What Is an NFT? Everything You Need to Know
In this article, we'll explore everything you need to know about NFTs, what they are, and how they can have real-world utility.
Unless you’ve been actively avoiding any form of tech content for the last couple of years, you’ll almost certainly have heard of NFTs.
Unless you’ve been actively avoiding any form of tech content for the last couple of years, you’ll almost certainly have heard of NFTs. There’s been quite a bit of buzz about them in the tech community, and since Facebook’s rebrand to Meta, NFTs are finally getting some attention from people outside the tech community, too.
It’s great that NFTs are getting acknowledgement from an ever-increasing number of people, because although there are some abstract use cases, NFTs have the opportunity to revolutionise several industries, particularly the event ticketing industry with the potential to significantly reduce both ticket scalping and ticket fraud.
NFT is an initialism for Non-Fungible Token. Fungible refers to the interchangeability of an asset with another asset of the same type. In this sense, items that are non-fungible are ones that cannot be traded for each other. This translates to a proof of ownership which can apply to either a physical or a digital items verified by a blockchain. Read more about NFTs.
The simplest use case to understand as a basis for NFTs is artwork. An NFT would be an original piece of digital artwork, while everything that has been given the ‘right-click, save as’ treatment would be a copy of it. It might seem strange that people would spend money on something that can be easily downloaded for free, but it’s a similar idea to physical art. You can buy a print of The Mona Lisa at a museum shop, but the original is out of reach financially (for most of us anyway!).
The idea is the same though, whoever owns that original piece gets to flex it, the rest of us can still admire it.
At the time of writing, the main use of NFTs is digital, though there is some expectation that this proof of concept will be broadened out to physical items in time. NFTs are one-off, cryptographic assets that exist on blockchain networks (we’ll get to those in a moment). NFTs can be any digital item, which gives them a really broad scope.
Already, some NFT artwork is selling for eye-watering amounts of money, but NFTs are also a key feature of the Metaverse, the 3d virtual reality playgrounds which also utilise blockchain technology.
There are heaps of different ways that NFTs are already being implemented, with big-name brands from the physical world like Gucci and Nike utilising the technology for their goods, Snoop Dogg’s land in the Metaverse and even a digital yacht (that’s right, a yacht that neither floats nor sinks).
So with everyone jumping on the NFT bandwagon, let’s take a look at how secure the technology which guarantees the authenticity of these digital tokens is, and what some more tangible use cases for them might be going forwards.
NFTs are made possible by blockchain technology, a decentralised network where information is stored in encrypted blocks, which are chained together, forming an irrefutable ledger for the information they contain. Blockchains have risen to prominence through their best-known use case — Bitcoin.
The reason for the security and guarantee of authenticity that blockchains can provide when compared with traditional data storage mechanisms is their decentralisation. It means that altering the data held on the blockchain network is significantly harder than altering data on a single, centralised server.
Blockchain networks are distributed networks, which hold information, in a similar way that a traditional server bank would. Where they differ, is that a blockchain network stores its information across the entire network, using each device that accesses it as a ‘node’.
As a result, all of the information on a blockchain network is distributed amongst these nodes, stored in blocks, chained together in chronological order. Once a block is completed and chained onto the previous one, there is no way of altering the information stored on the block.
Unlike traditional centralised servers, decentralised networks are significantly less vulnerable to attack, because there is no single point to direct efforts towards. This makes a blockchain network extremely reliable, meaning that they act as immutable records of the data they hold.
To reach an agreement on the information stored on the blockchain, the nodes use a “consensus mechanism”. For most scalable blockchains, this consensus mechanism consists of tokens, where users “stake” their tokens, actively guaranteeing authenticity through proof of funds.
The security of the data contained on distributed networks is what makes non-fungible tokens (NFTs) possible. A blockchain allows us to prove, beyond any doubt, the true owner of an original digital asset hosted on its network. That digital asset is an NFT.
In conjunction with NFTs, smart contracts also exist on a blockchain network. A smart contract is a self-executing piece of code that triggers when certain conditions are met. Smart contracts allow the users minting NFTs to attach stipulations to them. These can be royalty splits, resale permissions and much more.
Original ownership is proved by the blockchain in a trustless system, which requires no third-party oversight. That’s why decentralised finance is such a big concept in the blockchain world — blockchains and smart contracts remove the need for third-party governance of transactions.
So, now that we have an irrefutable ledger of ownership, some unique, one-off digital assets and some smart contracts with them, what can we use them for (apart from virtual sneakers and the chance at being Snoop Dogg’s neighbour)?
We mentioned earlier that the use cases for NFTs are only just beginning. In time, the expectation is that many of the transactions that take place in the physical world requiring third party oversight can be automated and streamlined using blockchain technology.
As of now though, we are only just beginning to explore what is possible, hence all the pictures of apes you might have seen circulating with the caption “NFT” underneath them.
There is a more tangible use to NFTs than just digital yachts and pictures of apes, that’s where SeatlabNFT comes in.
SeatlabNFT is creating a platform where event creators can mint NFT tickets for use at their live events. This means that artists and designers can have total free reign over the aesthetic of the ticket, while the blockchain secures the authenticity of the ticket and NFC (near-field communication) tags verify the entry on the door.
SeatlabNFT’s platform will also provide a way for artists, performers and event organisers to reward their fans with exclusive airdrops to the wallet that the NFT ticket resides in. These airdrops can incentivise fans with anything from unique NFT collectables, to on-site perks and exclusive merchandise offers.
What’s more, using smart contracts, event creators will be able to set the royalties or commission they expect to receive from every single sale, for the entire lifetime of the NFT.
This unique ability to define a royalty split for the lifetime of a ticket has the potential to significantly reduce scalping. Event creators can set the artist commission to 100%, meaning whenever a ticket is re-sold, it is only the artist that gets paid, irrespective of price.
For fans, the addition of a secondary marketplace provides the convenience of reselling a ticket without having to create a new account for a different website or transfer their NFT ticket to another wallet.
There is an emphasis on community participation and the rewarding of active members of our NFT ticketing community. Holders of the $SEAT token will receive special rewards that scale in accordance with the number of tokens held. Similarly, event creators will be able to reward loyal fans with bonuses for holding tickets to events that are part of their network, should they so desire.
The SeatlabNFT platform has the potential to let artists and event creators connect with fans in a more meaningful way through airdrop incentives, whilst also reducing scalping and ticket fraud with smart contracts for royalty splits.
It’s an exciting time for blockchain technology as Web3 approaches fast. While the possibilities for these technologies are still being explored, the many successful proofs of concepts and widespread adoption of them demonstrate that there is an underlying trust in the technology as a whole.
If you want to know more about how SeatlabNFT is going to shake up the ticketing industry and change the way we see event ticketing in the future, stay in touch with us via social media, and sign up for our newsletter below.
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