Where Does NFT Money Go?

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Where Does NFT Money Go?
Where Does NFT Money Go?

You’ve probably heard about non-fungible tokens (NFTs) by now – and you might even be ready to stop hearing about NFTs. Beeple’s Everyday: The First 5,000 Days sold for over $69 million in March 2021, sparking broader interest in digital artwork and continued media coverage. 

The concept of digital ownership can be difficult to grasp, and with so many of the loudest voices investing heavily in NFTs, it can be difficult to know who to trust. 

Be careful when trying your hand in the NFT world. Investments can disappear overnight. Certain artworks may pose security risks, such as disclosing your IP address. In addition, the energy consumption of blockchain transactions can also contribute to climate change. 

In this article, we will be discussing what NFTs are, how they work and where NFT money goes.

What is NFT?

NFT stands for Non-Fungible Tokens, meaning that hidden within these crazy works of art is a unique and non-fungible unit of data stored in a digital ledger that uses blockchain technology to provide proof of ownership. Essentially, it uses the same or similar technology used for cryptocurrencies like Bitcoin and Ethereum to guarantee the uniqueness of each NFT and prove who owns it.

However, unlike a Bitcoin unit, each NFT is unique, so it cannot be exchanged among its peers. The file stores extra information that elevates it above pure currency and brings it into the realm of anything. Therefore, NFTs have become collectible digital assets with value, just like physical artworks retain their value.

Any easily replicable digital file can be stored as an NFT to identify the original copy. The NFTs you’re most likely to see or read about are typically forged from awesome futuristic motion graphics, and NFTs can be created from any photography, art, music, or video file. Even tweets and memes have been turned into NFTs. To help you, we outline the NFT trends for 2022.

Essentially, you can make an NFT out of just about anything unique, can be digitally stored, and has value. They’re just like any other collectible item, like a painting or vintage action figure, but instead of buying the physical thing, you’re paying for documentation and proof that you own the real thing.

How Do NFTs Work?

The unique identity and ownership of NFTs can be verified via the blockchain ledger. They were originally launched on the Ethereum blockchain, but other blockchains, including FLOW and Bitcoin Cash, also support them. Whether the original file is a JPG, MP3, GIF, or some other file, NFT identifying its ownership can be bought and sold like any other type of art. Like physical art, the price is largely determined by market demand.

If you go to an art gallery gift shop, you will find many reproductions of famous masterpieces and some NFTs that behave the same way. Some parts of the blockchain are fully valid, but their value is not the same as the original.

An NFT will most likely come with a license for the digital asset it references, but this does not automatically grant copyright. Copyright holders can copy the work, and NFT owners receive no royalties. 

Where Does NFT Money Go?

Blockchain technology and NFTs offer artists and content creators a unique opportunity to monetise their products. For example, artists no longer rely on galleries or auction houses to sell their art. Instead, the artist can sell it directly to the consumer as an NFT, which also lets them keep more of the profits. In addition, artists can program in royalties, so they’ll receive a percentage of sales whenever their art is sold to a new owner. This is an attractive feature as artists generally do not receive future proceeds after first selling their art.

Art isn’t the only way to make money with NFTs. Brands like Charmin and Taco Bell have auctioned off themed NFT art to raise funds for charity. Charmin dubbed its offering “NFTP” (non-fungible toilet paper), and Taco Bell’s NFT art sold out in minutes, with the highest bids coming in at 1.5 wrapped ether (WETH)—equal to $3,553.84 at the time of writing.

Nyan Cat, a 2011-era GIF of a cat with a pop-tart body, sold for nearly $600,000 in February. And NBA Top Shot generated more than $500 million in sales. A single LeBron James highlight NFT fetched more than $200,000.

Even celebrities like Snoop Dogg, Lindsay Lohan, Amitabh Bachchan and Salman Khan have jumped on the NFT bandwagon and posted unique memories, artworks and moments as safe NFTs.

Conclusion

Like most blockchain experiments, the future is relatively unknown. However, prominent publications indicate that NFTs aren’t going away soon. Now that wealthy investors are pouring money into them, they will likely become more and more mainstream.

With the ability to sell the right to use assets without giving up ownership, this may even become the new way to sell music to consumers. To jump into the market with the least risk, anything creative you own is potentially valuable.