How NFTs disrupt the world of business
As we draw to the end of 2021, the Collins Dictionary has made its yearly announcement for its word of the year. For 2021, it is NFT (non-fungible token). By definition, an NFT is a unique and non-interchangeable unit of data that is stored on a blockchain, which is a form of digital ledger. They are bought and sold online and often this is with cryptocurrency. In the last few months, NFTs have taken the world by storm. However, despite the 2021 hype, they have been around since 2014. According to Coindesk, £123 million has been spent on NFTs since 2017. So why have NFTs been growing and what opportunities does this present for the future?
NFTs and the art world
One key realm NFTs have been expanding in the world of art and media. This is because they represent a real-world object and can be associated with reproducible digital files. Examples of this can include audio, videos, or audio. Throughout 2021, NFTs have been gaining traction in the world of art. Back in May, the Charlie Bit My Finger video sold as an NFI for £500,000. In August, Sotheby’s dived into the world of NFTs through its collaboration with the anonymous digital artist Pak and the NFT marketplace Nifty Gateway to create a new collection of digital art called The Fungible Collection. The collection sold for over US$17 million.
So why are NFTs so popular and worth so much if they are a digital asset? According to Forbes, NFTs enable a buyer to own the original item. In addition to this, NFTs contain built-in authentication. This serves as proof of ownership for the buyer. In addition to this, collectors who buy art through the means of NFTs also buy the “digital bragging rights” of ownership which is almost more than the item itself. In addition to this, it is currently possible for artists to attach stipulations to an NFT so that they can ensure they will receive proceeds every time the NFT gets sold. Due to this, the artist will benefit should their work increase in value.
However, despite the popular traction NFTs have been gaining in the world of art, The Conversation published an article documenting that NFTs are much bigger than an art fad and they have the potential to change the world of business and exchange.
The potential of NFTs in new markets
Like with any invention, NFTs are set to create new opportunities for business models that never existed before. The potential of NFT goes way beyond redefining the idea of ownership but also leaves room for reinventing transactions within ownership. More often than not, a transnational process between a buyer and a product depended on layers of middlemen to carry out the transaction. This is often to ensure that there is a layer of trust and an exchange of contracts before an exchange of money takes place. However, with NFTs, this process will no longer need to take place in the future as the transactions will be recorded on blockchains that are reliable. Thanks to NFT and their ability to convert assets into tokens that can be moved around a digital system, the future will see the arrival of smart contracts that will remove the role of lawyers and escrow accounts. In such cases, this would completely transform different markets such as the automotive industry, jewelry, land ownership, and property.
‘This would be beneficial to these markets as often their current systems are outdated’ shares Bobby Ward of Vorto Trading. NFTs will open up a new world of possibilities of contract exchange and the processes carried out when it comes to a transaction.
If you would like to learn more about how NFTs will disrupt the future and how Vorto Trading can empower your business when it comes to foreign exchange, contact [email protected]