Many in the crypto community say we’re in an NFT summer, and for good reason. NFT trading volumes have been soaring, making over $5 billion dollars from January to July this year alone!
For those new to the space, it may seem like a lot of blown-up hype, especially when news headlines feature Jpegs of rocks and images of apes that sell for millions. To be fair, some of it is, but hype alone doesn’t build a multi-billion dollar industry.
NFTs are an amazing technology with real value and utility. They have great transformational potential for many industries and are already changing the way people interact with the world. This article will explain the real benefits of NFTs ownership, and why you should join the NFT community.
What are NFTs?
NFTs are digital assets that are backed by blockchain technology. When you buy an NFT artwork for example, what you’re getting is an artwork that is attached to a program (smart contract) on the blockchain. This smart contract can automatically process transactions, distribute royalties, and add other functionality to your artwork. All the benefits of the blockchain like security, transparency, immutability, and traceability, are also inherited by your NFT.
How all of this happens is rather technical, and we’ve written some introductory guides to NFTs and blockchain technology if you’re interested in learning the mechanics of it all. But as a collector, all you really need to know is how these features benefit you.
How Can I Truly Own Something That Is Digital?
To start with, let’s talk about ownership. Traditionally, digital art and physical art weren’t valued the same by collectors. An original physical Basquiat would be much more valuable than a digital artwork, even if it was made by the same artist. This is because there are some inherent problems that come with digitization – it’s easy to copy digital files especially if they are online, and it’s difficult to verify the authenticity of a digital image.
NFTs have changed this. For the first time in history, verifiable ownership of unique digital assets is actually possible. The creator, current owner, and the entire transaction history of an NFT artwork can be seen on the blockchain, and NFTs cannot be copied, replicated, or changed in any way. Now, you can own digital art in the same capacity that you own a unique physical artwork. NFTs have thus created a way to digitize the traditional art market, while avoiding all the problems that used to come with digitization.
Of course, NFTs aren’t just art – they can be collectible cards, music, videos, and even real-world assets! The possibilities are endless, but the benefits are the same. Let’s take a look at some of the other benefits of being an NFT collector.
1. NFTs directly support artists and enrich the creator economy
The NFT ecosystem is decentralized, and allows collectors and creators to directly trade with one another. Authentication can be done easily by looking at the blockchain, and royalties are automatically distributed by smart contracts. This means there are no barriers to entry, no galleries and authenticators taking a cut of creators’ profits, and that creators will be able to secure royalties from every sale throughout the life of the work. If you care about supporting artists and creators, buy their NFTs.
2. NFT ownership can come with attractive benefits
NFTs can contain much more than just one asset. It can come with additional unlockable content too, like high quality files, behind the scenes videos, or secret messages from the creator. Some NFT projects also reward their buyers by giving NFT holders a small percentage of royalties, access to events, raffles, and additional free content in the future.
Another benefit is financial. Some NFTs can greatly appreciate in value over time, and flipping NFTs is a viable way to generate some extra income. NFTs are not a particularly liquid asset, but there’s a lot of money to be made if you know how to pick winners. This requires a lot of time and research, however. If you want to know how it works, we have some tips on choosing good projects in our article on collectible NFT avatars.
3. NFTs strengthen digital communities
Because collectibles are limited, and offer exclusive benefits (as mentioned above) to holders, they act like a club membership. Most collectible projects have active online communities where members interact with each other over a shared interest in the project. Using a collectible NFT avatar as a profile picture online is the digital version of wearing your favourite team’s jersey to a sports bar – it signals interest and establishes camaraderie with others in the community. Because of the investment required to join and the supportive nature of these communities, they also tend to be much less toxic than the more freely-accessible areas of the internet.
4. NFTs accelerate adoption of blockchain technology
NFTs and blockchain have promising real world applications. They can be used to simplify verification of documents, real estate transactions, and bring transparency to processes in countries with weak institutional controls. The principality of San Marino uses NFTs as COVID-19 vaccine passports because they are easily traceable and cannot be forged. Even the UN is looking at blockchain technologies as a means to drive sustainable development and track aid resource distribution in developing countries.
There are many, many applications for blockchain technology that can help improve the world. Many of these applications haven’t been actualized yet because the technology is still fairly new, and widespread institutional changes are fraught with resistance. As an individual collector, your contribution and support of the technology in one application will encourage governments and institutions to adopt it for other, more socially beneficial applications as well.
NFTs may be intangible, but the benefits they provide for both individual collectors and the larger global community are very real. At Mintable, our mission is to accelerate adoption of this amazing technology through accessibility and education. We hope this guide has cleared up any doubts you have about the real value of NFTs, and that you’re ready to join us in this digital revolution.
This guide is the first in an educational series for NFT collectors. We also have a basic series on NFT fundamentals.
If you’re an NFT creator, don’t forget to visit Sellers’ University – where you can learn best practices on NFT creation and marketing from some of the most credible names in the industry – for free!