They're the talk of the town right now: NFTs. The internet's newest craze. They totally reimagine digital ownership and are already being hailed as a cultural revolution. Are these coins, however, truly revolutionary or simply a speculative bubble? What function will they play in e-commerce, specifically? The answers to these questions can be found in today's reading recommendation of the week.
NFTs are Mentioned Frequently, But What are They Exactly?
Non-fungible token is abbreviated as NFT. This sort of token is a digitised representation of a certain asset. It serves a purpose or has a specific value. Real assets, such as real estate or music licences, can be tokenized by converting the rights and obligations to a non-fungible token (NFT). In a nutshell, ownership is mapped in the digital realm, allowing it to be traded (What is the NFT Marketplace and How is It Different from Cryptocurrency).
But how do they vary from bitcoins? Bitcoins can be exchanged at any time and their value does not change as a result. It's the same as exchanging a €20 bill for another €20 bill. NFTs, on the other hand, can be compared to paintings. They each have a distinct value, and you do not receive the same value back when you swap them.
To put it another way, NFTs are traded digital assets within a metaverse. Any item, including avatar apparel, virtual baseball player trade cards, video snippets, digital music CDs from your favourite bands, a screenshot of a tweet, digital sneakers, or an old Internet meme, can theoretically become an NFT. The only thing that matters is that NFTs include information that demonstrates their singularity.
Every NFT has an owner who can be identified. This is due to the blockchain technology that underpins cryptocurrencies and NFTs. To put it another way, if someone buys an NFT (or a cryptocurrency) today and sells it tomorrow, the transaction is recorded on a blockchain and can be monitored for the rest of time by anyone in the globe. The bulk of NFTs use the Ethereum blockchain since it is not limited to cryptocurrencies like the Bitcoin blockchain. As a result, NFTs are usually exchanged in Ether, the Ethereum currency.
NFTs can cost anywhere from a few dollars to a few million dollars. The artwork »The First 5000 Days« by American artist Beeple seems to be the most premium NFT ever sold. It was purchased by a long-time cryptocurrency investor for over 42,000 Ether, which is almost 69 million dollars.
NFTs in E-Commerce and How to Use Them
In the world of e-commerce, NFT technology offers the possibility of streamlining digital sales and enabling lifetime product data tracking, which was previously impossible. So, would there be more transparency in e-commerce as a result of this?
NFTs have the potential to transform SKUs (stock keeping units, or in-stock product variants) with blockchain technology, allowing for the creation of unique, one-of-a-kind products. The concept might also promote a more equitable profit-sharing arrangement, which would be beneficial to developing firms wanting to get into the e-commerce market. Furthermore, because users have lifetime access to every data point during a product's life cycle, NFTs may make it possible to track e-commerce data. As you can see, increasing transparency in e-commerce is a good thing.
According to a Forbes article from April, NFTs have the ability to make it very easy for users to see the entire supply chain history of a product they've purchased - and to fully trace the product's transaction lifecycle. This innovation is beneficial not only to customers, but also to brands in terms of supporting their sustainability objectives.
What can NFTs Be Used For?
NFTs could be used in real estate to streamline and improve transactions, allowing smart contracts for properties (enabling automatic payments), and even build decentralised house rental services, all while safeguarding sensitive data such as credit card numbers.
Why are NFTs so Popular?
According to experts, there were several variables that contributed to the growth of NFTs in 2021, and the increasing popularity of NFTs exemplifies the unpredictable adoption curve of new technology. The bull market in Bitcoin and Ethereum attracted a large number of new investors in 2021.
Why are NFTs the Future?
NFTs let artists create and distribute art through online channels, eliminating traditional gatekeepers that have controlled what art is and who has access to it for decades. Thanks to blockchain transactions, artists can be directly sponsored by their fans and maintain control over their careers.