A non-fungible token (NFT) is a digital asset that has been tokenized with unique digital certificates by its creators, making it valuable in the same way as a painting or very rare piece of sports memorabilia.
The unique token is published on blockchain technology. However, NFTs themselves carry no inherent value; all of their value is derived from what a buyer is willing to pay for the digital asset or file that they symbolize.
Portions of this definition originally appeared on EnterpriseNetworkingPlanet.com, and are excerpted here with permission.
How do you own an NFT?
NFT ownership means that an individual owns the sole verified file from the creator. Creators place unique authentication signature codes on all NFTs they sell, so when the NFT is bought or sold, ownership of the unique digital piece can be verified on any server, browser, or another platform. Ownership grants the token holder the freedom to resell the NFT, but creators can usually collect a percentage each time the NFT is resold.
How do you purchase an NFT?
Digital auction platforms sell NFTs online, allowing prospective buyers to review a visual gallery, bid on, and sell a variety of digital assets. Some of the best-known NFT platforms include OpenSea, Rarible, Foundation, and Mintable. On May 11, 2021, eBay also announced that they would be selling NFTs on their platform, making them the first e-commerce enterprise to step into the NFT space.
Can anything be an NFT?
Any asset that can be digitized has the potential to become an NFT. Some of the most common NFTs on the market are digital art, video clips, and brand and celebrity collectibles. Typically created and sold by artists and influencers, but there’s also a growing market for enterprise assets in the NFT world. Patient records, supply chain procedures, and other valuable enterprise data have increasingly been codified into NFTs.
Read more about NFTs and their use in enterprise settings at EnterpriseNetworkingPlanet.com.
Top concerns with NFTs
Since the debut of NFTs in May 2014, the market for the new kind of asset has exploded. As a result, buyers, sellers, and experts alike share a few concerns about their longevity and practicality:
Value of the Original vs. the Copy
An NFT represents a digital file, so it’s fairly easy to make or access an exact copy of the original file. Traditional collectibles like paintings cannot easily be replicated in any form other than a print, so the owner of the original claims something completely different from everyone else, making it extremely valuable. This uniqueness is technically true with NFTs as well, but many people do not buy into the value of an original video file versus the same video clip on YouTube, since the original and the copy are effectively the same.
Digital files can easily be copied and widely distributed. For artists and the owners of NFTs, major concerns have arisen about who can copy these files and who has the right to extend those copying privileges. In the enterprise world, there are concerns about what other businesses might be able to access information about processes and procedures.
At present, most NFTs sell like high-value trading cards, going for thousands and sometimes millions of dollars. NFTs have already become a major buying and selling trend amongst celebrities and the ultra-rich, but the price point of most NFTs limits who can logically enter the market as a buyer.
Mass Production Capabilities
The most renowned NFT exchanges have been for a few highly valuable assets auctioned off as collectible items or events. But creating, selling, and buying NFTs en masse is often too costly and complicated for both creators and the platforms that sell NFTs.