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Valkyrie's VP Trading and Research offers a 101 on NFTs, one of the hottest topics in the crypto industry.
NFTs (Non-fungible tokens) are a digital object a user can own that is stored as data on a blockchain. (Although Rooney reminds us that not all blockchains are created equal).
The term "Non-fungible" refers to the fact that it is unique and cannot be replaced by something else. On the blockchain, there is a permanent and verifiable record of digital ownership.
Rooney explains that digital objects have a history we are familiar with that range from art, gifs, social media handles, and objects within games such as avatars, skins, etc.
Although these objects are attainable and in most cases can be bought and sold, he explains how ownership is a different story for these items that are stored on a centralized platform where rules can be changed and sites can be deleted. He compares these to NFTs stored on a decentralized blockchain.
Artists and creators usually profit only from the initial sale of their work. For example, many musicians may never have the chance to own the masters to their songs, or receive a fair cut of profits from an album. Smart contracts that support NFTs are programmable, which means they can potentially allow the artist to profit from the secondary or tertiary sale of their work and so on.
Looking forward, Rooney calls us to have an open mind for the future of digital objects. It is important to ask questions such as "What role will KYC and regulators play in this space?", "Will Bitcoin ever host NFTs?", and so on.
We can't ignore NFTs as forever being avatars and cartoons, because if given a little bit of time and breathing room, there's potential to create a new economy for artists and creators using these programmable tokens.
Listen to the full episode to learn more.
The Lightbulb Series covers crypto topics in 5 minutes or less. If you have a question you want covered, reach out to us on social media or via email at [email protected]
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