After seeing an internet-breaking post that says something like, “Duct-taped Banana picture sells for $120,000”, you must think that how can a regular picture; A: get so much fame on the web? And B: Is bought and sold for thousands of dollars. The reality behind the image is that it is more than just a JPG image, it is an NFT. Now to learn what is an NFT and how it is different from any regular image, let’s tune in!
People mostly fail to explain what actually an NFT is when attempting to explain NFTs to those individuals who are unfamiliar with blockchain and are outside of the trading environment. You've probably seen or saved snapchat avatars, making different poses , which isn't a bad comparison to make when talking about the interest in collecting NFTs, but it doesn't explain what the distinction is between buying one and simply storing others as a JPEG.
It must be puzzling to find out why these little images sell for such absurdly high rates when virtually everyone can right-click and download the same images for free. Let’s begin but, before diving into the core difference between the Non-fungible token (NFT) and Joint Photographic Experts Group (JPEG) the two terms must be described and then differentiated.
What are JPEGs or JPGs:
JPEG or JPG is an image format. It is considered as a digital picture data that has been compressed and is contained in the JPG format. JPG format includes crucial image information. It is the most used image format for exchanging pictures and online images shared and uploaded by mobile and PC users.
Thousands of photographs may be stored in a tiny amount of memory due to the small file size of JPG images. JPG pictures are frequently used for editing and printing. Most images that have been modified with CorelDRAW, Adobe Photoshop, InDesign and Illustrator are saved in JPG format.
These images are shared, downloaded, uploaded, saved, and used in many ways with and without consent as mostly there is no ownership attained with the data of these files. Does this sound like an issue, when your created image gets used by somebody else without credits? Well it sure does. This is where NFTs come in so let’s explore NFTs.
What actually are NFTs:
NFTs (Non-Fungible Tokens) are digital assets that have a distinctive ownership mark. Fungibility means for an item to be replaced with another item of some value. Like interchangeable objects or goods. Whereas, Non-fungible items are those that have unique value and can not be replaced or exchanged by any other item.
Exactly as it sounds like, a non-fungible token is a token(Unique, one-of-its-kind). Tokens are digital assets created on a particular blockchain and defined by a project or smart contract. Tokens come in utility and security types. Consumer or incentive tokens are other names for utility tokens. A Non-Fungible Token is entirely hard to copy, much like Bitcoin or Ethereum tokens. But these tokens are attached to external media, like JPEGs, tickets, paperwork, etc.
The assets that NFTs represent are said to be non-fungible as they are distinct and non-transferable. For instance, you may exchange a $10 note for ten $1 bills. A special membership card, used for transactions at the specific hotel cannot be exchanged for another identity, debit, credit or another membership card because paying off using another card would not hold the same value set by and for different markets. And thus, it is not interchangeable.
Actually, NFTs operate quite similarly to the majority of cryptocurrencies. But they are digital files stored on the same blockchains, not tokens that are traded for different platforms and projects. NFTs differ from trading tokens. To read further, this is explained in detail here.
How is NFT different from JPG:
When comparing NFTs to JPG, the "non-fungibility" factor would be the most significant NFT advantage. NFTs are digital files known and considered valuable objects, much like vintage cars, art pieces, or gold bars. NFTs are stored and exchanged as a digital asset on a blockchain. An NFT possesses ownership and transferability attributes that are absent from standard JPG, PNG, or PSD files, so it provides additional elements to the NFTs. These properties and more characteristics of NFTs can be discussed as:
The choice for scarcity is the first characteristic of non-fungible tokens that sets them apart from JPEGs. Only a few well chosen works of art can be produced by NFT engineers or artists, increasing scarcity.
The most apparent difference between NFT and JPEG would likewise be related to ownership. Non-fungible tokens run on a distributed ledger, and the holder of the private keys of that NFT on the blockchain controls it. If you own an NFT, you are the only one who has the authority to sell or transfer it to another account.
NFTs' non-interchangeability characteristic makes them stand out in terms of utility. While DAOs are expanding the possibility of community ownership of NFTs, it is possible to split an NFT into two separate halves in order to sell it. One fundamental characteristic of NFTs' non-fungible nature is their non-interchangeability.
- Unique Resources
The distinctiveness of NFTs is the last factor to be considered in comparing the two. Non-fungible tokens feature distinctive metadata that is virtually impossible to change. With the aid of provable authenticity, you will be able to identify the NFT and JPEG.
In addition, non-fungible tokens differ from JPEGs in that they may be traded on various blockchain-based platforms. NFT investors have the freedom to explore new opportunities thanks to the unrestricted ability to trade NFTs across all platforms.
Transparency is another important feature of NFTs that sets them apart from JPEGs. The decentralized and unchangeable public distributed ledgers containing comprehensive information on the NFTs are accessible thanks to the NFTs' base on the blockchain. As a result, NFT transactions stand out from ordinary digital photos due to their openness and assurance of verifiable validity.
Are NFTs only artworks?
While non-fungible tokens offer the potential for numerous more use cases, the majority of conversations surrounding NFTs frequently focus on demonstrating that NFTs are not just JPEGs. NFTs are frequently associated with artistic work and are seen as more sophisticated and secure JPEG alternatives. Non-fungible tokens, however, have a wide range of uses that go beyond the realm of the arts. Undoubtedly, non-fungible tokens have given digital artists and content creators all around the world a useful tool.
On the contrary, in order to fully grasp NFTs' capabilities, it is crucial to investigate how they may be used in areas other than art. It's interesting to note that some assets have non-fungible tokens created as certificates or deeds.
Existing Use Cases of NFTs
NFTs can be used for multiple purposes, few are listed below:
- Music making
Anybody can purchase your original musical creations in the form of NFT. The composition may only be used in accordance with the owner's wishes.
- Gaming Industry
In the gaming industry, gaming NFTs offer the finest use case. NFTs can be used to buy and sell exclusive game characters, avatars, and stuff. As an illustration, consider buying weapons for the game from the NFT market.
- Land Ownership
An NFT can be used to represent real estate or land. It would be useful in presenting ownership documentation, owner biographies, etc. It is also conceivable to develop decentralized services for home rentals.
Paper tickets for parking, transportation, and other services can be substituted by NFTs, for validation.
- Supply chain
NFTs can enable businesses to follow the progress of tracking the products from manufacturing to shipment and delivery. Customers can see what they are paying for thanks to this, and the supply chain of a business is kept transparent.
NFTs can give individuals a digital identification that demonstrates their identity and place of residence in the nation. As NFTs will act as an official record of people who installed their votes, this will also aid in the elimination of voter fraud and cheating.
- Artwork Monitoring
Many pieces of art are easily duplicated today, and it might be challenging to identify the original owner. We may confirm the legitimacy and ownership history of NFTs by using them. Additionally, this guarantees the authenticity of the property for NFT owners.
So why do people buy NFTs?
According to a survey conducted over twitter (as there is the most blockchain technology people pool resides), it shows that the major chunk of people purchase NFTs for gaining value, making money etc. Second on the line is the ratio of people who collect NFTs for community and flexing their assets. Then there are those who are artists or aesthetes who collect it for the artworks and lastly the ratio represents the gaming industry associates who quantify their gaming assets and tools.
Where can we buy NFTs from?
Now we understand that NFTs are special products that are incomparable to other things. For instance, a unique celebrity-signed card is an NFT since you cannot just swap it out for another card. Your card will become different if you exchange it with another card. These are distinct from fungible things, which are frequently interchangeable.
The majority of NFT platforms demand that customers utilize cryptocurrency and a digital wallet to complete their transactions. Not all NFT markets purchase and sell every type of NFT since different NFTs employ different blockchain technologies. It's common for creators to base their decision on an NFT marketplace's support for a certain NFC token standard.
The following are some of the leading NFT markets:
5. Magic Eden
The distinctions between NFTs and the typical JPEGs found online demonstrate the uniqueness of NFTs. Also reading through the section, "what are NFTs" we get the idea that Non-fungible tokens have a particular evidence of ownership, rarity, and uniqueness. These characteristics are not present in JPEGs. NFTs don't merely apply to artistic creations, either. NFTs have several applications, including representing real estate or metaverse assets, which give a peek of their future potential. This article also includes how to buy NFTs and what are the marketplaces that can be explored where it is explained where to buy NFTs.
NFTs are more than just JPEGs, but it's also crucial to understand that not all non-fungible tokens are created equal. In fact, providing control and ownership over assets—whether digital or physical—is the fundamental concept of NFTs.