NFT Galore: Understanding the How and Why

Where did the Tokenization of Tangible Assets Began?You must have heard of that Art piece by the digital artist known as Beeple that sold for a record $69 million. I bet that was the first you heard of NFTs and wished you owned one or could create one.

Let's get you up to speed!

Non-Fungible Tokens or NFTs first emerged in 2012 when the concept of Bitcoin Colored Coins emerged. The Bitcoin Colored Coins were tiny fractions of a Bitcoin called Satoshis embedded in code with or colored in, with distinct information that could link them to real-world assets. For the most part, Colored Coins were used to create and then trade artwork eccentrically.

NFT Tokenization

NFTs can represent anything unique and one of a kind. Through NFT tokenization, you can tokenize almost anything tangible or intangible, from artwork, to commodities such as Gold and Silver, to building and real-estate, to someone's photo. As you can see above, actor Lindsey Lohan sold her first NFT, a picture of herself "with an earring featuring the word "LIGHTNING" under the shape of a lightning bolt" for $50,000.

How did Asset Tokenization Begin?

The above discussion must beget the question then, 'What is asset tokenization?' Tokenization began in the financial industry due to Securitization. Various types of contractual debts such as mortgages, loans, credits, and other assets are bundled to generate receivables and are offered to investors in the form of securities.

How Do Tokens Get Offered to Investors?

Tokens are digital representations of a real-world tradable asset. After an asset has been tokenized, it is offered for sale to investors via an event called Initial Coin Offering, or ICO. Commodity-backed tokens are also called Security Tokens and are offered through Security Token Offering or STO.

Not only that, you can even create your own token!

How to Create an NFT:

With the popularity of NFTs, several websites have gotten into the game of creating an NFT easy for an average person to create their own NFTs out of assets that they hold dear but want to share its representation as a token.
Websites like Rarible.com offer to convert images that you upload into NFTs and list them on the NFT art sale website OpenSea.

The website allows you to create a single or multiple collectible NFT like a series of collectible cards at a touch of a button and charges 2.5 % of the collected amount if it sells.

Even better, you continue to get royalties on the NFT if it continues to resell on the secondary markets.

As you can see, the representation or tokenization of assets into NFTs is rapidly gaining strength. Tokenization is a universal effort to decentralize everything and anything that sells in the real world and thus democratize a marketplace that has been controlled for far too long by Centralized parties with varying interests and influence.

In conclusion, both the Blockchain domain and its role in our daily lives are becoming ubiquitous. If the trend continues, we will soon buy groceries and pay for gas in digital currency, if not NFTs. But, blockchain, decentralized financial transactions, and more transparent transactions are here to stay for the foreseeable future.