Do you know what “NFT” is? NFT is a non-fungible token that has been heard a lot lately and is attracting worldwide attention. A variety of people and companies are paying attention to NFT, and it is being used in many businesses. However, I think there are many people who say, “I know it looks amazing, but I don’t really know what it is…”
Therefore, in this article, we will explain the basic knowledge of NFTs, why NFTs are attracting attention, and what kind of future prospects NFTs have. Rather than shy away from NFTs because they seem difficult, after reading this article you may find yourself wanting to try using NFTs.
What is NFT?
NFT is an abbreviation from the initials of “Non Fungible Token”, which means “non-fungible token” in Japanese. This refers to a system that can prove that “no substitutability = only one in the world” by linking data to content. Blockchain technology is used, which is a database technology that can properly record data regarding various transactions carried out over the Internet.
Before NFTs were introduced to the world, digital data could be easily copied and mass-produced, resulting in almost no rarity value as digital data. However, with the advent of NFT, it has become possible to prove that digital data is irreplaceable, and it has become possible to have unique value.
Characteristics of NFT
A major feature of NFTs is that they can prove that they are “non-fungible = the only one in the world,” while virtual currencies are called “FT (Fungible Tokens).” Virtual currency is a currency that utilizes blockchain technology.
To give an example, 1000 yen held by person A and 1000 yen held by person B have the same value, so they can be exchanged (=substitutable).
On the other hand, non-substitutable means that person A’s commercially available T-shirt and person B’s autographed T-shirt of a Hollywood star have different values. These one-of-a-kind items cannot be replaced (=non-substitutable).
Both NFTs and virtual currencies use blockchain technology to safely manage data, but among them, NFTs use blockchain technology to prove that they are “non-fungible content.” It will be.
In the digital market, the era in which blockchain technology has developed is called “Web3 (Web3.0).”
Why are NFTs attracting attention?
NFTs have been attracting a lot of attention as they have given irreplaceable value to various data and digital contents, but from here on we will explain the benefits of using NFTs.
Can guarantee the value of digital assets
By using NFT, it becomes possible to clearly identify the owner of items that only exist on the web, such as illustrations, games, and in-game items on the web. Until now, before the advent of NFTs, it was difficult to clarify the ownership of items that existed only on the web, and a variety of content was being copied. However, by using NFT, it is possible to clarify the ownership and prove that the content is unique. Therefore, there will be no reduction in value.
Anyone can become a creator and sell
Anyone can create and publish NFTs, so anyone can become a creator and sell them. People tend to think that it’s complicated and difficult to get started with, or that it’s difficult without special skills, but it’s surprisingly easy to build a system. Marketplaces where you can buy and sell NFTs are also commonly available, so feel free to list your work as an NFT.
If you become a creator who creates works, it may become one of your sources of income.
Furthermore, with NFTs, it is possible to create a system in which the owner (creator) receives a reward when the NFT is resold. You can also earn a set percentage of your margin each time the work you sell is purchased by another person, leading to long-term profits.
Various programs such as smart contracts can be configured
NTF allows you to configure various programs. Various functions can be programmed into NFTs based on a function called smart contract, which allows contract procedures to be completed automatically without human intervention. For example, I explained earlier about a system in which the owner (creator) gets paid when the product is resold, and it is possible to program a system like this.
Problems with NFT
Although NFTs have various benefits, there are also problems when using them. From here, I will explain the problems with NFT. Let’s use NFT after understanding the problems.
Legislation is not sufficient
Although NFT has developed rapidly, the enactment of laws has not yet caught up. Even if you issue NFTs in the gray area, there are cases where it may not be a violation of the law because the legal framework is not yet in place. Therefore, there is a possibility that a lawsuit may occur in the event of any trouble related to NFTs. Establishing legislation to prevent fraud related to NFTs will be a major issue in the future.
Gas prices (fees) may increase
Since NFT transactions are carried out on a blockchain called Ethereum, there is a fee called “gas fee”. This fee is like a usage fee for processing transactions on Ethereum. One of the problems with NFT is that the gas bill may be high. Gas fees fluctuate depending on the number of transactions on Ethereum, so fees will increase depending on demand. Unstable fees can be a source of anxiety when trading.
The future of NFT
So far, we have explained the benefits and problems of NFTs, but what is the future of NFTs? From here, I will explain the future potential of NFT.
Marketplace development
NFT is still a new technology as it has developed rapidly. Marketplaces that handle NFTs are not large, and many are still under development. In the future, as NFTs become more popular and marketplaces develop accordingly, a wide variety of NFTs will be bought and sold. Perhaps NFTs will become indispensable in our lives.
Major Japanese companies and celebrities also participate
Many companies and celebrities are also entering the NFT market. Examples of Japanese companies include Square Enix releasing an NFT digital sticker called “Asset Million Arthur,” and Yoshimoto Kogyo shooting and selling comedian video content for NFT called “Yoshimoto NFT Theater.” I do things like that. Many Japanese companies and celebrities will continue to enter the NFT market, and NFTs will become more familiar.
Expansion in the entertainment industry
It is predicted that NFTs are likely to further develop and expand in the entertainment industry such as games and music. Even today, there are games called “blockchain games” developed based on blockchain technology, and it is possible to use NFTs to turn items acquired in the game into assets. As NFT develops, the entertainment industry is expected to expand.
3 NFT Marketplaces
In order to purchase NFT works or sell your own works using NFT, it is common to use NFT marketplaces, which are platforms for trading NFT-related items. From here, I will tell you about recommended marketplaces.
Coincheck NFT (beta version)
If you have no experience purchasing NFTs or virtual currencies and would like to try using NFTs, we recommend Coincheck NFTs to start with. It is operated by a major domestic virtual currency exchange.
Since there are no gas fees (fees) required for NFT transactions, you can easily purchase NFTs, and the service is designed to make it easy for NFT beginners to start trading.
There are 10 types of content available, and Coincheck Co., Ltd., which operates the service, has officially announced that they will continue to add content from time to time, so further development is expected in the future.
Open sea
Open sea is recommended for those who want to take advantage of one of the world’s largest marketplaces. It started operating in 2017 and handles various genres of NFTs, and is known for the large amount of NFTs in circulation. Since it is a global marketplace, information and development are fast, and cutting-edge NFT content is always in circulation. However, since the entire site is in English, it may be a bit of a hurdle for beginners.
Adam byGMO
Adam byGMO, operated by GMO Group, was launched in August 2021. It supports payment in Japanese yen, and NFT transactions are possible without purchasing virtual currency. For those who are interested in NFT but find it troublesome to prepare virtual currency, we recommend it because you can easily trade in Japanese yen. We handle a wide range of genres, and you can buy and sell NFTs such as art, illustrations, music, sports, trading cards, etc.
summary
This time, we provided a wide range of explanations, including the basic knowledge of NFTs, the benefits of using NFTs, and the future prospects. Even today, NFTs are mainly used in the world of art and games, but the market is expected to expand further in the future. There is a good chance that it will expand into fields such as business in the future, and NFTs may even become necessary in our daily lives. Many companies and celebrities have already entered the NFT market, so we can’t wait to see how NFTs will be used in the future.