Wednesday Wind Down: Let’s Talk NFT
Last Modified: November 18th, 2021
Non-fungible tokens, popularly known in the crypto community as NFT, is defined as a unique and non-interchangeable unit of data stored on a digital ledger. NFTs can be any digital file that are easily copied, such as photos, videos, audio, but gives them each a one-and-only identity through blockchain, backed by public proof of ownership visible to all participants on the blockchain network. In essence, it solves the problem that previous existed in the world of the Internet, which is that there is no way to differentiate the original copy of the digital work from a duplicated version.
Why is this important? Well, we can think of NFTs as rare artworks or playing cards, or post stamps, or any collectibles that hold value, but instead of being present in a physical form, the item is owned digitally, and can easily be bought or sold through public exchanges. This creates a massive market for collectors, creators, and speculators in general.
Recently, there has been fantastic news regarding NFTs and their impact on cryptocurrency prices. Sam Bankman-Fried, crypto billionaire and founder/CEO of FTX exchange, says that NFTs could be the missing piece that connects the crypto industry to the average person. He specifically mentioned video games or public events, such as concerts and shows, as how NFTs could integrate into the economy and become mainstream.
“I think that we’re seeing really active movements on those fronts and it totally makes sense as a product.”
The biggest advantage of NFTs over simply crypto coins is that it allows the average person to have a digital way of supporting or connecting with their favorite content creators/artists/sports stars. By owning a piece of a singer’s unreleased album, or a NBA player’s most clutch moments, it showcases the collector’s devotion as a fan of whoever he supports.
Coinbase’s CEO Brian Armstrong held similar opinion with Sam Bankman-Fried with regards to NFTs. He said that he wouldn’t be surprised that NFT marketplaces and trading become as big or even bigger than regular crypto trading; in addition, he also revealed that Coinbase was looking to make their new NFT marketplace similar to Instagram shops to catch the social network economic scaling.
Since most NFTs are Ethereum-based, this means that NFTs becoming more mainstream would see a much larger use of ETH tokens and the Ethereum network in general. If we were to believe in the future of NFTs is as bright as Armstrong or Bankman-Fried predicts, then Ethereum could be primed as a long-term investment. Today, Ethereum’s price has dropped to one of its lowest points in November, pricing at $4,233.11 at the moment. This could be a great price point for investors to enter into the Ethereum and NFT hype.
ETH price chart since November 1st (4 hour intervals)
Disclaimer: these are the writer’s opinions and should not be considered investment advice. Readers should be cautious and conduct their own research before making investment decisions.