People are still exploring what NFTs are, and that’s a good thing.
The key to any understanding and certainty of credibility is to question the why and wherefore of a subject and to revisit this practice for the benefit of all newcomers.
We will attempt to answer some questions concerning NFTs in simple laymen language.
What are NFTs?
And how do they represent value? Will they be an everlasting technology or at least last long into the future?
Among a dozen examples, you can say that an NFT is as unique as you are. No one else can be you, and no one else can bring the unique value, expression, presence, etc. Someone may take your place or substitute for your role, but that replacement will not be you.
Your replacement will not have the same date of birth, place of birth, DNA, the same parents, etc., and will not be your traceable biological match. An NFT is somewhat like this – it is unique in its own existence, and it is traceable on blockchains like binance or Ethereum.
Duplication Can Hardly Escape Detection
You may have some scheming attempts to duplicate your NFT asset, but that would be akin to impersonation. If you were to run a DNA test on your impersonator, that person would be exposed.
That’s enough to express the uniqueness of an NFT asset; even though a duplicate might have identical features, the details would reveal it to be unoriginal inasmuch as its date of production, and more would be revealed through blockchain evidence.
Mind you, the system is not foolproof, but security is heightened and difficult to penetrate compared to traditional systems.
There, we have it. We have pretty much put the description of NFTs to rest for the time being until, of course, we feel the need to revisit its description.
The man asks what it is; the child asks what he can do with it.
More than what an NFT is, it’s important to ask what you can do with it. This child-like curiosity is the essence of human progress, and that’s really the idea with NFTs. They’d be useless if they didn’t serve our purpose. But they do, and they are brilliant.
The NFT idea is the latest thing that has taken the software development industry and the gaming industry forward, along with adding advanced value to the idea of ownership, including tangible and nontangible assets like music, digitized art, and much more.
How Does NFT Valuation Take Place?
NFT value relies on the value that people or buyers give it. If it is something of value for people, it will organically receive importance, and people will seek to own it. Hence, there will be buyers willing to pay what it is worth. The people or buyers decide the value of an NFT depending on its relevance or importance for them.
An interesting analogy can be the value people create for automobiles; if people choose to walk and not drive, cars will lose their value. Since this is unlikely to happen, cars will always have value.
Another example of value given to NFTs would be Mike Tyson’s boxing gloves. Fans would pay for those just because Mike Tyson used them. On their own, gloves, just like those, can be bought from any sports store. But this is the emotional string that drives value in an object.
This logic helps us understand the value people give CryptoPunks and NBA Top Shot.
So, what do we take away from these examples?
Rarity/Scarcity: Since unique items can’t be duplicated, there will be many buyers bidding for ownership of a single item. E.g., asset ownership in NFT games.
Asset Ownership: NFTs and their value can be traced and verified; their existence on the blockchain forever ensures this.
Community: As with a lot of things, you need to act wisely and look for valuable items in the right places. Join communities that have relevant NFTs that are being traded in an NFT marketplace.
Are NFTs here to stay?
It has been quite a while, and NFTs are being given their due importance, with more and more people investing in them. There are projects planned and under development with vast amounts of funding.
Some projects have already been launched, and many more are set for release in 2022, with future expansion going into 2023. Going by this, the future for NFTs, NFT game development, and most associated technologies seem bright with lucrative opportunities for investment.