Saturday Brain Storming Thought (218) 13/04/2024
NON-FUNJIBLE TOKEN (NFT)
Non-Funjible Tokens, often referred to as NFTs, are blockchain-based tokens that each represent a unique asset like a piece of art, digital content or media. An NFTs can be thought of as an irrevocable digital certificate of ownership and authenticity for a given asset, whether digital or physical
Key Takeaways of NFTs
1) NFTs are unique cryptographic tokens that exist on a blockchain and cannot be replicated
2) NFTs can represent digital or real-world items like artwork and real estate
3) “Tokenizing” these real-world tangible assets makes buying, selling, and trading them more efficient while reducing the probability of fraud
4) NFTs can represent individual identities, property rights and more
5) Collectors and investors initially sought NFTs after the public became, more aware of them, but their popularity has since waned
Benefits of NFTs
1) Direct monetization
2) Immutable ownership and authenticity
3) Royalties
4) Fractional ownership and accessible investing
5) Enhanced interactivity and utility
6) Easy entry and lesser restrictions
7) we can access global market easily
Disadvantages of NFTs
1) The market is high risk
2) Copies of Digital assets are possible
3) Costs to the environment
4) they are vulnerable to theft
5) NFTs are illiquid and volatile
6) NFTs do not generate income
7) NFTs can be used to perpetuate fraud
8) No permanent place to store
9) Capital Gainsctax explained
Uses and examples of NFTs
NFTs are being used to sell a range of virtual collectibles and assets
1) National Basketball Association virtual trading cards
2) Digital sneakers from Nike
3) Trading cards featuring personal memorabilia from actor William Shanter
4) A full studio album by rock band Kings of Leon
5) The original Nyan Cat meme
6) Collectible virtual characters called Crypto Punks
7) A variety of GIFs and images commissioned by Taco Bell, with proceeds going toward the restaurant chains charity organisation
8) Virtual real estate in Decentraland, a 3D virtual (VR) platform
9) Tokenized real-world assets, such as real estate
Steps of creating NFT
1) Choose the NFT format
a) PNG file format
b) Tagged Image file format
c) MP4 format
d) MP3 format
2) Figure out the content and availability of your NFT
3) Find a place where you can create NFTs
4) Open a crypto wallet and add crypto currency
5) Create your account and link your wallet
6) Follow the necessary instructions for producing the NFT
7) Publish the NFT and choose how to sell it
Can I create an NFT on my own
Anyone can create an NFT on their own
They just have to open a crypto wallet and create an account
Platforms like OpenSea, Coinbase and Rarible can facilitate this process
Cost for creation of NFT
The cost to create an NFT varies, depending on what platforms and technologies are involved
Users may pay as little as Rs 1 or Rs 1 lakhs to produce an NFT
NFT creating process
Creating an NFT is a straightforward process
NFT marketplaces often provide instructions for steps like how to open a crypto wallet and link it to an account, making it easy for anyone to begin creating and selling NFTs
History of NFTs
Kevin McCoy
Early projects, the first known NFT, quantum was created by Kevin McCoy and Anil Dash in May 2014
It consists of a video clip made by McCoy’s wife, Jenifer
First NFT trade
In 2014 – Quantam
In 2017, however the world became aware of Non-Funjible Tokens
During this time, numerous distinct NFT collections arose on the Ethereum blockchain
Most expensive NFT over sold
The Merge – $ 91 Million
The most expensive NFT sold is the Merge
The NFT collection created by digital artist PAK that was sold for
+$ 91, within just 48 hours following its release on 03/12/2021 on the NFT marketplace Nifty Gateway
Most expensive NFTs
1) The Merge – $ 91 Million
2) Everydays – The first 5000 days – $ 69 Million
3) Clock – $ 52 Million
4) Human One – $ 28 Million
5) CryptoPunk #5822 –
$ 23 Million
6) CryptoPunk #7523 –
$ 11 Million
7) TPunk # 3442 –
$ 10 Million
8) CryptoPunk # 4156 –
$ 10 Million
9) CryptoPunk # 5577 –
$ 7 Million
10) CryptoPunk # 3100 –
$’7 Million
Starting of NFT in India
November 2005
National Electronic Funds Transfer (NEFT) is an electronic funds transfer system maintained by RBI
The setup was established and maintained by Institute for Develpament and Research in Banking Technology
Different types of NFTs in the year 2023
1) Digital art
2) Gaming assets
3) Collectibles
4) Virtual real estate
5) Sports Memorabilia
6) Music and audio
7) Fashion
8) Domain name
Key Characteristics of NFTs
1) Indivisibility
2) Ownership
3) Uniqueness
4) Rarity
5) Transparency
6) Interoperability
Safety of NFTs
1) The security level of NFTs is similar to any type of digital asset and very close to cryptocurrencies
2) All of the NFTs are stored on the blockchain platform where the ledger is immutable, making it impossible to delete or alter the ownership
3) Blockchain offers robust security protocols and eliminates the scope of cyber-attacks
COMPILED BY:-
Er. Avinash Kulkarni
9822011051
Chartered Engineer, Govt Regd Valuer, IBBI Regd Valuer