There is much buzz about NFTs or non-fungible tokens, digital assets recorded on the blockchain, which represent real-world objects such as artwork, music, memes, GIFs, photocards and videos.
NFT collectibles include products like tickets, trading cards, guitars, cybersneakers and even furniture. Unlike ‘fungible’ tokens, such as digital currencies, which are stored in digital wallets and may be exchanged for fiat, NFTs have coded certificates of ownership and are non-interchangeable.
Of course, since this phenomenon of purchasing digital assets is a new thing, there are doubters and detractors like in the case of the sudden trend of using cryptocurrencies years ago. Frankly, it takes a while to understand the digital asset marketplace, but one cannot deny that right now, NFT collectibles are selling hot like pancakes.
Take for example how many established music artists are exploring the idea of putting up their compositions and art for sale on NFT platforms. Kings of Leon, known for hits such as “Use Somebody” has jumped into the NFT collectible business, auctioning unique tokens in 2021. These tokens, or “golden tickets” have long-term, special perks for its purchasers such as front-row seats to the band’s concerts and a pre-show hangout.
Their album “When You See Yourself” is said to be the first rock album to be released as a nonfungible. Shawn Mendez, Snoop Dogg and Korean boy band BTS have also joined the NFT bandwagon. 3LAU, a DJ and electronic dance music producer, sold his NFTs for a whopping $11 million in February last year.
And why not? It is true that a recognizable name or strong media presence can help sell an NFT collectible or art. But even for the not-so-well-known artists, there will still be serious fans, investors and collectors who will be willing to actually buy their music. This is compared to earnings from apps like Spotify, which pays cents for every stream by occasional listeners, which means that a thousand streams can only earn the rights owner a few dollars.
YouTube, on the other hand, requires a number of views before a video can be monetized. There are many other music platforms where a musician can sell and earn from, but a long period is needed to get a decent livelihood out of that, and, of course, a large following on social media.
NFT collectibles are tradeable, and upon each resale, a percentage will still be paid to the original owner. These all depend on whatever smart contract rules are applied to each NFT. For instance, an in-game NFT can have the ability to increase or decrease its properties depending on gameplay.
To discourage scalpers, NFT marketplaces and artists may also set a ceiling price for reselling; and since the details of each property or transfer are immutably recorded on the blockchain, it is easier to trace the amount it is sold for or to whom an asset is sold to.
Naturally, artists and those in the entertainment world must adapt to new trends and technology in order to sell their creations and products. The pandemic has also influenced artists to consider turning their works into NFTs as they look for other sources of income, as the existing health protocols offered them little opportunity to perform and tour in public.
Caution and research, however, are the smartest moves artists can do before dealing with some NFT sites, for creatives are often taken advantage of. NFT investors and collectors must also be reminded that the NFT market, like any other market, is subject to fluctuation and prone to fraud.
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