Everything You Always Wanted to Know About NFTs... or just about.
We couldn’t not write a blog post about NFTs while we are in the midst of a true craze.
You likely have heard about NFTs, but what are these mythical Non Fungible Tokens?
Well, let us get back to basics and for the sake of keeping things simple we’ll just look at NFTs on the Ethereum blockchain. Non Fungible Tokens started on the Ethereum blockchain as ERC721 tokens. These tokens have something rather unique about them, namely that they are in fact... well, erm... unique. Every NFT is identified by a unique uint256 ID inside the ERC-721 smart contract.
The beauty of the ERC 721 tokens is that they are interoperable and immediately accessible to the entire Ethereum universe. Wallets can hold ERC721 tokens, etc.
However, let’s hold our horses here for a minute. Is that it? Tokens with a unique identifier?
Ah well, the Ethereum community had obviously figured out that we needed actual data… so they added optional metadata to the protocol, something like this (only an excerpt):
"title": "Asset Metadata",
"description": "Identifies the asset to which this NFT represents"
"description": "Describes the asset to which this NFT represents"
"description": "A URI pointing to a resource with mime type image/* representing the asset to which this NFT represents. Consider making any images at a width between 320 and 1080 pixels and aspect ratio between 1.91:1 and 4:5 inclusive."
source: Herbie Starbelly on OpenSea
Right, well is that problem solved then? Not exactly...
How much does it cost to store data on the Ethereum blockchain? 😳
URIs to the Rescue!
source: IPDB Blog
Since storing data on the blockchain itself is ludicrously expensive, the clever developers from the Ethereum community decided to allow the use of URIs (Uniform Resource Identifiers) > tokenURI as used below: function tokenURI(uint256 _tokenId) public view returns (string) The tokenURI method returns a public URL. This, in turn, returns a JSON dictionary of data. This metadata should obviously conform to the official ERC721 metadata standard.
Interesting sidenote, the requirements for image data are actually based on Instagram recommendations since the Ethereum community figured that Instagram would know a thing or two about images.
Where does this data live?
Now, if an NFT is merely a unique pointer to content. Then surely, where that content resides is of utter importance… however, this rarely gets mentioned in any articles or Youtube videos. I thought this was really odd but then came across this excellent article by Brady Dale on Coindesk, confirming that the actual storage is crucial when considering buying NFTs.
So, what about the actual art and the collectibles.
After having discussed some of the more geeky aspects of NFTs let’s put our creative caps on! It is easy to understand why artists find NFTs so appealing. When digital or digitised art is so easily cloned, how can an art collector “own” a piece of art and how can an artist “sell” a piece of art if not for a unique proof of ownership, stored on an immutable ledger that is decentralised and can be verified by anyone?
This concept has given birth to an entirely new industry and has introduced a new group of art buyers, collectors and investors to this market. Established artists are selling pieces via the same platforms as new incumbents such as Fewocious.
The entire NFT art scene is piping hot at the moment and we love the impact it has on young artists and their communities. By cutting out many of the middlemen, decentralisation has given more power back to the creators and it is empowering an entirely new generation of creative geniuses. Now before you start frantically buying NFT art, it might be wise however to ask yourself some questions:
Except for bragging rights, which rights am I buying? Is it the copyright or am I entering a licence agreement or … ?
How will I display this art?
Where am I authorised to display this art?
Can anyone just have saved this digital piece of art (from the marketplace website) and also display it at home?
Music and NFTs are another good match obviously and Kings of Leon’s latest NFT venture is definitely worth mentioning. Not just music itself is being sold via NFTs, but the band’s Golden Tickets have sold for seriously big bucks (or ETH in this case).
Things can go a little crazy also on that front. CryptoKitties, CyberPunks are the “veteran collectibles” in the crypto scene but more recently NBA TopShot has been in the headlines with some sports fanatics paying massive sums of money for short video fragments of their favourite basketball star performing a slam dunk, 3-pointer or such. These basically are sports trading cards on steroids!
NFTs that are not NFTs:
The last category I would like to mention are crypto tokens that often are being grouped together with NFTs while they are not strictly speaking NFTs. The reason I would like to discuss these is that they offer a functionality that is extremely useful in video games and virtual worlds.
If you are into gaming or you have children who are addicted to games such as Roblox, Fortnite and Rocket League then you will surely be aware that a) as a parent you probably have spent a small fortune on in-game items for these “free to play games” and b) that these assets are stuck within their gaming environment. If kiddo is fed up with Roblox but now wants to get an entire wardrobe of new Fortnite skins, then be prepared to occasionally cave in and yet again spend more hard-earned fiat currency on virtual items. Wouldn’t it be great if assets in one game could be “melted down” for a crypto currency token that can be used again in another game. Or if unique in-game assets could easily be traded? And that is exactly where platforms such as Enjin - and many others - come into play. Don’t get me wrong, ENJ tokens don’t allow you to trade assets across the aforementioned gaming platforms but Enjin have developed solutions allowing the transfer of value in and across games and virtual worlds.
What does this all mean for AR?
I am glad you are asking that question.
At Tropos AR we are developing our AR Cloud with crypto being an important layer for the transfer of value and for the ownership of unique virtual items. With the mainstream adoption of AR glasses, we envisage a mixed reality experience where your virtual items will take up as an important place in your world as your physical items do. In fact, we believe that you will want and own less physical items, especially if these only have a decorative purpose or if you don’t manually handle them. Do you really need that physical shelf on the wall, that pricey wall-paper or even that 55 inch flatscreen TV if these can all be rendered in augmented reality. Heck, that 55 inch screen could actually be replaced by your entire wall that now shows the latest 8k blockbuster.
Did you recently treat yourself to the latest 3D VR creation by your favourite artist, maybe Anna Zhilyaeva, and you are still debating where to drop it down for the time being? Maybe slightly reduce it in size and show it off in your entrance hall, or increase its size and place it in your garden so you can enjoy it during the long Summer days.
The synergy between NFTs, art and a plethora of unique objects might still be in its infancy but we can definitely see this concept redefining ownership in the digital age.