What is an NFT?
By: Artist Crowdfund Exchange
Tags: Startup, Crowdfunding, Nft, Nft Token, Gen Z

Over the first half of 2021, NFTs have exploded in popularity. Everyone from artists to fashion companies and restaurant chains is looking to capitalize on the NFT trend. Despite being a common buzzword, many people continue to wonder what exactly this new digital asset is.

An NFT, or non-fungible token, is a unique, one-of-a-kind digital asset. A fungible token like bitcoin, for example, can be traded for the same exact thing; i.e., a bitcoin can get traded for another bitcoin, and both assets are of equal value. Non-fungible tokens, however, have come to represent unique items like digital artwork. With NFTs, only one of the tokens is in existence, and you cannot trade one NFT for another identical token. Unlike buying a digital print from your favorite artist, owning an NFT is ownership over the original artwork. This would be equivalent to walking into the Louvre, buying the Mona Lisa, and taking it home to hang above your fireplace. Other people can purchase prints of the painting, just like they can make copies of the digital artwork, but you own the original. However, NFTs can also be like trading cards, where a limited number of pieces are created, given value by their desirability and rarity.

NFTs are backed by the cryptocurrency ethereum. Cryptocurrencies are digital currencies secured by blockchain technology to prevent fraudulent transactions and double-spending. Blockchain is a form of distributed ledger technology, meaning that there is no central repository for transactions. Instead, copies of transaction ledgers get distributed amongst various computers that provide continual validation. If one copy gets altered, the others will recognize the alterations and signal it as invalid. Because of the validation blockchain provides, cryptocurrencies secure forms of currency that support NFTs. When an NFT gets purchased from an artist, the transaction is recorded in the blockchain ledger, providing immutable proof of ownership.

Companies like Nike and Taco Bell are looking to be a part of the NFT craze. Nike launched an NFT system called CryptoKicks, which issues users NFT versions of physical shoes they’ve purchased. The NFT sneakers go into the user’s virtual locker, which they can trade or sell alongside their pair of collectible sneakers. Taco Bell created taco gifs that got turned into collectible art NFTs, which sold out in less than 30 minutes.

Just as these companies are looking to use NFTs in innovative ways, the Artist Crowdfund Exchange, or ACE, is changing how artists, influencers, athletes, and celebrities interact with their fans. Through ACE, a social platform, artists can sell access to themselves through ethereum-backed NFTs. Each artist has 100,000 tokens they can sell, which fans can use to interact with them. When fans buy tokens, they pay for access to their favorite artists, and the more tokens they have, the more access they have to the artist. Fans also have access to exclusive content based on how many tokens they own, and if they wish to sell, they can sell their tokens to other fans.

Platforms such as ACE allow everyday people to utilize NFTs, not just the mega-rich who can spend millions of dollars on an NFT artwork. Ethereum-backed NFTs are still relatively new, with the first created in 2017, so it will be interesting to see how they continue to evolve into the future.