ALL ABOUT NON-FUNGIBLE TOKENS (NFTs)

A Non-Fungible Token (NFT) is a non-interchangeable unit of data stored on a blockchain, a form of a digital ledger. Types of NFT data units may be associated with digital files such as photos, videos, and audio. Because each token is uniquely identifiable, NFTs differ from blockchain cryptocurrencies such as Bitcoin. It can also be used to represent individuals, identities, property rights, and more. For example, they are an ideal vehicle to digitally represent physical assets like real estate and networks. Because they are based on blockchains, NFTs can also be used to remove intermediaries and connect artists with audiences, or for identity management, NFTs can remove intermediaries, simply transactions, and create new markets. NFTs are rising in popularity as a more popular means to buy and sell digital art. Since November 2017, a whopping $174 million has been spent on NFTs. 

      “In 2021, we saw the world awaken to the idea that NFTs represent the basic building blocks for brand new peer-to-peer economies.” wrote Devin Finzer, who co-founded the company in 2017.NFT sales volume totaled $24.9 billion in 2021 compared to just $ 94.9 million the year before, DappRadar collects data across ten different blockchains, which are used to record who owns the NFT. NFTs gained popularity among both Indian and global icons. Celebrities leveraged NFT-backed technology to create digital content for their fans and relevant community.

HOW DOES AN NFT WORK? 

NFTs exist on a blockchain, which is a distributed public ledger that records transactions. You’re probably most familiar with blockchain as the underlying process that makes cryptocurrencies possible. Specifically, NFTs are typically held on the Ethereum blockchain, although other blockchains support them as well. An NFT is created or minted from digital objects that represent both tangible and, intangible items including art GIFS, videos, and sports highlights, collectibles, virtual avatars, video game skins, designer sneakers, music. Even tweets, count. Twitter co-founder Jack Dorsey sold his first-ever tweet as an NFT for more than 29 million. Essentially, NFTs are like physical collector’s items, only digital. So instead of getting an actual oil painting to hang on the wall, the buyer gets a digital file instead. They also get exclusive ownership rights. That’s right  NFT’s unique data makes it easy to verify their ownership and transfer taken between owners. The owner or creator can also store specific information inside them. For instance, artists can sign their artwork by including their signature in  NFTs metadata.

POSITION OF NFT IN INDIA

There is no official law or legislation put in place by the Indian Government that forbids or restricts an Indian resident from buying or selling NFTs as of now. The ambiguity surrounding the legality of cryptocurrencies in India appears to be the main roadblock in NFT Trading. NFT marketplaces in India are repository hubs where the NFT projects and pieces from the creator and business are listed for trading, buying, and selling. The marketplace is trading, buying, and selling. The marketing harbors a much broader spectrum of use cases than it puts on. In India, celebrity brands have been taking to the trend quite aggressively. Popular names such as Amitabh Bachchan, Sonu Nigam, and Yuvraj Singh have all launched their NFT in 2021. There are also brands like MG Motor India that announced their foray into the NFT world. With this, the British brand has become the first carmaker in India to launch a collection of NFTs. The MG NFT collection went on sale with 1,111 units of digital creative as part of the launch collection. Finance Minister Nirmala  Sithraman on Tuesday (1st Feb 2022) proposed a 30% tax on transactions in Cryptocurrencies. There has been a phenomenal increase in transactions in virtual digital assets and the magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.

ISSUES AND CHALLENGES IN NFT

The main challenge faced in the NFT market is the uncertainty in determining the price of the NFT. The price of any NFT will depend on creativity, uniqueness, scarcity of the buyers and owners, and a lot more. There are considerable fluctuations in the prices of NFT because there is no fixed standard for any particular type of NFT. The NFT risk and challenges related to intellectual property rights suggest that buyers only have the right to display NFTs and that they are the sole owners. The limitation of NFTs is also evident in terms of the services that users should follow when using NFTs in marketplaces. However, it is important to ward off all applicable for decentralized blockchain technology, so it is important to reflect on important IP rights considerations such as copyright trademarks, patents, moral rights, and the right to publicity. The growth of the digital world and the staggering growth in the popularity of NFTs has resulted in prominent cybersecurity and fraud risks. NFTs of replica stores that appear similar to original NFT stores with the same logo and content as authentic stores. Another prominent challenge related to NFTs in cybersecurity refers to fake NFT stores that could sell off NFTs that are not present in the first place. At the same time, the buyer must also be wary of the concerns due to artist impersonation or counterfeits of NFTs. Unlike dividend-paying stocks, interest-bearing bonds, and rent-generating real estate, NFTs do not offer their owners any income potential like antiques and other collectibles. The returns associated with NFT investments are based entirely on price appreciation, which is not something you should count on.

FUTURE OF NFTS

The NFT industry may still be at the beginning stage, but if we look at the amalgamation of NFT into the gaming industry, the merger could lead to the birth of the trillion-dollar industry. From sports stars to singers, actors, and brands, everyone has jumped on the NFT wagon, and excitement around the assets class is palpable in sectors like art, virtual real estate, sports, cinema, and gaming have seen the most action, and people have invested and traded in NFTs to the ton of billions of dollars. NFTs have grown to become a $41 billion market in 2021. The market is set to expand to $80 billion by 2025. The fact that NFTs run on a blockchain network and cannot be exchanged makes them unique and valuable assets. NFTs have the potential of providing a stable online market for investors and digital developers therefore, it becomes all the more essential to treat them as an asset with special regulations.

CONCLUSION 

• NFTs are unique pieces of data that are stored on a blockchain. Digital art, music, video clips, and tickets are a few examples of digital assets that are being converted into NFTs. Some people think that this is a bubble that will burst and some people think that NFTs will drive the digital economy. The technology is still in the initial stages, so we have to wait and watch how it evolves.