of the 10,000 characters is unique. Theoretically, it is possible to issue the same NFT collection in terms of the visuals, but the “filling”, aka the internal technical part of the picture, confirming its uniqueness, will be different (read more about NFT from a technical point of view below).

  • Rarity

NFT rarity can be artificial, numerical, or historical.

Artificial rarity refers to the uniqueness of an NFT, defined by its code features.

Numerical rarity can be compared to limited-edition rarity. For example, 50 digital copies of an album released as an NFT by an artist would be more valuable than the same album on Spotify. Or take an autographed and unautographed artist album as an example — the rarity of the former is undeniable.

The historical rarity of the NFT implies the length of time the NFT has existed. For example, historical rarity refers to CryptoKitties or CryptoPunks, which are considered some of the first generative NFTs. These NFTs were among those that laid the foundation for the emergence of subsequent collections of other unique items.

  • Persistence

Blockchain-based tokens or rather information that is embedded in them in the form of code are very resistant to hacking.

NFT can be stored in a blockchain as long as that blockchain exists, although at the moment there is still a danger of smart contracts stored on the blockchain being hacked.

  • Programmability

Another specific feature of NFT from real assets is its wide programming capability. In addition to the visual representation, NFT can be programmed in different ways, depending on the preferences of its author. For example, an NFT can be programmed by an artist to “document” the rights to an image or music for the work’s lifetime — but the proof of right is not on paper but in the smart contract behind a picture or a song.

  • Ownership

In addition, ownership of digital assets can be attributed to the unique NFT characteristics as well, the proof of which is enshrined by an NFT.

NFT: tech overview

The token creation is based on the process of minting, which can be interpreted as the minting of a coin. But this coinage takes place in a digital projection, i.e., on the blockchain. Minting can be described as uploading your digital art (aka digital object) into the Ethereum blockchain or turning a digital file into an asset, i.e. a token, which you can freely trade with cryptocurrencies.

Why Ethereum? The point is that NFTs are released in most cases via Ethereum-based smart contracts (ERC-721 and ERC-1155). This platform supports many standards for NFT minting. In turn, there are other alternatives for NFTs generation such as Wax, Flow, Solana, Tezos, and Binance Smart Chain.

Note: It is essential to understand that when you buy a token (a digital art item), you do not directly own the thing or even the token — you own the right to “occupy a certain position” in the blockchain, which is confirmed and cannot be changed. When you sell an NFT, you lose that right, but the previous owners’ data remains in the transaction history. Thus, you are not selling the NFT -driven digital picture itself, but rather its place in the database.

Important: Further in the article the term “own NFTs/NFT owner” will be applied for simplicity, but now you understand that it will not be used in its direct meaning from the technical point of view.

What about the NFT storage?

Okay, now you are the owner of an NFT object (let it be a work of art in the form of a painting). Since it is a digital object, it will be stored in the same form. Where can a token be stored at all? As mentioned earlier, tokens can be kept on:

  • Blockchain or decentralized storage
  • And on centralized or private servers.

Blockchain or decentralized storage is considered the safest since your work “stays alive” even after a project fails or a site is deleted.

The second method entails private servers or centralized storage usage. However, this method has its drawbacks. For example, your NFTs can be worthless if the hosting “crashes” or the storage mechanism fails. Also, if the server owners modify the picture to which the token is attached, the visual representation of the token will change.

Token metadata as proof of its identity

The metadata of a token is the main “documented” source of its uniqueness. Metadata can be thought of as a detailed description of the token, where you can find information about attributes, creation date, artwork references, the object description itself, previous owners, and more.

The generation of metadata occurs at the Reveal stage, which follows the stage of the actual transformation of a digital file into an asset. That is, the token production itself does not yet determine the object’s identity. It is after the Reveal stage that the art object is endowed with true uniqueness, which can grow exponentially. This is where rare creature hunters, i.e. avid collectors, enter the game.

NFT from its inception: the history

The NFT boom that emerged in 2021 was not a “soap bubble” as is often the case with innovations. On the contrary, last year’s NFT explosion was the impetus that helped NFT develop into something more from its original form — art. Thus, the topic of tokens, along with crypto has become an integral part of the digital user’s daily life.

But unique tokens have been around since before 2021. The first NFT, Quantum, was generated in 2014 by New York artist Kevin McCoy on the Namecoin blockchain. However, although it is believed to be the first in history, NFTs technically originated earlier.

Quantum

The very first application of NFT technology can be observed in the example of Colored Coins, created in the Bitcoin network in 2012. Colored Coins was an experimental project, the purpose of which was to study the concept of uniqueness where non-fungible tokens were at the core. The project showed that the capabilities of such tokens differed from conventional Bitcoin transactions. But the further development of the technology’s potential was impeded by the very technical peculiarity of the Bitcoin network. Nevertheless, a beginning has been made.

Along with the creation of the aforementioned Quantum, comes Counterparty, a Bitcoin-based P2P financial platform (decentralized exchange). The platform allowed users to generate assets and tradable currencies. However, the technical problems and full potential of NFT were not yet revealed.

In 2015, the now widely known Ethereum network was launched, in which smart-contract-generated code appeared. Thus, developers have a chance to develop full-fledged NFT-driven projects. One such project is Etheria, a virtual isometric world where players can own tiles, extract “blocks” from them, and build things.

Thus, the further development of NFTs was facilitated by the gaming industry and the subsequent emergence of collections. Cryptopunks and CryptoKitties NFT collections that emerged in 2017 based on games have now become the epitome of a classic representation of unique NFT-powered digital objects.

👉To know more about the history of NFTs, read this comprehensive OneArt guide.

CryptoKitties

NFT is not just about digital art: current NFT types and use cases

It was through the art, now known as generative, that the whole world started talking about NFT… news headlines so exactly! But the real picture looks different: today NFTs are rapidly but gradually taking over all areas of life. While art, music, and games are considered the trendy NFT use cases, the fully crypto-powered future is not far off. Potential use cases of NFTs in educational, financial, medical, social, and other fields are more than likely. Moreover, such cases have already begun to appear.

What are the popular use cases of technology today?

Art

The concept of generative art emerged back in the ’90s when artists began to incorporate technology into their daily creative workflow. But contemporary art is a broader concept, where NFTs are at the forefront. NFTs now represent 16% of the global art market and that number continues to grow. No one is talking about replacing traditional art with digital art — perhaps NFT paintings are just an evolving extension of the art itself. But thanks to it, previously invisible artists have come out of the shadows and revealed their hidden talents to the world. Moreover, thanks to NFTs, artists can monetize their creations and get 100% income from transactions without intermediaries.

Beeple with his most popular masterpiece “Everydays: 5000 Days”, Trevor Jones with “Bitcoin Bull”, Jaiden Stipp with “NFT astronaut”, and other creators became genuine crypto-artists who managed to reach the tech-oriented audience with their digital masterpieces.

Another wave of technology development can also be seen in galleries. Today you can see not only a mix of traditional exhibitions with NFT elements but also completely NFT-powered galleries, which are becoming more and more numerous every year.

Everydays: 5000 Days

Music

As in the case of the arts, the music sector also succeeds with the introduction of NFTs. Just like paintings, songs and clips can also be turned into tokens and traded. In this way, musicians can also monetize their creativity without intermediaries.

For example, in 2021, 3LAU sold his NFT Ultraviolet album for $11.7 million; Kings of Leon released an album as an NFT on March 21, which generated $2 million; Grimes’ NFT project WarNymphs raised around $7 million.

Along with the creation of NFT albums, some artists have tried virtual concerts, where fans could enjoy the event to the fullest and purchase collectible things related to the artist — of course, not without the participation of the NFT technology.

Travis Scott’s virtual Fortnite concert

Games

Although the concept of uniqueness embedded in NFTs first appeared in the art field, the gaming industry has provided opportunities for players to unlock the full potential of the technology. NFTs and blockchain became the drivers of the “play-to-earn” concept on which most crypto-related games are built today.

Image source

Roblox, Axie Infinity, Cryptokitties, Aavegotchi, LiteBringer, The Sandbox, Decentraland, Splinterlands, Alien Worlds, and others can be called “icons’’ of NFT and blockchain-powered gaming projects. The introduction of such technologies into the industry has made games more personalized. For example, players are now able to create their worlds and personalize their characters with so-called skins — weapons or outfits. NFTs have become the bridge between just a game item and one that can be traded and profited from.

Thus, in-game experience has become valuable, and the possibility of earning from one’s victories has become one of the reasons for the increasing emergence of blockchain-based games.

You can read more about the top GameFi projects here.

Collectibles

Collectibles have always been and remain one of the unique asset classes.

Collecting as such is one of the activities that people all over the world are engaged in. Who collects stamps, who collects magnets, who collects postcards. While for some it is just a part of the entertainment, for others it is one of the main activities of their life. Think of Pokémon trading cards, which became a real mainstream activity in the 90s.

Nowadays NFT сollectibles such as CryptoPunks, Bored Apes Yacht Club, or Hashmasks remain a major draw for true collectors who are ready to acquire items for a significant amount of money, buying them for their uniqueness and rarity.

CryptoPunks

Sports

The NFT has introduced a new format of interaction between athletes and their fans, with the latter being able to express their support in other ways as well. One of them is, for example, buying NFT sports items (be it a T-shirt or a ball) of a favorite basketball player or soccer team.

Also, sports NFT can be trading cards or game pieces, where users can participate in the events and compete with each other in virtual reality.

One of the outstanding examples of NFT in the sports industry is the ability to buy and sell Moments. For example, the NBA Top Shot platform is designed for basketball fans. Here you can buy valuable moments, i.e. video of your favorite player in action.

While it is not surprising to witness NFTs in sports, music or art, there are other use cases of the technology that may be surprising today. Nevertheless, this points to the potential of NFT, which is still at the stage of unlocking.

Out-of-the-box NFT use cases and utilities:

  • Digital lands & real estate

NFT serves as an ownership of the digital lands in the metaverse. Decentraland, The Sandbox, and Axie Infinity have already begun to realize their goals of using the metaverse with NFTs as the basis. These lands can be advertised, they can be used as an event, work, and play space.

  • Avatars & PFP

People can change their social media profile picture to a new NFT they own, which creates more personalization and security. Moreover, NFT-powered avatars are your copy in the metaverse.

  • Academic credentials

A digital diploma or certificate in the form of an NFT will ensure the safety of the document and leave no room for its loss than if it were a “paper”.

  • Medicine

The NFT technology can create a secure system for storing patient medical data. In addition to storing medical history, NFTs can find a use for birth records and thus confirm the “lifespan of a newborn” via the blockchain.

  • Tickets

The scope of NFT tickets extends far beyond the ordinary “pass confirmation”. They offer the opportunity to generate income by reselling them as collectibles or as rewards for fans.

  • Social media

The adoption of NFT in decentralized social networks (aka SocialFi) will allow users to leverage emoji as a username, personalize PFP NFT-based avatars, trade tokens with other “accounts”, receive rewards for creating quality content, and be part of the community that manages the network.

NFTs are the future currently under development

When we think of blockchain, everything related to finance and the payment network comes to mind at once. Plus it’s also quite complicated to understand. However, NFTs have changed this perception. What do we have today? An expanded notion of crypto and an understanding of blockchain as a huge decentralized platform with room for NFTs, dApps, personalities, cultures, and communities. Could this be a gradually evolving new reality? But the shift in the perception of technology and NFTs in general as a way to digitize physical assets has already happened.

Today’s world is digital. Ok, this fact is rather trivial. The possibility of using NFTs in this world already goes far beyond art. Games, social media, sports, music, and the list goes on. But one thing is clear: the use of technology has paid off, and all that remains is to keep exploring it and uncovering the hidden potential that can change our perception of everyday life as a whole.

Just as property rights have enabled the growth of the traditional economy, NFTs have started to do the same for the digital economy. Moreover, NFTs are changing not only the way we perceive value but also the traditional ways people interact with each other. What will happen in the future can only be guessed, but it is unlikely to predict with accuracy. However, looking at innovations that successfully occupy a place in real life and modify it from head to toe, changes are inevitable. What they will be is up to people to decide. In the case of NFTs, the decision has already been made: they are going through a phase of development into something bigger.

We, at OneArt, are trying to speed up the process of adapting to NFTs so that everyone can take full advantage of this still novel phenomenon. With a single tried-and-true infrastructure, this shift can be quick and seamless.

Explore our branded NFT app, which is designed to provide a single hub for storing, sharing, and browsing NFTs for everyone — all in one place. For example, the basic version of the app is equipped with some basic features: NFT wallet, NFT preview, security, etc. Stay tuned for updates on new features!

Follow official OneArt channels to find the latest info and updates:

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