Tesla CEO Elon Musk announced on his Twitter that he is selling a music track about a Non Fungible Token (NFT) for such a token. A buyer was immediately found for it: artist Mike Winkelmann, known under the pseudonym Beeple, offered the entrepreneur $ 69 million for a token – this is how much he earned on the eve of the sale of a collection of drawings, which became the first lot in the history of Christie’s auction house sold for cryptocurrency. Musk replied that he was ready to give NFT cheaper – for 420 million Dogecoin tokens with a total value of about $ 24 million, but later called his decision “not entirely correct” and refused the deal.
However, the hype around NFT continues to grow. Not only songs are trying to sell in the new format, but also video clips, images and even words. So, billionaire and investor Mark Cuban put up one of his motivational quotes for sale in the NFT format, requesting $ 1,700 for it in cryptocurrency. In an interview with CNBC, he compared current attitudes towards NFT to the early days of the internet, noting that if starting a business now, NFT would be one of the technologies he would focus on.
NFT technology is unique in that it is impossible to counterfeit or replace a token without a trace. Unlike the open blockchain, where any record called a token can be replaced with another one of the same, since they are all equal and interchangeable: one bitcoin is no different from another. You can create a unique token and associate a media file with it independently and for free on specialized cryptocurrency services.
With the emergence of well-known implementations of distributed ledger technology, such as Bitcoin and Ethereum, the question arose about automating some of the transactions within these platforms. Further, it became obvious that if it is necessary to conduct transactions with real property, and not with a digital asset, then it is necessary to link this property to digital values. This is how the need for NFT technology arose, explains Alexander Kapitonov, Dean of the Faculty of Infocommunication Technologies at ITMO University.
Alexander Khvoinitskiy, Marketing Director of the Chatex p2p cryptocurrency platform, notes that NFT tokens are needed in order to fix (tokenize) the value of an asset. The token is tied to one or another object and determines its value in the market, and also assigns the rights to this object to the owner of the token. “It’s like a digital ownership certificate,” adds Vladislav Utushkin, CEO of TTM cryptobank. – NFT tokens are needed where their main characteristic is demanded – uniqueness. These are objects of art, collectibles, things and content that are subject to copyright, etc. ”.
According to Khvoinitsky, in the future, NFT tokenization will reach other unique objects: real estate, vehicles, etc. NFT can also be used for personal identification, says Vladimir Smetanin, CEO of the Swiss financial company Newcent. He believes that the token can be tied to a person in order to identify legal documents, personal data, etc. “This will eliminate the need for intermediaries who participate in transactions, being a guarantor for both parties: the authenticity of documents and identity can be verified by the NFT token” , – indicates the expert.
Utushkin sees great potential for using NFT in the financial sector – for example, in bearer shares, which have certain inconveniences for holders. Due to the fact that such securities do not contain the name and surname of the owner, it is easy to steal and appropriate them, and banks and financial institutions do not like to work with such shares, the expert explains. In addition, according to Utushkin, NFTs can improve the efficiency of national depositories by reducing the cost of maintaining registers.
But so far, you can make money on this technology only by acquiring objects of digital art and subsequently selling them, says Khvoinitsky. It is also possible to buy the general NFT index and make a profit on the difference in rates. According to the CEO of the cryptobank TTM, the crazy popularity of NFT is precisely due to the fact that blockchain and cryptocurrencies have penetrated into art, got into a fashionable wave – art is always looking for new ways for self-expression, and it is new methods of self-expression that receive the highest rating from the market. “Therefore, we see NFT for collages sold for $ 70 million at auction. But this story will not last forever: the market will be saturated, and this way of self-expression in art will go mainstream. You can’t draw on a colored square every month and cause excitement and delight every time, ”Utushkin is sure. Khvoinitsky also believes that the excitement around NFT is likely to subside within 2-3 years. But in 10-15 years they may well become a really working technological tool in different directions, he predicts.
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