Twitter has become a trend lately. Not only because of the special attention from Elon Musk of Technology Billionaire, but also because of the NFT (Non-Fungible Token) of Twitter founder’s virgin tweet posted in 2006.
The NFT consists of photos of Jack Dorsey’s first tweet. A few weeks ago, NFTs lost their grace. It wasn’t just your average price drop. During the noisy days of March 2021, NFTs sold for $ 2.9 million. Today it is fetching less than US $ 10,000.
This brings us a question, is NFT important?
NFTs should not be confused with cryptocurrencies. However, both are based on blockchain technology. The Ethereum blockchain has created a standard called ERC-721 that helps blockchains look beyond cryptocurrencies and generate entirely new objects or tokens. NFTs started as a refreshing way to monetize art. Later, major brands, especially luxury brands, began to create their own NFTs. This is how the 2021 NFT Gold Rush began.
The generation of children who trade in Pokemon cards has grown and raised investment to dream of all kinds of NFTs. From non-alternative toilet paper to virtual meals that you can never eat, to the fantasy land of the Metaverse, NFT dominates our imagination.
Tokens may look faint, but NFT owners have a promise of privilege. For example, provide access to an online gated community. These may be members-only clubs and sporting events. Dubai hosts the world’s first pay-per-view livestream sporting event, a boxing match at the Burj Al Arab heliport.
With the rush of private investors into the market, anyone can create NFTs on a whim. Therefore, finding a valuable NFT requires the ability to screen a collection of nonsensical NFTs. Despite the well-documented risks, people are busy buying NFTs.
The idea of ownership is very attractive to humans and even addictive. The value of ownership is tied to our sense of identity. At the heart of NFTs is software code called smart contracts. It securely records a permanent record of ownership, along with the blockchain hashing mechanism. Tokenization allows buyers to own the original item, in some cases even partially, through a process called asset fragmentation. NFTs create rarity, even for boring apes images that are widely available online.
Today, NFT transactions are collectibles, just like last year’s stamp collecting. Except now, transactions can be in the millions of dollars and the secondary market can be very volatile. NFT illiquidity has benefited from some savings that prevented investors from making hasty decisions. Sina Estavi claims that Dorsey’s first tweet NFT will never be sold due to lack of affordability. The NFT gold rush has temporarily stopped with the attention of buyers and sellers. This is not a bad development for the early tech market.
NFTs promise more comprehensive inclusiveness. Still, the gap between what you have and what you don’t have continues in this market. It consists of players who can afford it and who can take great risks without closing their eyes. Inequality began before the NFT matured. According to Chainalysis, between February and November 2021, about 360,000 NFT owners owned about 2.7 million NFTs. However, only 9% of NFT holders own about 80% of the market value.
The appeal of NFTs is also the possibility of removing intermediaries. However, it is premature to declare the termination of the intermediary. Carefully selected exchange platforms can easily be eliminated by larger platforms like Opensea. Other intermediaries such as regulatory agencies and courts intervene.
There are open issues regarding NFT ownership. The legal community does not know whether NFTs are legal contracts or licenses. It’s no wonder that a copy of the original photo of a moody cat made by a startup is freely available without the legal means of the NFT owner. If the NFT is based on an asset that no longer exists after the startup goes out of business, the NFT can tragically point to a non-existent file and a fairly expensive 404 error. As many proceedings suggest, the legal status of intangible NFTs is uncertain. Is it the same as physical property? Isn’t the copyright of the song automatically transferred to the NFT purchaser? Do securities regulations work?
While the court is organizing this, we will continue to see NFTs confuse the status quo wherever ownership and certification can be monetized. When we move towards all the inevitable tokenization, NFTs fill our lives in ways that are hard to imagine today. Through numerous market modifications and integrations, NFTs determine how digital products will change.
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