… for Random Weirdness
Tip #1525: Monetize Images Using Blockchain
NFTs verify ownership and provide potential royalties.
This article, written by Alejandro Medellin, first appeared in Shutterstock.com. This is a summary.
The seemingly-overnight meteoric rise in popularity of NFTs (non-fungible tokes) has confounded many, including myself, begging the question: What are NFTs? Are they a cryptocurrency, a form of digital media, a speculative asset? The answers are no, kind of, and yes.
NFTs are digital assets whose ownership is verified by thousands of computers around the world using blockchain technology. Turning a regular digital asset into an NFT is called “minting,” which “tokenizes” the digital asset on the blockchain. NFT’s are sold using cryptocurrency, so the buyer and seller need a cryptocurrency wallet to participate in the transaction.
The digital asset itself is no different than non-NFT media, but its verification on the blockchain gives owners of the NFT legitimacy. While some people may buy NFTs because they like the content, many are treating NFTs as speculative assets, which are purchased because they may increase in value and sold for profit. With many NFTs selling as one-offs or in limited quantities, the digital scarcity increases the value of an NFT over time.
When an NFT is sold, and the transaction is verified on the blockchain, owners have digital proof of their purchase. That doesn’t mean they own the original asset or the copyright for that asset. They just own access to the NFT version of that thing, which is verified and cannot be changed unless sold. The blockchain verifies the transaction, which acts like a digital receipt that validates ownership of the NFT.
NFT ownership can be bought and sold, which is verified each time on the blockchain, but the original creator of the NFT is permanent. Typically, artists receive payment once when they sell their artwork, but selling an NFT is different. Each time an NFT exchanges hands, the original creator of the NFT receives a cut of the profit, which is a royalty payment. With the hope that NFTs appreciate in value over time, creators could make more on royalties than the initial price of the NFT.
The entire article is worth reading – as NFTs are simply another revenue source for our digital assets. The link is at the top.