The NFT is an example of how crypto technology has creeped into the art world, as it provides proof of ownership over digital arts by way of blockchain. NFT stands for Non-Fungible Tokens, not at all related to cryptocurrencies but to the buying and selling of digital artworks in exchange for fiat money a or cryptocurrency.
The concept of NFT involves the issuance of a certificate of ownership for a particular digital art, by way of a decentralized encryption recording system similar to the cryptocurrency blockchain. The act is called minting, since the certificate of ownership serves as a “token” that will make a digital art unique and rare.
Since digital art can simply be copied and distributed throughout the world wide web, such copies have no, or have little value if sold in the market. The owner of a NFT for that particular digital art can lay claim to owning the original copy, which also gives him or her the right to transfer ownership by selling the NFT token to anyone who is interested.
Why Call the Token Non-Fungible?
The term fungible applies to assets or goods that have a per unit value that can be sold or bought using another type of asset with the same value. A physical art work is a fungible asset and has the quality of being rare in ways that can command an equivalent value when put up for sale in the market, usually in exchange for another fungible asset like fiat money or cryptocurrency.
Currencies are fungible assets because they can be bought and sold interchangeably in foreign exchange markets. The same is true for bitcoins and other types of crypto money, which can be exchanged for fiat money or another type of cryptocurrency at crypto trading platforms.
An item or object is non-fungible if it does not have a specific unit value to use as the basis for an asset exchange, but can be bought or sold using only fiat money. NFTs for digital art therefore give owners of an original copy of the digitally created artwork the ability to transfer ownership but only in exchange for fiat or digital money.
Without an NFT to show for a copy of the digital art, it will be difficult for the seller to find a willing buyer in the marketplace because there is no proof to show that the seller owns the original and not a mere reproduction. To be clear, the NFT is the asset for sale and not the artwork, because only the original copy is unique. Since it is a non-fungible asset, the token can only be purchased by way of fiat money.
The NFTs of Kings of Leon’s Recently Released Album
The most recent example of a digital asset for which NFTs have been issued is the artwork appearing in the latest album released by Kings of Leon. While the digital art of the album will be produced in millions of copies, only a few will be released with NFTs.
The limited number of NFT albums were available for sale during the first two weeks after the album’s release in March 05, 2021. According to reports, only six NFT albums were released, while 12 were stored in a vault to make the NFT albums distinguishably more valuable than the other reproduced copies.
The six owners of the NFT Kings of Leon albums therefore, can fetch a market value for any one who decides to sell his or her copy along with its NFT .