5 questions about NFT technology.
Posted: 24 May 2021, 20:34
Since February 2021, there has been only talk about NFT tokens. Billionaire Elon Musk tweets about them. Why, Musk - Minister of Justice of Ukraine Denis Malyuska put up a collage for auction as an NFT token! Digital artists are selling their NFT creations for fabulous money, and the CEO of the blockchain company Tron, Justin Sun, is about to turn a $ 20 million Picasso painting into non-fungible tokens. You involuntarily ask yourself: why is there such a stir around this technology? Focus answers the five most popular questions about NFT.
Question # 1: Why are NFTs as unique as fingerprints?
The abbreviation NFT stands for non-fungible token, which means non-fungible (unique) token. Such tokens work thanks to the blockchain protocol. They first appeared in 2017 on Ethereum. Now let's take a look at the shelves.
Blockchain (English block chain - a chain of blocks) - a register of records, each of which is a unit of account that performs the function of a substitute for securities in the digital world. All transactions carried out in the blockchain are combined into data blocks and each next transaction is written to the end of the chain of already existing blocks describing all previous transactions. Each blockchain is controlled by many nodes (nodes). In addition, the system is decentralized and includes hundreds of thousands of servers. If someone tries to hack the blockchain, they will need to access all the nodes or servers at the same time, which is impossible, which makes the blockchain inaccessible for hacker attacks.
It's too early to talk about NFT as about a public tool for the complete eradication of piracy
Token. The records contained in the blockchain are called tokens. They can be stored like gold, transacted with them, bought and sold.
Non-fungible token. Digital assets such as Bitcoin, DogeCoin, Ethereum, etc. are made up of tokens. And these tokens can be easily replaced with one another, and also divided into parts. In other words, one Bitcoin token is no different from one DogeCoin token - they are similar, like clones, and therefore are not unique.
But NFT tokens are not equal either to fungible tokens or to each other.They are as unique as fingerprints. Also, they cannot be divided into parts. As a result, one Bitcoin token cannot be equated to one NFT token. If you change them, it will be visible.
Question # 2: How and where is NFT used?
With NFT, you can protect copyright as well as ownership. Non-fungible tokens are like an entry in the register of property rights, only in this case the blockchain acts as the register.
For example, singer Grimes, the wife of Elon Musk, created a series of digital drawings, to each of which she tied exclusive musical tracks of her own composition and NFT-tokens containing some data about her as an author. What specific information is indicated there is unknown, but it could be, for example, the number of her Ethereum wallet. Thus, she protected the drawings from forgery and proved their uniqueness. She then auctioned four original drawings and 100 copies of each, earning a total of $ 5.8 million in 20 minutes of online bidding. In the future, the owners will be able to bind their NFTs to the purchased drawings, containing personal information about them and proving their ownership. This will be displayed as a password-protected link.
Question # 3: Will the NFT rid the world of piracy?
Non-fungible tokens could be an excellent tool in the fight against pirates. By linking tokens to copies of music albums, films, digital art objects, programs, games, etc., content producers could permanently solve the problem of copyright protection, because, as we already said, NFT cannot be replaced, divided, modified.However, Sergey Antonenko, CEO and founder of Science Research Center for Legal Informatics, believes that it is far from the total tokenization of all original content.
Minister of Justice Malyuska called his crypto collage "The sea is temporarily unavailable" and estimated it at US $ 2267 [+ -]
" Today NFT is used on several platforms, not only on Ethereum; but the technology is still just beginning its development - we see individual attempts to popularize it in the form of auctioning the first digital paintings, films, audio works, as well as creating virtual wedding rings or issuing collectible cards. In many cases, these are still just separate image events with the participation of famous people to attract attention and further investments in order to probe the possibilities of creating and launching a market, "says Sergey.
He believes that it is too early to talk about NFT as a public tool to completely eradicate piracy and provide completely legal access to content. Rather, it is an idea that needs to stand the test of time. In addition, so far, tokenization as a means of protecting against pirates is expensive and technically difficult for both creators and consumers of content. There is one more problem, according to Antonenko: "I think that it is necessary to consider the technology also from a legal point of view. It is necessary to develop a regulatory and legal framework with the help of which the regulation of the digital content market would be carried out."
Question # 4: How much does NFT cost?
Very expensive. And the point here is not only the payment for placement on online auctions, which, taking into account the commission, will cost at least $ 120, but the fact that mining itself in Ethereum, where non-fungible tokens are created, is too expensive.
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Recently, architect Chris Precht calculated that the production (mining) of one token took as much electricity as he had spent earlier during the month ... Initially, Precht wanted to create 300 non-fungible tokens - 100 for each art object - to make them super exclusive and make more money on the sale. But when I estimated the costs, I realized that mining 300 NFT tokens will take as much electricity as it would have spent in 20 years. As a result, the architect abandoned tokenization.
Now let's calculate. In Kiev, one household on average spends a little more than 200 kWh per month, which cost UAH 335–400. This means that only mining one token will cost 400 UAH, and 100 tokens - 40 thousand UAH. Also, with NFT, you need to make a number of transactions. According to data published by digiconomist.net, to complete one transaction with NFT in Etherium, it takes about 73.45 kW * h, respectively, 73.45 kW * h will cost 123.39 UAH (at a rate of 1.68 UAH per 1 kW * h). Multiply by 100 and get UAH 12 339. And then you will need to pay at least another $ 120 (3363.26 UAH at a rate of 28.03 UAH) for placing a tokenized digital object on an online auction.In total, our minimum costs reach 55 702 UAH (excluding the purchase of equipment).
Question # 5: can I use NFT?
But you don't need to mine. You can simply buy an art object with pegged NFT tokens and thus invest in the same way as investing in art or real estate.
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"You can invest in NFTs if you consider them as rights to a unique thing, technology or something else of value. For example, a specific NFT fixes the copyright and guarantees the originality of a painting by a famous artist. Buying paintings, and such an NFT is an investment. It makes sense to keep such tokens if you see value in their conditions and in belonging to the item or service you purchased, "- comments Andrey Shevchishin, head of the analytical department of the Forex Club Group of Companies. {{ 1}}
You can also make money on NFT in the simplest way - to buy at a certain price and then sell at a higher price. This can be done on specialized exchanges Rarible and OpenSea.
Question # 1: Why are NFTs as unique as fingerprints?
The abbreviation NFT stands for non-fungible token, which means non-fungible (unique) token. Such tokens work thanks to the blockchain protocol. They first appeared in 2017 on Ethereum. Now let's take a look at the shelves.
Blockchain (English block chain - a chain of blocks) - a register of records, each of which is a unit of account that performs the function of a substitute for securities in the digital world. All transactions carried out in the blockchain are combined into data blocks and each next transaction is written to the end of the chain of already existing blocks describing all previous transactions. Each blockchain is controlled by many nodes (nodes). In addition, the system is decentralized and includes hundreds of thousands of servers. If someone tries to hack the blockchain, they will need to access all the nodes or servers at the same time, which is impossible, which makes the blockchain inaccessible for hacker attacks.
It's too early to talk about NFT as about a public tool for the complete eradication of piracy
Token. The records contained in the blockchain are called tokens. They can be stored like gold, transacted with them, bought and sold.
Non-fungible token. Digital assets such as Bitcoin, DogeCoin, Ethereum, etc. are made up of tokens. And these tokens can be easily replaced with one another, and also divided into parts. In other words, one Bitcoin token is no different from one DogeCoin token - they are similar, like clones, and therefore are not unique.
But NFT tokens are not equal either to fungible tokens or to each other.They are as unique as fingerprints. Also, they cannot be divided into parts. As a result, one Bitcoin token cannot be equated to one NFT token. If you change them, it will be visible.
Question # 2: How and where is NFT used?
With NFT, you can protect copyright as well as ownership. Non-fungible tokens are like an entry in the register of property rights, only in this case the blockchain acts as the register.
For example, singer Grimes, the wife of Elon Musk, created a series of digital drawings, to each of which she tied exclusive musical tracks of her own composition and NFT-tokens containing some data about her as an author. What specific information is indicated there is unknown, but it could be, for example, the number of her Ethereum wallet. Thus, she protected the drawings from forgery and proved their uniqueness. She then auctioned four original drawings and 100 copies of each, earning a total of $ 5.8 million in 20 minutes of online bidding. In the future, the owners will be able to bind their NFTs to the purchased drawings, containing personal information about them and proving their ownership. This will be displayed as a password-protected link.
Question # 3: Will the NFT rid the world of piracy?
Non-fungible tokens could be an excellent tool in the fight against pirates. By linking tokens to copies of music albums, films, digital art objects, programs, games, etc., content producers could permanently solve the problem of copyright protection, because, as we already said, NFT cannot be replaced, divided, modified.However, Sergey Antonenko, CEO and founder of Science Research Center for Legal Informatics, believes that it is far from the total tokenization of all original content.
Minister of Justice Malyuska called his crypto collage "The sea is temporarily unavailable" and estimated it at US $ 2267 [+ -]
" Today NFT is used on several platforms, not only on Ethereum; but the technology is still just beginning its development - we see individual attempts to popularize it in the form of auctioning the first digital paintings, films, audio works, as well as creating virtual wedding rings or issuing collectible cards. In many cases, these are still just separate image events with the participation of famous people to attract attention and further investments in order to probe the possibilities of creating and launching a market, "says Sergey.
He believes that it is too early to talk about NFT as a public tool to completely eradicate piracy and provide completely legal access to content. Rather, it is an idea that needs to stand the test of time. In addition, so far, tokenization as a means of protecting against pirates is expensive and technically difficult for both creators and consumers of content. There is one more problem, according to Antonenko: "I think that it is necessary to consider the technology also from a legal point of view. It is necessary to develop a regulatory and legal framework with the help of which the regulation of the digital content market would be carried out."
Question # 4: How much does NFT cost?
Very expensive. And the point here is not only the payment for placement on online auctions, which, taking into account the commission, will cost at least $ 120, but the fact that mining itself in Ethereum, where non-fungible tokens are created, is too expensive.
{ {1}} Important Space technologies in the everyday life of earthlings: how NASA scientists made our life comfortable
Recently, architect Chris Precht calculated that the production (mining) of one token took as much electricity as he had spent earlier during the month ... Initially, Precht wanted to create 300 non-fungible tokens - 100 for each art object - to make them super exclusive and make more money on the sale. But when I estimated the costs, I realized that mining 300 NFT tokens will take as much electricity as it would have spent in 20 years. As a result, the architect abandoned tokenization.
Now let's calculate. In Kiev, one household on average spends a little more than 200 kWh per month, which cost UAH 335–400. This means that only mining one token will cost 400 UAH, and 100 tokens - 40 thousand UAH. Also, with NFT, you need to make a number of transactions. According to data published by digiconomist.net, to complete one transaction with NFT in Etherium, it takes about 73.45 kW * h, respectively, 73.45 kW * h will cost 123.39 UAH (at a rate of 1.68 UAH per 1 kW * h). Multiply by 100 and get UAH 12 339. And then you will need to pay at least another $ 120 (3363.26 UAH at a rate of 28.03 UAH) for placing a tokenized digital object on an online auction.In total, our minimum costs reach 55 702 UAH (excluding the purchase of equipment).
Question # 5: can I use NFT?
But you don't need to mine. You can simply buy an art object with pegged NFT tokens and thus invest in the same way as investing in art or real estate.
Important Not able to think: the developer told why do not be afraid of the superiority of AI over the human mind
"You can invest in NFTs if you consider them as rights to a unique thing, technology or something else of value. For example, a specific NFT fixes the copyright and guarantees the originality of a painting by a famous artist. Buying paintings, and such an NFT is an investment. It makes sense to keep such tokens if you see value in their conditions and in belonging to the item or service you purchased, "- comments Andrey Shevchishin, head of the analytical department of the Forex Club Group of Companies. {{ 1}}
You can also make money on NFT in the simplest way - to buy at a certain price and then sell at a higher price. This can be done on specialized exchanges Rarible and OpenSea.