KT Explainer Series: Understanding the Curious World of NFTs – News

In part four of our five-part series, Khaleej Times examines the ultimate buzzword of the season in the tech world – non-fungible tokens.



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Published: Thu 9 Jun 2022, 15:57

For Emirati business developer and entrepreneur Mohammed Al Jasmi, non-fungible tokens, or NFTs, are the most important thing since the internet.

“Last year, when Meta (formerly known as Facebook) announced its Metaverse, it blew my mind. At that moment, I realized that everything is happening in the digital world,” said Al Jasmi.

In the year since NFTs exploded in popularity, ‘bored monkey pictures’ have sold for millions, the internet’s best-known meme ‘doge’ has been bought for $4 million and an NFT version of whistleblower Edward Snowden’s iconic ‘Stay Free’ portrait sold for $5.4 million. Still, these are some of the less outrageous NFTs out there.

Anonymous artist NFT Pak’s coin “Merge” officially became the most expensive NFT ever sold on December 2, 2021, with nearly 30,000 collectors coming together for the colossal sum of $91.8 million.

In the United Arab Emirates, Access Abu Dhabi and the Abu Dhabi Investment Office (Adio) have partnered with identity platform Web3 and domain name provider NFT Unstoppable Domains to provide free crypto domains to all women residing in the capital of the United Arab Emirates. Organizations ranging from e& (formerly known as Etisalat Group) to Emirates Airlines and the Museum of the Future have announced plans to launch their NFT collections.

An explosion of news from the blockchain world has left many UAE citizens and expats wondering, “what’s going on here?”

The fourth edition of the Khaleej Times digital asset explainer series dives deep into the curious world of NFTs and answers the questions that every non-NFT expert is concerned about – why do digital images sell for millions of dollars? dollars? Can everything be converted to NFT? What are their practical uses?

Experts from all segments contributed their expertise on what makes non-fungible tokens the most exciting thing since the invention of the World Wide Web. Here’s what they have to say:

What are NFTs? What’s so special about them?

Let’s dive into the basics. Non-fungible means something unique and cannot be replaced by something else.

For example, a Bitcoin is fungible – one can be exchanged for another Bitcoin. However, a one-of-a-kind trading card is not fungible. NFTs are part of the Ethereum blockchain (click here for a refresher on blockchains) although other blockchains have implemented their versions of NFTs. Although Ethereum is also a cryptocurrency like Solana or Bitcoin, its blockchain also keeps track of who is trading and holding NFTs.

How exactly do NFTs work?

Non-fungible tokens live on the blockchain, and most of them are hosted on the Ethereum network.

“Specifically ERC-721 or EIP-1155,” said Nikita Sachdev, Luna PR’s founder and CEO.

“These tokens that live on the blockchain represent ownership of something else. It could be a car, and it could be a song, it could be an artist’s digital art,” she said. .

How to buy NFTs?

Investors could buy them on marketplaces like Opensea or Binance NFT using cryptocurrencies.

“All you need is a wallet, which is completely free and easy to make, like Metamask’s, and get some crypto in it, which you could buy on an exchange or Moonpay with your card, then you could buy NFTs.” Nikita added.

What do NFTs have to do with intellectual property rights?

According to Mohammed Al Fayed, founder and CEO of GrubTech, NFTs are closely associated with intellectual property (IP) rights. A seller or an NFT creator can transfer the intellectual property rights to the buyer. However, the intellectual property must be assigned to the buyer in writing in a smart contract to do this.

“It’s no different than a deed of ownership. You can take any IP address and tokenize it,” AlFayed said.

“It depends on how people interpret it. For example, if I wanted to get a photo of the Mona Lisa. I can search it on the internet, see the photo and save it as a jpeg. the right to use that image,” he explained.

“We need the rights to use the images found in the media world. Whether it’s a code snippet, a video, an apartment or whatever, you have to prove that you have the license to use it and that you own it. That’s what NFTs do – it records ownership of digital assets on the blockchain,” he added.

While owners can transfer ownership of NFTs from one wallet to another, the data can never be changed or manipulated once it is stored on a blockchain, he added.

Can you explain how NFTs use the blockchain?

Ryan Rivera, Head of Crypto Operations at MContent, said, “Each NFT created (created) gets a unique number on the blockchain. That’s why each cannot be replicated, due to its specific number.”

“For example, if governments link passports to NFTs, they will all have a unique number that cannot be copied because it is not fungible.

“Companies and governments can use NFTs to ensure that their product (high-priced bag, content item, passport, etc.) is real,” he said.

What is the potential of NFTs?

According to AlFayed, the potential of NFTs is limited only by an individual’s imagination.

“Take, for example, a giant interactive billboard on Sheikh Zayed Road. The owner of the billboard could split every pixel of the asset and sell the coins as NFTs. Now, whenever a brand uses the billboard to advertise their product, each owner of each fraction gets a share of the sale,” he explained.

“Similarly, individuals could carve popular podcasts into minutes and sell them as NFTs. Every time an ad is shown on the segment, the NFT owner gets a fraction of the ad sales,” AlFayed said. . Similarly, government agencies can also convert land ownership and title deeds into NFTs.

“Assuming the blockchain it is on lives forever, there will be no dispute over who owns the property,” he said. However, the NFT market is risky, volatile, and rapidly changing right now.

“As it stands, it’s designed for early adopters,” AlFayed said.

But what use are NFTs?

“That’s the beauty of blockchain. Creators can convert anything physical into a digital asset,” said Emirati NFT and crypto enthusiast Mohammed Al Jasmi. Total non-fungible token (NFT) trading volume grew from $200 million in 2020 to over $12 billion in the first quarter of 2022.

“It is still too early to comment on the actual use of NFTs; however, they have the potential to be more than just image files on the blockchain,” he said.

“One of the most well-known utilities of NFTs can be found on the metaverse. Brands like Gucci, Prada, Adidas, and Nike have already launched their NFT collections. Your avatars can dress up with these brands by purchasing these NFTs at inside the metaverse,” Al Jasmi said.

What has been the growth of the NFT market?

“The NFT market may not have reached the mainstream consciousness yet, but it is growing incredibly in Dubai. Many NFT investors are making Dubai their new home every day due to its personal income tax regime to zero percent, among other big enabling factors. Several cryptos have recently launched dedicated NFT marketplaces,” said Robin Philip, founder and director of award-winning Dubai-based business consultancy A&A Associate, which specializes in creating crypto and NFT activities for new investors in UAE.

In March this year, the annual Art Dubai fair saw the launch of “Art Dubai Digital”, a live marketplace for non-fungible tokens and digital art.

“The event not only generated record attendance but also huge sales volumes. This just goes to show the appetite people in Dubai and the UAE currently have for NFT businesses,” said Philip .

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Why are NFTs so expensive? Are all NFTs expensive?

Al Fayed said that two elements determine the price of NFTs.

“You have the hype and the rarity. The technology has been embraced and promoted by many influencers and celebrities, which explodes its value,” he explained. However, the value of NFTs would increase once they begin to pivot towards metaverse utility, he added.

However, not all NFTs are expensive.

“You can buy NFTs for as little as a dollar. But make sure you know what you’re buying. There are a lot of scams and empty promises being made in the space. Do your research and stay safe” , said Nikita.

James T. Quintero