ČeskyWhat is NFT and why do we experiment with it?
NFT is a recent phenomenon and is the next big thing after the ICO and DeFi waves. Let’s explain what NFT is and why it makes sense to be interested in them.
Fungible vs. Non-Fungible Tokens
NFT stands for Non-Fungible Tokens. Everyone probably knows what a token is. In the context of blockchain, a token is a digital asset that has value and can represent something. Tokens, like ADA coins, for example, can be held in your own wallet. People may struggle to understand the meaning of the word fungible. Fungibles are things that are exchangeable one for another. For example, tokenized dollars are fungible because you don’t care what dollar you hold specifically. All dollars have the same value, so their use-value is exactly the same. Dollars can easily be divided into smaller parts, as each part has its exact value. We know the value of $0.5 or $3.75.
Non-fungible tokens are tokens that are in some way unique or have a limited and usually smaller amount of pieces. Every single piece holds its own inherent value. Unlike fungible tokens, Non-fungible tokens are generally not divisible since it is difficult to understand what a fraction of one of them would mean.
A typical NFT might represent a piece of art. It can be a representation of physical art or purely digital art. It might be difficult to explain what it actually means to own 1/3 of a physical painting by Rembrandt. The owners would have to agree who would have the painting in their living room at home. However, in some cases, it can make sense. For example, if the NFT represents a painting that is on display in a museum. In this case, a portion of the admission fee can be distributed among the owners of the exhibited paintings. The share of ownership can determine exactly how much who gets. Shared ownership can therefore make sense.
In the digital world, a token represents digital art or anything else that exists or can be expressed in the digital world. It can be an image, a song, a video, a celebrity tweet, an article, an opinion, an idea, a ticket, a thought, a game item, or a game character. A token represents ownership of any digital object.
NFT value
The value of the NFT is a frequent topic of discussion. In short, a token can only represent as much value as the work or object associated with the token. The value of tokens must be backed by something. It can be the reputation of the creator, rarity, copyright, physical objects, but only demand. You could say that supply and demand influences the price.
It is important to note that NFTs are usually issued by a single entity or group. Only the authors can influence the rarity of tokens and it is up to them to keep their word. This is unlike the ADA coins in the Cardano network, their quantity is controlled by the entire network. People buying NFTs have to trust the authors. For example, if Alice paints a beautiful digital picture, makes it into an NFT, and promises that only one piece will exist, the buyer must trust her. Alice can use the same image and make a new NFT after some time. Or someone other than Alice can do it. Bob can steal the image and try to make a similar NFT. Both attempts can reduce the value of the first original token. However, there will always be a record in the blockchain of exactly when the first token was created, including the entire history. It can be expected that the first token will always remain rarer.
Note that Bob wanted to commit fraud. People buying NFT must be careful to buy only NFT from genuine authors. Regulation of the NFT sector and protection of ownership can play a significant role and increase the value of tokens. It is also important to think about what you are actually buying. If a Twitter account owner tokenizes their own tweet and sells that, all is well. If someone tokenizes someone else’s tweets and sells those, there may be a copyright issue.
So what do NFT owners actually own? Their own token, which they can keep in their own wallet. That is, they own a token that no one else can take from them. The rules here are exactly the same as with ADA coin ownership. Thus, token owners themselves can decide to sell or otherwise use the token at any time. In the case of digital art, such as an image, the token includes a link to the physical storage with the image. At this location, the owner of the token can view the image. Ideally, this is a repository that will be around forever.
You may ask if such a picture is really rare. Here it is necessary to think out of the box. People often have a box in their own heads and feel comfortable in it. Unless they step outside the box, they remain anchored in the old thought frame. Some people like to hang a picture above their bed, others prefer to have it as wallpaper on their phone. Someone will be happy to own a token of the picture they have above their bed. Times are changing and everything around us is going digital. Cryptocurrencies are an attempt to digitize money. As for art, most of us consume it exclusively through the digital form. We listen to music, watch movies, play games, read articles and look at pictures. Everything is digital. We are used to the idea that only physical art must be precious. Why not digital art? Any of us can take our own photos or pictures and try to sell them. The internet may be literally flooded with NFTs, but that doesn’t mean people are resigned to choosing quality NFTs. People will gladly pay for something nice if the price is reasonable. What if there are NFT shows in 10 years? People will go to the museum to see them. Artists will provide physical originals, or other artists will paint new paintings based on digital NFTs. Maybe everything will be done in the digital world only and people will pay admission. The owners of the NFTs will lend them to the museums. Do you think that’s a very crazy idea? Maybe you’re still trapped in the old thought box.
People have always longed to possess something that others do not have. NFT’s ability to be owned, easily transferred, and easily sold to anyone in the world makes these tokens unique. Owning NFTs is different than owning, say, money or cryptocurrencies. What is of more value, ADA coins, their number is digitally capped at 45B, or very similar digital tokens, which each represents a digital image. Believe it or not, there are people in the world who prefer to choose tokens representing images.
We expect the value of NFTs to increase with their age. At this stage of development, the NFT industry is in a bubble. However, this does not mean that the whole industry will disappear when the bubble bursts. The market will show what has value and what does not. Supply and demand will become more rational, more traditional artists will come into the industry, and perhaps works will be created that only make sense in the digital world. There may be many competitions that will be built solely on NFT. Collectors may collect NFTs in the same way that stamps or hockey cards are collected.
Why did Cardanians decide to release their own NFT?
Cardano is a platform and NFT is one of the many options it offers. Getting your own experience and making your own opinion is very important. So we decided to release our own NFT tokens. At the same time, we wanted our tokens to have real artistic value. So we approached a well-known art group from Prague called Show me! tattoo and asked them to collaborate.
Kawaii, (Japanese かわいい), means “kissable”, “cute”, or “adorable” is the culture of cuteness in Japan. It can refer to objects, people, or fictional characters that are charming, vulnerable, shy, or childlike, such as cute handwriting, certain genres of manga, and characters like Hello Kitty and Pikachu. That’s why our project is called ADA-Kawaii. You can visit the website have a look at ladies.
ADA-Kawaii is a group of 30 scantily clad girls who love to dance and party. The rarity of each girl varies. The most represented is a girl named Yuri. There will be 310 NFTs with the girl Yuri. The rarest is a girl named Mami, who will only come out in 20 pieces. Each girl has a unique story attached to her. Yuri is a very quiet and shy girl by nature, but today she has thrown away her inhibitions and is ready to go all out in a nun costume. Mami is the most beautiful girl. She only appears at the best parties and her charisma can take everyone around her breath away.
The price of NFTs with ladies starts at 50 ADA with a 5% increase every day thereafter. It is possible to buy only 50 NFT per purchase. It is not possible to select the character of your choice. NFT is randomly selected for you based on the total quantity and number of pieces of a given lady. By that, we wanted to support trading with NFT. We expect, that people might want to sell one lady in order to buy another one. It is a part of our experiment.
We have several expectations from the project. We wanted to find out if there is interest in the NFT from artists. The interest has exceeded our expectations and more artists have expressed a desire to work with us. Artists are eager to experiment with NFT. They were often aware of this possibility but were put off by the technological complexity of token issuance and expensive fees on other platforms. Thus, a collaboration between artists and IT professionals is likely to rise in the future.
We wanted to give issuing NFTs a try so that we would be ready to help artists or other people. We were surprised by how easy it is. It’s handy that no smart contracts are needed to issue tokens and that Cardano works with tokens similarly to ADA coins.
Of course, we are most curious about the result. That is, how the sale and subsequent trading of tokens between users will turn out. As we said, there is a lot of craftsmanship behind our NFT tokens. Tokens have a certain value. We certainly don’t plan to release any more token girls, so tokens will remain scarce. We can’t estimate the future value of the tokens and will have to wait a few years to see the outcome.
Conclusion
We believe that tokens have huge potential for the development of blockchain technology. Interacting with tokens increases the network effect and offers additional uses beyond the use of ADA coins. Almost anything can be tokenized. Smart contracts will make it possible to interchange tokens and coins with each other or build entirely new services.
We believe that ADA-Kawaii will inspire other artists and that Cardano will be an attractive platform for them.