June 27, 2022

Dubai Week

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NFT .. a revolutionary digital asset without risk

NFT .. a revolutionary digital asset without risk

NFT technology for digital documentation has made profound changes in the arts and culture market and has become a major driver in the world of auctions, but its application to those unfamiliar with the field remains problematic.

Following is the touching tour of these “digital collections” as the first SMS in history went on sale at the French auction on Tuesday in “NFT” format.

NFT stands for Funky Token, which means “Funky Token” and refers to the inability to convert any currency into an equivalent currency (for example, a $ 5 note of the same denomination).

NFTs can be defined as “digital holdings” and their source can be traced. In concrete terms, it is a contract, the terms of which are defined by the virtual or real benefit information code.

Like cryptocurrencies such as Bitcoin, which uses blockchain technology, NFT has become a new type of digital asset, a document that is shared by a large number of individuals without central authority.

Who buys?

Buyers are mainly collectors or speculators who make a profit by then reselling at a higher price.

“NFT” was the center of several auctions, which caused a global stir, for example, when the first tweet of “Twitter” founder Jack Dorsey sold for $ 2.9 million.

It is also used in video games, cinema and music, and is the center of extraordinary endeavors, including the purchase of virtual land or the breeding of virtual racing horses.

What is the way to use it?

Like cryptocurrencies, NFT can be bought and sold on specialized platforms.

During the process, the buyer is not required to obtain a specific portion, but only a blockchain-registered certificate of authenticity is issued to transfer ownership.

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To maintain the rights in this certificate, a digital wallet is required, whether the program is in the form of an extension for a web browser or a secure connection in the form of a USB bus.

Prior to purchase, payment must be made in cryptocurrency, but you can “create” an NFT piece yourself, relying on certain skills in the information industry.

Are there any risks?

Buying, selling and using NFT is still technical and sometimes misunderstood, which can put investors at risk.

For every contact with Blockchain, there is a need to pay the costs to the persons verifying the transactions.

The latest report released by the specialized site “Chain Analysis” says that buying the newly created “NFT” from the most anticipated group is a very competitive process because thousands of users want to buy at once.

In this case, many transactions fail, but depending on the price of the cryptocurrencies often used for payment, it can sometimes be high.

But some buyers are determined to succeed and use bots (powerful sorting software), which makes the transaction very vague for a new investor.

The study concludes that in 2021, “the smallest group of experienced investors will capture the bulk of the profits of NFT groups.”

(AFP)