Non-fungible token and how it impacts the high-value art market
Some consider Non-fungible token “a modern Holland tulip fever”. Indeed, in early April, an NFT artwork was sold for more than $69 million through auction.
“Artists have been using hardware and software to create artwork and distribute it on the internet for the last 20+ years but there was never a real way to truly own and collect it… With NFTs that has now changed.”, said Mike Winkelmann. Mike is the owner of the NFT artwork “Everydays: The First 5000 Days” — which was sold for more than $69 million in early April this year.
In the past few years, the term Non-fungible token (NFT), associated with blockchain, has become popular in the digital product market. The world has continuously recorded sales records of NFT products including digital art, GIFs, game items, and even famous tweets.
Since NFT is a new concept, it has much to talk about. In this article, let’s start with learning “What is an NFT?” and then have some discussion on its role in the future of the art market.
What is an NFT? — The history of Non-fungible token
Non-fungible token or NFT is defined as a digital or physical asset that has been associated with a unique cryptographic token that exists on a specific blockchain network.
Created in 2014 but the story of NFT only became famous in 2017, with a video game called CryptoKitties, which allows players to buy and “breed” limited edition virtual cats by tokenization assets.
Tokenization of game assets has set NFTs-based games apart from others since then. Players of different games can now use tokens to exchange assets between different games or to other players through a dedicated marketplace.
NFTs have then been applied more widely to buy and sell a variety of digital products, mainly for collectible purposes, such as music products, digital images, video clips, etc.
The advent of NFT has solved the challenges of digital art: being copied and disseminated many times on the internet, which reduces its value. NFT market ensures that the buyer has the real original directly from the artist. It also allows artists to sell their artwork directly to buyers, which will somehow democratize the art market.
NFT and CryptoCurrency
We have to admit that the development of NFT was greatly influenced by the popularity of cryptocurrencies, as well as their original technology — blockchain. However, NFTs are distinctly different from cryptocurrencies, they have their methods, purposes, and potential markets.
What Non-fungible token and Cryptocurrency have in common is that they both contain ownership specifics that make it easy to identify and transfer tokens between owners. In addition, NFT owners have the right to add metadata or aspects related to the content such as artist signatures to the artwork.
Unlike cryptocurrencies, however, each NFT token is a digital representation of a product’s attributes, and each NFT token has its own special, non-fungible identity. In addition, by combining two NFTs, you can also breed a third NFT, like the example with CryptoKitties.
The impacts of NFTs on the future fine art market
Currently, the main use of NFT is to digitize, store and trade works of digital art, mainly for collection and speculation.
Individual artists are using NFT to break away from the traditional market and at the same time boosting the market’s sales. Recent NFT artwork auctions with millions of dollars worth were the signs.
From a broader perspective, NFT is not only involved in the endorsement, purchase, and sale of works of art, it allows artists to interact directly with their viewers. This is the signal of the NFT’s potential to focus on consumers, increase customer engagement, and improve customer loyalty.
NFTs in practical by akaChain
The NFT fine art market seems to be getting hotter lately and the value of works of art is elusive. However, in addition to exchanging and buying digital artworks on marketplaces, how can businesses exploit the benefits of NFT and blockchain?
Built on Hyperledger Fabric, the enterprise blockchain platform akaChain provides customized NFT project development solutions. We allow premium creators to digitize, secure, and authenticate their work. The solution’s ultimate goal is to help businesses improve their digital capabilities, support customer relationship strategies, and protect copyrights.
akaChain is backed by FPT Software, a globally leading technology, and IT services provider. It is an end-to-end, permissioned, multi-chain network based on the Hyperledger Fabric. Since its establishment in September 2018, akaChain’s product has assisted many enterprises, from SMEs to Fortune 500 firms, to transform with distributed ledger technology. The company provides a broad range of permissioned blockchain-based products and services in multiple sectors, including retail, supply chain, banking and finance, insurance, shopping mall management, etc. to transform with its distributed ledger technology. For more information, please visit https://akachain.io
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