What is the significant impact of NFTs on the economy?

At the end of last year, Collins Dictionary announced that its Word of the Year 2021 is NFT, or non-fungible tokens. Find out what they are, and why they are so important right now.

So what are non-fungible tokens? Collins describes NFTs as “a unique digital certificate, registered in a blockchain, that is used to record ownership of an asset such as an artwork or a collectible.” Visit nftrobots.org to learn more and to start your NFT journey.

Basically, an NFT is a piece of digital data that records who owns a piece of digital work. NFTs have existed since 2014, however they are gaining in popularity now as a convenient way to buy and sell digital artwork. Since 2017, it is reported that £123 million has been spent on NFTs.

Last year, the surrealist digital artist Beeple made history by selling an NFT of his piece Everydays: The First 5,000 Days, a collage of all the images he’d made since 2007 at Christie’s for an eye-watering $69 million. And NFTs for the YouTube video Charlie Bit Me and meme art Nyan Cat both sold for over half a million dollars.

Even entertainment icons like Quentin Tarantino, Amitabh Bachchan, John Cena, and A$AP Rocky are interested in NFTs. And the studio Warner Bros has started recreating the Matrix franchise as NFTs. The 2021 Oscars swag bag ever contained an an NFT tribute to Chadwick Boseman.

How does NFT help the economy?

NFTs offer businesses new opportunities to manage and sell goods in digital ecosystems. They are considered by many to be a significant economic innovation because they enable creatives anywhere in the world to share and get payment for their work.

This will likely incentivize the development of more NFTs, which consumers everywhere have demonstrated that they’re more than willing to purchase.  

NFTs are also predicted to disrupt our ideas of copyright and ownership. With NFTs, transactions are permanently recorded on a digital ledger, so you can discover who made a purchase, when it happened, and how much was paid.

So now wonder sales of NFTs are skyrocketing. According to Reuters, I’m their first half of 2020, there were over $13 million NFT sales. This figure rose to over $2.5 billion in the same period in 2021. And in June 2021 alone sales on NFT marketplace OpenSea numbered $150 million.

A recent PwC report concluded that blockchain technology could add $1.76 trillion to the global economy by 2030, with NFTs counting for an increasingly large share of that number. 

Data security via blockchain technology

Security is one of the essential elements of the popularity of the NFT database, because without it would be straightforward for hackers to access the currency. That is why the blockchain technology is so important.

Blockchain is a form of database technology that is at the core of almost all cryptocurrencies and all NFTs. A blockchain is able to record information about cryptocurrency transactions and ownership of NFTs. And while it is true that any conventional database can record this type of information, what makes blockchain so special is that it is decentralised.

So, rather than being located in one place and being maintained by a centralised administrator, much like a spreadsheet or normal database, instead multiple computers across a network hold many identical copies of a blockchain database.

By circulating exact copies of a database across an entire network in this way, blockchain makes it extremely difficult to hack or cheat the system.