Cryptocurrencies have been a hot topic for a while now. At their simplest definition, cryptocurrencies are digital currency or assets that exist within a given blockchain, which are distributed ledgers keeping track of transactions that occur within that network. NFTs (Non-Fungible Tokens) are digital assets as well, but opposed to a non-unique currency that can be traded at an equal value, NFTs are unique digital assets that exist on a blockchain.
It’s likely you’ve heard of Bitcoin, the world’s most popular cryptocurrency. They've gotten a lot of flack for good reason, with the energy expenditure being comparable to entire countries. This has to do with the mechanism used to approve transactions. With decentralized finance, there’s no central authority deciding on what’s allowed, so for a transaction to be added to a blockchain there has to be a shared consensus. There are various mechanisms, but Bitcoin uses proof-of-work (PoW), which encourages massive amounts of energy consumption. I’m relieved to report the industry seems to be moving towards other far less energy-expensive protocols, such as proof-of-stake (PoS). Ethereum is transitioning from PoW to PoS. Algorand uses pure PoS, and is a client of Rocket Insights!
NFTs have had a prominent place in the spotlight recently, often around how lucrative selling artwork has been for artists. Visuals are a prime component of any NFT marketplace, and while you may be able to enjoy a version of the product without purchasing, the draw comes with owning that original item. A perfect parallel is with art collecting - we all know what a Salvador Dali painting looks like and can find a copy, but the original would be invaluable for many. It offers a new way to support artists - independent artists can reasonably do this on their own and recoup their investment, and in the music industry especially this has such great potential.
Connecting with music is universal and many people feel a deep bond with their favorite musicians. NFTs can represent all types of items, and offer a new way for music fans to connect with musicians. Recently an artist I appreciate released a set of NFTs for one album, which included 3D animations of the album art with remixed audio of songs from that album. The NFTs were sold in a marketplace using an auction model and fans bid at pretty outrageous prices. Many bands, especially with non-mainstream genres, can have an extremely difficult time finding funds to tour and make new records - even some of the biggest names. This is an incredible opportunity for the artists and dedicated music fans seem thrilled to support them in this new unique way.
A variety of marketplaces have risen to prominence, some offering various NFT types and others filling a niche, such as NBA Top Shot. This sports platform sells virtual trading cards representing historical NBA moments, and has become exceptionally popular. Fans can purchase “moments” in the marketplace or packs where you have the chance to collect rare moments. They and many other marketplaces have simple checkout processes similar to any online store, with a credit/debit option.
The crypto world is ever evolving and there’s already such interesting applications, but in hearing approaches from companies looking to break into the NFT space, there’s some seriously impressive ideas. It makes me wonder what’s yet to come - the possibilities seem endless!
