NON FUNGIBLE TOKEN (NFT)

INTRODUCTION
• Artists and creators require platforms to showcase, monetise, and protect their creations.
• Traditional systems involve intermediaries like galleries, auction houses, and platforms.
• NFTs enable decentralisation, allowing creators to directly control ownership, copyright, and monetisation.
• NFTs gained global attention in 2017 with 10,000 pixelated digital collectibles, proving demand for digital ownership.

WHAT IS A NON-FUNGIBLE TOKEN (NFT)
• NFT stands for Non-Fungible Token.
• It is a digital asset stored on a Blockchain network with a unique identification code.
• Each NFT has a distinct serial number making it unique and non-interchangeable.

MEANING OF TOKEN
• A token can represent:
  – Digital art
  – Music
  – Videos
  – Games
  – Domain names
  – Physical assets (digitally represented)
• Once uploaded to a Blockchain, the asset gets a unique identity.

FUNGIBLE VS NON-FUNGIBLE
• Fungible:
  – Interchangeable assets
  – Example: One Rs 500 note can replace another Rs 500 note
  – Same value after replacement
• Non-Fungible:
  – Unique and irreplaceable
  – Example: Original artwork, NFT
  – Each NFT has distinct value due to unique metadata

WHY NFTs ARE UNIQUE
• Each NFT has:
  – Unique serial number
  – Unique ownership record
• Even identical images minted separately become different NFTs.
• Stored permanently on Blockchain.

WHY CHOOSE NFTs
• Direct sale by artists without intermediaries
• Reduced dependence on galleries and auction houses
• Royalty mechanism:
  – Artists earn commission on every resale
• Secondary market benefits creators
• Transparent ownership history
• Blockchain verification ensures authenticity
• Scarcity due to uniqueness
• Metadata cannot be altered
• Immutable and permanent record

NFTs VS CRYPTOCURRENCIES
• NFTs are NOT cryptocurrencies
• Cryptocurrencies are fungible
  – Example: One Bitcoin equals another Bitcoin
• NFTs are non-fungible
  – Each NFT is unique
• NFTs are bought and sold using cryptocurrencies like Ethereum

CATEGORIES OF NFTs
• Visual Art NFTs
  – Digital paintings, illustrations, graphics
• Music NFTs
  – Songs, albums, exclusive audio rights
• Domain Name NFTs
  – Blockchain-based domains (.eth, .crypto)
• Metaverse NFTs
  – Virtual land, avatars, assets
  – Example: Daler Mehndi’s ‘Balle Balle Land’
• Sports NFTs
  – Player cards, moments, memorabilia
• Event NFTs
  – Concert tickets, movie access, museum passes
• Collectibles
  – Digital certificates, rare assets
  – Example: Blockchain-based degrees at IIT Kanpur
• Community NFTs
  – Membership-based NFTs
  – Example: Zostel travel community NFTs

SIGNIFICANCE OF NFTs
• New digital economy for creators
• Strengthens intellectual property protection
• Promotes decentralised digital ownership
• Encourages innovation in digital art and commerce
• Expands scope of Web3 ecosystem

CHALLENGES AND CONCERNS
• Market volatility
• Speculative pricing
• Environmental concerns due to energy-intensive blockchains
• Regulatory uncertainty
• Copyright infringement risks
• Lack of awareness among users

CONCLUSION
• NFTs represent a shift in ownership of digital assets.
• They empower creators and redefine monetisation.
• With proper regulation and awareness, NFTs can become a sustainable digital innovation.
 

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Subject: Science

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