NFTs are dominating the news. Whether it’s the announcement that Nike sold an NFT sneaker for $134k, or Actor Seth Green complaining about his stolen Bored Ape NFT, this new form of blockchain technology isn’t dying down any time soon. In fact, a monumental £123 million has been spent on NFTs since November 2017.
You’ll have seen NFTs on your newsfeed, but how do they actually work? Read on to find out what an NFT is, how it works, and how they’re being utilized in different industries.
NFT stands for non-fungible token. While a fungible token is something that can be mutually exchanged for another token, a non-fungible token is unique and so has its own unique value.
An NFT is a digital asset that represents a real-world object. This can be anything from artwork (which you’ve probably seen before) or even public and private information that’s all stored on a blockchain. They’re bought and sold online normally with cryptocurrency and are encoded using the same software.
Now you know what an NFT is, how do they work?
NFTs are made using blockchain technology. Blockchain is publicly distributed meaning that NFTs are stored transparently, which allows anyone to check the authenticity of an NFT. When an NFT is created or transferred, the process is recorded on the blockchain and timestamped, allowing any NFT to be tracked back to its creation date. It’s therefore pretty easy to tell whether your NFT is genuine or not.
The most popular form of NFT is artwork, however, they’re being utilized in lots of industries. Because NFTs remove intermediaries, transactions become more efficient and new markets have emerged. Here are some examples of how NFTs are currently used:
Artists are taking a big interest in NFTs, as they can stop relying on auction houses and galleries to sell their art. It gives artists the power to sell their artwork directly as an NFT, cutting out intermediaries and making them a bigger slice of profit.
Musicians are using NFTs similarly to artists, selling their songs and albums as NFTs, meaning they no longer need to put their music on streaming sites like Spotify and Apple Music which take a monumental cut of their profits. NFTs are also being used to sell concert tickets, giving them far more control over their tours.
Metaverse games rely heavily on NFTs as part of their metaverse ecosystem, allowing people to buy and sell virtual goods such as cars, clothing, pets, and even real estate! Metaverse games that currently utilize NFTs include Axie Infinity, The Sandbox Game, and Star Atlas. Axie Infinity’s highest-selling ‘monster’ NFT sold for a staggering $800k last year!
Documentation is perfectly suited to NFTs, as they can tokenize documents like degrees, licenses, medical records, and birth and death certificates. Though it’s still early days for this, it’s likely that the future of documentation will involve NFTs. LOX is even using NFTs to mint public and private device ownership information.
The LOX Network’s mission is to improve security for wireless devices by using a unique dual-NFT proof of ownership model, running on a hybrid blockchain. Currently, stolen phones are blacklisted using their unique IMEI number, meaning that the phone can no longer connect to the network and is useless. However, criminals can take the stolen phone to a different country and it becomes operable again.
LOX’s NFT model solves this issue, as the SmartNFT and the SmartLOX NFTs bridge users’ digital and physical ownership of their wireless devices. This forms a salient proof-of-ownership model that makes it far harder for criminals to resell stolen phones, as phone ownership proof is tokenized.
The LOX Network has begun developing its own NFT marketplace, allowing users to buy, sell, and list their NFTs with ease. Find out more about this upcoming project here, set to be announced in late 2022.