An NFT or Non-Fungible Token is based on the concept that we can create scarcity in a digital environment. Using NFTs, we can now create unique, identifiable digital goods that can be sold directly to consumers in a marketplace. Creators can select a digital product and “mint” it to create limited versions to be sold online. All of this is based on Blockchain technology which enables the creation of a democratized marketplace where no one central entity needs to approve or control transactions. All the transactions are created and approved by different “nodes” that help to keep the decentralized structure, which is the core of this technology. Each version created is unique and non-modifiable.
This technology has several implications, but the main use case that we’ve seen so far has been in the collectibles and digital art verticals. NFTs allow creators and rights-holders to create a new source of revenue tied to digital ownership. In the music industry that might come in the form of a song or a special edition release. In the sports industry, we’ve seen projects like NBA Topshot have great success.
NFTs’ underlying characteristics mean that we can now use our content to create limited edition tradable assets that users can own and control. And this taps directly into the two overarching trends discussed above.