To anyone who follows the cryptocurrency domain for longer than a few months, the concept of non-fungible tokens is nothing new. Like the blockchain technology in general that props up all of the cryptocurrency networks in the world, including bitcoin, NFTs are basically just another representation of the same core technology. In its essence, it is a once-in-a-generation IT achievement, again, just like any blockchain-based entity in existence today. However, like many other things in crypto, but also social media, esports, and other fields where public attention is able to actually change the thing it is observing, NFTs are now entering an entirely new chapter of their existence.
That mutation is coming from the evolution of the general crypto ecosystem. But, it is also stemming from the exponentially growing amount of public attention. Some of that focus is coming from the niche audiences that are already interested in crypto in some shape or form. But, a lot of it is coming from the mainstream media and a public that does not get the underlying tech of NFTs. The result is presently a quickly-forming fear of missing out or FOMO that is such a well-known appearance in this space, but still one that is very worrying to all those who are following the scene in a more in-depth manner.
Non-Fungible Token Technology Misunderstandings
The frantic market activity in recent days regarding NFTs business deals – mainly sales of recently minted works of art in one form or another – attracted a lot of public awareness of the same space. For many, that is the first time they are coming across anything like this in terms of not just a market phenomenon, but also when it comes to the underlying technology that drives it. Like almost always in the wider blockchain development space, most individuals who suddenly take an interest in this topic (even those who have a drastically negative outlook on it) lack a lot of background information.
Most of them have a very limited understanding of what not only NFTs are, but how the basic technology of distributed ledger functions. Yet, the nature of the modern world is that they are still able to engage in the public debate on social media and streaming services, among other places. The resulting miasma of ideas and opinions is something that the crypto ecosystem saw from day one. Now, it is setting across the NFT field and like always, the escape from it comes from the basic understanding of how the core blockchain technology works in this particular niche application.
The key idea behind the non-fungible tokens, in general, is nothing more than to define a digital set of data inside of a network that cannot be copied or reproduced. Essentially it is nothing more than a bar code or similar carrier of data that shows a level of autonomous and universal recognition inside of a particular network with the purpose of showing its origin and ownership. That makes it almost identical to any bitcoin token, with the difference that all bitcoin tokens are unique and non-copyable, but also are mutually interchangeable. It does not matter for the end-user which token they hold, just as it does not matter for a holder of USD bills if they have one serial number or the other. All of these are fully interchangeable between each other.
But, NFTs are not and they are thus marks of both ownership and non-fungible uniqueness. That is why they are mostly associated with digital art that is minted into an NFT and thus cannot be moved or copied in that form. A copy of the actual pixels or soundwave can be made, just as anyone who has a laser printer can print USD bills. But in both cases, the copies are nothing like the actual element they are reproducing, no matter how technically similar they might be. That is essentially the entire focus of the NFT revolution and its guiding principle – making elements that are unique something that can be owned and tracked without any risk of the same data going anywhere without the rightful owner’s consent.
Missing Out on Art
When the technology component is stripped away, the thing that is left in the market sense is a basic desire to collect art. In essence, the way NFTs work on the market is nothing drastically different than the idea of buying and selling – or holding for one’s pleasure – art. That concept is known to humanity for thousands of years and today, many works of art possess prices that are either incredibly high or even incalculable.
For example, the most famous paintings from the renaissance masters are today literally without a market price because they are deemed too valuable to be even considered for any kind of a sale. Other, less famous works by slightly less famous artists easily reach prices of multiple millions of USD on regular auctions. NFTs work in the exact same manner, offering unique works for whatever price the market assesses they are worth at any given moment. But, that also opens up a way for one of the most damaging elements of the crypto domain in general – the fear of missing out.
FOMO meets NFTs
The explosion of the NFT markets did not come about because of technological advancement in this field. It did not come because work from a famous author was discovered recently and sold for huge amounts of money. Instead, it came as more and more individuals and businesses began to feel they are missing out on this phenomenon.
This included some high-profile sales of dubious works of art that were minted into NFTs and which in turn generated a lot of media attention. Here, the full cycle began of having a spotlight on NFTs and having the same spotlight feed into itself. That piggybacked on the great year that crypto markets are having overall and produced a unified space where everyone can feel they are missing out. That is why the present NFTs craze will likely even get stronger before somehow and somewhere, this mini-bubble gives way.