NFTs and NIL
WHAT IS AN NFT? “Non-fungible” more or less means that it’s unique and can’t be replaced with something else. For example, a bitcoin is fungible — trade one for another bitcoin, and you’ll have exactly the same thing. A one-of-a-kind trading card, however, is non-fungible. If you traded it for a different card, you’d have something completely different. NFTs can really be anything digital (such as drawings, music, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art.
What is NIL? Name, Image and Likeness describes the process by which college athletes are allowed to receive financial compensation through marketing and promotional endeavors — from autograph signings to product endorsements to social media posts.
NFT are the new HOT digital technology, why? By Reginald Grant, MS Ed.
Artist for centuries have been characterized as “starving artist.” Well, NFT’s could be the platform that changes that forever. NFT’s are essentially “Digital Collectibles.” With the evolution of technology artist, athletes, entertainers, influencers and other can now monetize their creative work, likeness and control their own creative destiny.
Non-fungible tokens, or NFTs, are blowing up, driving huge prices and explosive hype and earning comparisons to the 2017 ICO (initial coin offering) mania.
What is a NFT you ask?
NFTs are defined as “unique, digital items with blockchain-managed ownership,” per NFT marketplace OpenSea. Imagine a rare baseball card. It has value because it’s scarce and can’t be replaced with just any other baseball card. The same can be said for digital files: Beeple’s $69M collage image file is among the most headline-grabbing NFT sales, but the Nyan Cat creator sold the iconic gif for $600K, Grimes sold a collection of short videos for $6M, and Kings of Leon released a new album along with concert tickets as NFTs.
These eye-popping prices are likely driven by speculation, but the question of the monetary value of art is something that the traditional art world has long grappled with.
According to CNBC:
Sales of nonfungible tokens soared to more than $2 billion in the first quarter — more than 20 times the volume of the previous quarter, according to a report from NonFungible.com.
NonFungible.com said the industry is largely dominated by the art and collectibles segments, and specifically projects such as CryptoPunks and SuperRare.
Despite the recent price drops from the February highs, NonFungible.com said the average price of NFTs “increased significantly” during the quarter.
Despite recent data showing a big drop in average prices from February, sales of NFTs at the start of the year showed an explosion of interest and buying. NonFungible.com said there were more than twice as many buyers than sellers in the first quarter, with 73,000 buyers for 33,000 sellers. The imbalance, according to the company, “is a signal of massive interest in newcomers, but also of the desire of current owners to keep their assets, which creates a phenomenon of scarcity in the market.”
Despite the recent price drops from the February highs, NonFungible.com said the average price of NFTs “increased significantly” during the quarter, with a work of art on SuperRare selling for an average of $1,231 in the fourth quarter, and $6,585 in the first quarter on the secondary market.
According to CB Insights:
Debate has arisen over what ownership actually means in the context of NFTs. In many transactions, NFTs don’t represent the actual asset itself (nor IP nor reproduction nor copyright), but solely a record of ownership. Some compare it to owning the deed of a house — rather than the house itself — or owning a verified, autographed copy of the Mona Lisa, but not the original Mona Lisa and not just a print. But the specific terms of a transaction can vary from NFT to NFT, driving much of the confusion around the definition of ownership.
That said, there are a few inherent baseline characteristics for NFTs that are commonly cited when defining the technology as a “new form of ownership,” including:
Rare and unique — This is where the “non-fungible” part of NFTs comes in (fungible refers to interchangeable goods). NFTs are wholly unique, and no two NFTs are identical.
Interoperability and trade — Due to the open nature of many blockchain standards, NFTs can be moved across different ecosystems, wallets, marketplaces, and more. As a result, users are able to use NFTs to trade goods outside of their original contexts (e.g., selling video game skins).
Immutability — Once an NFT has been encoded using blockchain technology, no individual can alter its ownership data/history or metadata. NFTs allow holders to prove the authenticity and originality of their asset, verified through whatever blockchain they are stored on.
Ownership — Holding an NFT token can allow people to prove that they are the owners of a unique asset.
Other features include the ability to program royalties into the token, allowing artists to collect a portion of sales thereafter, or include other technical features like fractional ownership.
Currently, the vast majority of NFTs are built using Ethereum standards, though technically NFTs can be minted on other blockchains, such as Algorand, Tezos, and Polkadot.
Where the opportunity lies
Traditional art, Sports & other collectibles, gaming and digital art represent some of the earliest applications for NFTs, as well as some of the largest asset classes in the ecosystem.
Learn and earn.
Reginald Grant, MS Ed.
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