A 10-second video by Mike Winklemann (a digital artist who is also known as Beeple) was sold for US $ 6.6 million at Nifty Gateway (an online marketplace for digital items) on February 22, 2021. Blockchain gave authentication to the video as ‘one-of-a-kind’. The authentication of the blockchain works as a digital signature. It certifies the real owner of the item and its originality.
Non-fungible Tokens (NFT): It is a type of digital asset used to represent both tangible and intangible items. NFTs are used for items that exist online and can be traded only in digital marketplaces. These items include all forms of digital artwork like videos, virtual games, and sports cards, etc. As unique cryptographic tokens, NFTs exist on a blockchain. Since these assets are non-fungible, they cannot be replaced with or interchanged for similar items. Hence, they are unique. Blockchain is an open and distributed ledger that records transactions embedded in digital code and stored in databases.
How NFTs work
NFTs can be created, with non-fungible tools and support, on blockchains which are contract-enabled like Ethereum, NEO, EOS, etc. The smart contracts used for NFTs include detailed information of owners and about the authenticity of the item. The idea is to have a limited number of digital copies for an artwork using a unique digital token. When a certain type of digital asset is sold, the item is sent to the buyer with an encrypted NFT along with the artist’s signature.
The digital marketplaces which enable trade of digital artwork online include OpenSea, SuperRare, Zora, and Nifty Gateway.
Growing Popularity
NFTs attained immense popularity during the COVID-19 pandemic as large sums of money were invested on the items online. Since then the crypto art market has been continuously growing and has reached
$ 80 million. The U.S. National Basketball Association has also launched a website (called TopShot) where video highlights of games can be bought and sold using NFTs. The hype around cryptocurrencies and the potential to create online worlds through virtual reality may prove to be beneficial for the crypto art market. However, there are major risks involved in investing in the crypto art market where users operate under aliases or pseudonyms.
Indian Scenario
There might be some future for cryptocurrency in India. As per the non-executive chairman of Infosys, Nandan Nilekani, cryptocurrency could be acceptable in India though they are not ideal for transactions in the country where better alternatives like Unified Payment Interface (UPI) are already available. In March 2021, the government also made it compulsory for companies to disclose any investments made in cryptocurrency. This move will open the door for Indian companies to have crypto on their balance sheets. Currently, there is no maintenance of data regarding cryptocurrency earning in the country.
Therefore, it can be said that Indian government is not completely against cryptocurrency.
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