A unique digital asset. The definition of a nonfungible token (NFT) may be simple in writing, but its applications stem to far-reaching uses that encompass a plethora of opportunities. In its essence, nonfungible means the token can’t be exchanged for another thing of equal value and each token is an entirely original and unique piece. An NFT could be an entirely blockchain-originating image. This same image could have an exact duplicate that is a completely different NFT because of its varied blockchain code. On April 16th, 2021, a single NFT created by the infamous whistleblower, Edward Snowden, sold for 5.4 million dollars. So what are these new digital assets, and how are they being used in the global business world?
Nonfungible tokens can be traced back to 2012 with the introduction of “Colored Coins” that could be used to represent multiple assets and utilized the Bitcoin blockchain model. Growth began to pick up speed in 2018, with new NFT marketplaces and a large increase in participators seen across the various crypto markets. The main use for NFTs as of recent times has been to digitize artwork, playing cards, and celebrity-created tokens that derive their value from being the only digitally coded work of their kind. So, truly, purchasing an NFT is more a function of purchasing the original token certificate than the asset itself because an image can be copied and reproduced almost infinitely while a certificate of ownership of a specific blockchain code proves original ownership.
Recently, the value of NFTs saw massive increases as a result of inflation. This same inflation has also driven recent volatility that has seen market prices drop drastically for NFTs, allowing more people to join the trend of buying and selling these unique digital assets. Of course, there is an inherent risk in inflation and volatility that could mean NFTs are just a bubble waiting to pop, but as of now the markets are booming—as long as value is placed on the product, the demand will continue to stay. There are also interesting and potentially serious environmental implications of the increased use of NFTs that may be increasing greenhouse gasses.
Despite these worries, NFT transactions are soaring in the United States and are also catching on in China thanks to their presence of crypto art. Europe is also a leader of NFTs, with Argo Blockchain sitting on the London Stock Exchange of Great Britain at a value of 48.3 million dollars. At the end of the day, nonfungible tokens are currently a hot commodity across multiple countries. However, their lifespan is uncertain and the nature of our fast-processing informational society makes them a risky but interesting investment for business people around the globe.