Benefits of NFTs - 2
We continue on exploring how NFTs add value to any object.
In our previous post, we looked at the concept of value and what constitutes ‘value’ in a typical art object. 👇
In this post, we will look at how NFT would add value to such an object.
First, what is an NFT?
Let’s first refresh our memory and briefly talk about what an NFT is. NFT (non-fungible token) is a small piece of code that refers to a specific location. It represents the ownership of what it refers to; in other words, the creator would store an object in a place and transfers the ownership to that NFT. The object can be stored anywhere but it usually resides in one of those file storage solutions (usually IPFS) such as Filecoin. That object can be anything, a high-resolution picture, or an audio file, anything digital would work.
|Image by Bemrahkarakas) from Pixabay|
The NFT itself is written on blockchain therefore cannot be changed later on. When it is transferred that change in ownership is also written on blockchain and becomes permanent.
The reason for such a design is the limited capacity of blockchains; it is not feasible to put megabytes of files on blockchain. Instead, that small piece of code would suffice to prove the ownership of that megabytes of data.
How would an NFT add value?
There are several ways an NFT would add value to an object. Let’s have a look at them one by one.
Art world has been fighting with forgery for over centuries. Museums and collections have been spending millions of dollars, hiring experts to ensure that the pieces they bought were original. This is a huge business!
With blockchain technologies, this becomes a non-issue. It takes literally seconds to ensure that any object is created and put in blockchain by the owner. All you need is the address of the creator. After that, you can check the NFT on any website.
This ease of authenticity would bring down the costs as well as eliminate the time that is required for such a task. As a result, it would help ease the transaction process significantly, resulting in higher activity and potentially higher value for the seller.
To be continued…
We will continue to explore the benefits of NFT in our future posts…
This piece is first published in BlockchainIST Center on September 25th, 2022.
None of the views expressed in this article should be considered as investment advice