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Current Affairs

NFTs

Date: 23 February 2022 Tags: Miscellaneous

Issue

Non Fungible Tokens have taken the world by storm due to its ability to assign value to everything from art to music to a simple selfie.

 

Background

Many celebrities and tech enthusiasts are interested in this form of crypto asset. This has fuelled popularity.

 

Details

  • Any object or asset that can be converted into a digital form can be an NFT. They can be traded online using cryptocurrency.

  • NFTs can be a picture, drawing, music, gif, videos, tweets or even selfies. They are unique because they are backed by Blockchain technology. 

 

Popularity

It has become a popular way to showcase and sell digital artwork. They started to get mainstream attraction in early 2021.

 

Working of NFTs

  • The person buying NFT will gain complete ownership of a digital asset. The proof of ownership will be recorded in blockchain.

  • For listing a digital asset on marketplace, individual has to pay gas fee (transaction fee) for using the Blockchain.

  • Once it is paid, the digital art is recorded on Blockchain and becomes the sole owner. Even the marketplace owner cannot change this.

  • At one point of time, only a single person can own one NFT. Owners can also digitally sign their artwork.

 

Difference with cryptocurrency

Cryptocurrency is fungible token that is interchangeable. NFT is not equal. Each NFT has different value and unique.

 

Buying NFT

One has to hold a cryptocurrency walletMetamask to buy a NFT. They should also need an NFT marketplace. No other documents are needed.

 

Concerns of NFT

  • NFT scams include emergence of fake marketplaces and unverified sellers. There are incident of hacking of wallets.

  • It can also have negative impact on the environment. Crypto mining run at a very high power capacity, affecting the environment ultimately. 

 

Blockchain

Blockchain is a distributed ledger where all transactions are recorded. They are transparent, can be seen by anyone and cannot be changed or modified once recorded.