The NFT trend began back in 2017 with the famous blockchain game CryptoKitties. Then the hype for Crypto Cats spread so much in the community that, in addition to selling pictures for 600 ETH, it practically blocked the operation of the Ethereum network itself for several days. With the crypto winter in 2018-19, the excitement for ”cats" subsided, but the tokens of the ERC-721 standard remained and in 2021 created a new NFT-HYIP.
According to DeFi trackers, the total sales of NFT at the end of 2021 exceeded $ 13 billion, although at the beginning of the year it was only about 2.5 billion, and in 2020 even less - 14 million.
What caused the wave of general interest in NFT? As an ordinary teenager collecting pixel images with whales earns an income of 400 thousand dollars, and at first glance, nondescript pictures are sold for millions of dollars and how long will it last?
What is NFT?
NFT - a non-fungible token is a token with which a digital impression is created for a unique object. For example, a song, a painting, a football card or another piece of art. The NFT is a digital certificate of this unique item.
As the industry developed and interest in tokens grew, NFT began to be used to digitalize unique virtual creations. Thus, the NFT was given the opportunity to fix the unique right to own a digital art object, just as in real life we protect our ownership of tangible property by making an entry in state registers.
The manifestation of interest in non-fungible tokens is fueled by outstanding personalities - world stars, politicians, entrepreneurs, bloggers. They consider it a wonderful way to support truly talented craftsmen. In addition, NFT is an alternative for investing in the future, because everyone has not forgotten about the bright breakthrough of cryptocurrencies.
Where can NFT be applied?
Despite the fact that now the main scope of NFT is cute "animals" in crypto games, in fact, this is not the only place where they can be appropriate. Thanks to its properties, NFTs can be used in services that need to be 100% sure that the user is real. At the same time, such a user does not have to be identified, he can remain anonymous, and the mere presence of NFT will give him access to the service or products.
For example, on September 25, 2021, the international conference “Money of the Future” was held in Vinnytsia (Ukraine). A special feature of the event were tickets in the form of non-fungible tokens issued on the Polygon blockchain. Participants received their NFTS according to the purchased ticket - Standard, VIP, Afterparty and could remain anonymous if desired. The presence of such a ticket confirms the right to attend the event, while it is impossible to forge it.
To buy an NFT ticket, it is enough to connect the Trustee Wallet crypto wallet to the event website and make a payment, the ticket itself will immediately be displayed in the application.
The decentralized exchange ExonSwap offers its users to create an NFT on the Tron blockchain, such an NFT serves as a kind of "login” on the site, allows you to provide liquidity to trading pairs and participate in the affiliate program. It is worth noting that this is a unique practice that has not been used anywhere before, more details about this can be found on their ExonCenter website.
Another option for using NFT may be the right to photograph models or interview bloggers. For example, the photo models of ValentiVitell and AngelSetFree, selling their NFTs on the Opensea marketplace, provide customers with additional bonuses, you can read in detail in the description of the NFT itself.
NFTs have become very common in online games, as they can represent a gaming staff - unique clothes, weapons, etc.
There have also been cases of the use of NFT in the real estate sector - in the summer of 2021, an apartment was sold in the capital of Ukraine using non-fungible tokens.
The very idea of owning real objects via NFT is not expected to be ignored. It is much faster to obtain ownership of a tangible object than to formalize this right in real life. For example, the ownership of an apartment is carried out by collecting a package of documents, contacting a notary, drawing up a purchase and sale agreement, obtaining an extract from the state register, and to purchase an NFT, you only need to perform a cryptocurrency transaction in the blockchain.
Where and how to store NFT correctly?
If initially NFTs existed only on the Ethereum blockchain, today they are implemented in almost all popular networks. You can find NFT on the blockchains Ethereum, Harmony ONE, Polygon, Solana, BNB Smart Chain, Near, Tron, Cardano, PolkaDot and many others. Such an assortment poses a number of problems for users:
- Firstly, it is difficult to decide on the choice of a network and, accordingly, a marketplace for creating an NFT;
- Secondly, there is no single application that supports all networks at the same time, and storing NFT on a centralized resource like an exchange is somehow obscene.
Therefore, the right solution for storing NFT is to choose a non-custodial crypto wallet (where private keys are only in the user's possession) with maximum network support. For example, Trustee Wallet supports NFT on Ethereum, Polygon, BNB Smart Chain, Harmony ONE and even Ropsten, Rinkeby test networks. Today it is the only crypto wallet with such functionality.
Legal regulation of NFT
We live in a world where each state has its own legal system and clear procedures for fixing property rights that have been formed for centuries. How is the issue of ownership of NFT settled from a legal point of view?
The answer is simple: nothing. Today, neither the process of creating nor buying/selling tokens is legally regulated.
On the one hand, based on the essence and purpose of tokens, NFT can be conditionally considered as a "title document” for a particular object. The right of ownership includes the right of the owner/owner to own, use and dispose of material objects and excludes the possibility of exercising rights to this object by other persons. Roughly speaking, the right of ownership is a monopoly on a thing.
On the other hand, intellectual property rights apply to a real object, the author can sell it and dispose of his work as he wants. However, he cannot interfere with the creation and sale of the NFT “attached” to his work. Also, anyone can download or distribute copies of the object, even if you have fixed the ownership of it. The address in the blockchain will be different, but the work becomes publicly available and it is impossible to establish control over the replication of copies.
Despite the fact that such tokens are unique, non-fungible and exist in a single copy, and information about each of them is publicly available, stored in the blockchain and cannot be forged, it remains unclear which court will consider controversial issues in transactions with them.
Considering all these aspects, the legal regulation in the field of NFT is still waiting for a lot of changes. It should take place in a comprehensive manner, satisfying all parties so that the development process does not stop, and the rights of each person are protected.
Read more: New risks of NFT investors
Why do people buy expensive NFTs and what are the prospects?
Despite the ambiguity of the legal status for NFT, people still buy them. At the same time, the prices of some non-fungible tokens sometimes exceed hundreds of thousands of dollars. Why do they buy them?
According to my observations, there are several reasons for this: some are subject to trends and are willing to spend money to be on the "wave”, others pour funds thereby supporting the industry and "HYPE”, others create hype and news for the media intentionally buying pictures for several million dollars.Other manipulations of various kinds are also appropriate, however, there are those who firmly believe that their NFT will become more expensive over time, so they are building up their collection.
It is likely that the growing trends of digitization of information will contribute to the further development and use of NFT. In the future, functional non-fungible tokens will be in use, which will represent real value - material or virtual.
Of course, one should not dismiss the possibility that the rapidly growing popularity of NFT may fade as rapidly as it arose, and the NFT market may disappoint users.
Only time will tell whether the technology will be massively distributed and generate innovative directions and ways of application. In any case, NFTs have become a good impetus for the popularization of their creations by many artists, an interesting experiment for users and an impulse for the development of the entire crypto industry.