Do You Know Where Your Digital Art Lives?

The Takeaway:

  • Non-fungible tokens (NFTs) are a way to prove ownership of digital art and collectibles.
  • The cool image or video the NFT owner owns doesn’t actually live on the blockchain. Instead the token refers to a file that sits somewhere else on the web.
  • If the file is stored at a traditional web address, the NFT owner is in some danger if that file is ever taken offline.
  • The NFT industry has solutions for this issue, but stakeholders haven’t settled on best practices yet, making it difficult for buyers to assess which NFTs safely store data for the long term.

Clearly, buyers are very excited about the potential of non-fungible tokens (NFTs).

This month alone, Nyan Cat’s creator nabbed almost $600,000 in ETH, a single Hashmask sold for $650,000, rare CryptoPunks are going for over $1 million and a chunk of “land” in the game Axie Infinity fetched 888 ETH.

Related: India’s Central Bank Chief Airs ‘Major Concerns’ About Crypto Risks

But those buyers should consider a very important question: What will happen to their NFT when the company or artist that created it closes up shop?

That question may be somewhat ahead of the curve for an industry growing this fast. For one data point, Devin Finzer, CEO of NFT marketplace OpenSea, told CoinDesk in a phone call that the company has “had some pretty insane growth,” going from $1 million in volume as of August to $8 million in January and $50 million already in February.

An NFT is a completely unique blockchain token. This is distinct from other tokens, which are fungible. One of Augur’s REP tokens is as good as any other, but each CryptoKitties collectible is its own cat, and provably so. 

As this particular blockchain use-case clicks in the minds of buyers, it’s important that they get more sophisticated about considering how safe and secure their asset is – its persistence.

PUBLISHED BY– Finance.Yahoo

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