Single non-fungible NFT token blockchain technology
It wasn’t that long ago that I remember being inundated with proposals for new blockchain-based music delivery systems. The promise to music artists was, “You can ask for anything you want for your music” and “Take all the money instead of giving it to a record label.” It got to a point where blockchain was labeled not just as the underlying technology for their offering, but as a feature. After a year of unfulfilled predictions, the proposal was already included in the “next” file by mentioning the blockchain. If the very smart people at record labels weren’t already using the technology, then maybe there wasn’t a “there” there.
However, February 2021 put the technology in a new light, this time in the form of NFTs or non-fungible tokens. An NFT is simply a record of who owns unique digital content. This content can be anything from art, music, graphics, tweets, memes, games – you name it. If it’s digital and created, it can be an NFT. It is “not fungible” because it cannot be easily exchanged for a similar good at a similar price.
When someone “mints” an NFT, they create a file that is stored on the blockchain. The beauty of this technology is that it can no longer be copied and pasted, edited, deleted or otherwise manipulated. It is the original creation, and although copies of the work can be made and distributed, they are not the original and therefore have less value.
When people think of blockchain, they immediately think of Bitcoin, which is also based on technology. However, NFTs use another cryptocurrency called Ethereum. This means that in order to buy an NFT, you must first buy ether.
Keep the promise?
Recently we saw a digital flower NFT sell for $ 20,000, a looping video clip for $ 26,000, and a sock and LeBron James clip for over $ 100,000. Even Nike NKE patented the concept of the shoes as NFT in 2019. Music wasn’t left behind.
Electronic record producer 3lau sold 33 NFTs for a total of $ 11,684,101, including a platinum-plated record that the artist can redeem for a custom song, as well as access to unreleased music and a bonus physical vinyl CD.
Daft Punk released several collectable NFTs on the Rarible platform before it was announced that they broke up. Grimes sold 10 works of art, one for nearly $ 400,000, while the secondary market (which is thriving) for the works raised $ 2.5 million. Linkin Park’s Mike Shinoda sold a digital artwork for $ 30,000. Many artists, seeing the potential revenue, are understandably keen to follow suit.
One of the great attractions for artists is that NFTs offer continuous payment on top of the original sale. If the token is later sold on a secondary market, the creator receives 10% of the purchase price, and this also applies to the subsequent sale of the piece.
There is a cost
Most entrepreneurs envisioned blockchain as a way to democratize paying where the average artist could finally make money as easily as the superstar. However, NFTs turn out to be just the opposite, as only the high-profile artists in one area of entertainment seem to be making money so far.
There are also costs. According to industry analyst Cherie Hu, the cost of minting an NFT is at least $ 70, which means the price of the token would start somewhere in the neighborhood of $ 100. This is because the online sales platform takes between 3 and 15% of the transaction for the first sale, with a 10% fee typical for secondary sales.
This initially high price makes the token a no-go for the average fan who is quickly pushed out of the market. NFTs seem to be for super fans only.
A potentially bigger problem, however, is the fact that imprinting NFTs and crypto media in general is incredibly energy-intensive and therefore poses a significant risk to the environment. For example, in 2018 it was estimated that mining in Ethereum alone would use more energy than the entire country of Iceland to validate its blockchain. While a new, more energy-efficient path is promised, the process is anything but climate-neutral for the time being.
And there are concerns
NFT sales pose a number of common problems that are easy to resolve in the non-crypto world and that don’t seem well thought out here. On the one hand, how are license fees calculated and paid? While the artist benefits from the sale, how are co-authors, publishers, and producers compensated?
Copyright issues are another problem. There is currently no platform authentication that can be used to verify that the creator of a token is actually the owner. What if someone decides to create an NFT for something they don’t own?
NFTs are indeed the current trend and it is very likely that it will continue. It’s a great use for blockchain as it lives up to its promise of being a revenue generator for developers, but it’s nowhere near perfect. We are facing an interesting journey.