But what exactly are these digital assets, and how are they traded?

What is an NFT?

NFT stands for Non-Fungible Token.

Something that is “fungible” can be exchanged with an equivalent item — for example, a $5 bill with another $5 bill.

Here’s an explainer by Tech Wire Asia on how they’re different from cryptocurrencies.

Cryptocurrencies, which use a digital public record of transactions called a blockchain, are fungible.

NFTs are digital items that can be bought and sold using this blockchain technology. But they are not fungible, making them a different type of asset.

Some have sold for millions, including an NFT by digital artist Beeple which went under the hammer at Christie’s in March for an eye-watering $69.3 million.

Some of the most coveted NFTs are released via collections of thousands of unique individual cartoons, such as the Bored Ape Yacht Club.

They are seen as intrinsically cool by their owners, who enjoy boasting of their purchases by displaying them as their social media avatars.

The tokens aren’t necessarily images, though: on several websites, such as Decentraland and The Sandbox, you can buy virtual land in NFT form.

Critics say investors are spending money on meaningless items, but supporters insist that NFTs are much more than digital trinkets.

Some predict that using the blockchain to record the ownership history of an item will eventually become much more widespread, revolutionizing how we think about property.

How are NFTs traded?

Like cryptocurrencies, NFTs are traded (bought and sold) on specialized platforms. OpenSea is the best-known NFT marketplace.

A sale does not necessarily involve the transfer of the object depicted by the token.

NFTs of famous paintings have been sold, for example, but the buyer does not receive the painting.

What changes hands is a certificate of ownership of the NFT, registered on the blockchain The certificate must be kept safe in a digital wallet, which can take various forms.

The wallet might be accessed via Metamask, a free internet browser extension, or a secure physical device. It might also take the simple form of a code printed on a piece of paper.

To purchase an NFT, the wallet must contain enough of the relevant cryptocurrency — for example, ether (ETH) if the person is buying a token on the Ethereum blockchain.

With a little technical know-how, it is also possible to make, or “mint”, your own NFT.

Ultimately, NFTs are digital contracts, with certain rules embedded such as the number of copies available for sale.

What are the risks?

Trading NFTs involves technical processes that are sometimes misunderstood — and that can lead to investors not knowing quite what they are dealing with.

Every interaction with the blockchain involves fees to pay for “mining” — the hugely energy-intensive computer calculations needed to verify each transaction.

Thousands of users might rush to buy a much-coveted NFT as it’s minted, and they have to pay the fees even if they walk away empty-handed.

Some buyers use bots to try to ensure that they get their hands on a token, which makes the market even less accessible for newbie investors.

“A very small group of highly sophisticated investors rake in most of the profits from NFT collecting,” blockchain data company Chainalysis said in a recent report.

And it added that NFTs are often sold at a lower price to enthusiasts who have helped to create hype for the project.

“The data suggests that NFTs are far from a surefire investment,” Chainalysis concluded.

with additional reporting by Jules BONNARD for Agence France-Presse

The post Want to trade NFTs? Best beware the risks appeared first on Tech Wire Asia.

We understand that “non-fungible tokens” can be quite the mouthful, which is why it is almost often referred to by its abbreviation, NFT. But what exactly are they, how do they function and what are their benefits?

Tech Wire Asia will explore the science behind it, and debunk some common misconceptions in this piece.

So… what exactly are NFTs?

NFTs are essentially digital tokens that carry data and are stored in an immutable blockchain ledger. Its main purpose is to represent assets and prove their authenticity and ownership. 

Whether the asset exists virtually or physically, the record of its existence can be stored and accessed in a highly secure and transparent manner. This is because said record, by its blockchain nature, cannot be changed, edited, or tampered with (called immutability).

These assets can be virtually anything that has value — from artwork, rare jewelry, music, original scores, even the source code that spawned the World Wide Web.

When an asset with an NFT token undergoes a transaction digitally or in real life, the blockchain creates a new ‘block’ with the information of the new owner. 

There will be a chain of information for every transaction carried out, and traceability of ownership along the chain is easily done in order to establish the authenticity and provenance of the item. 

Blockchain: A refresher

Blockchain is a distributed ledger technology that’s applied in areas such as decentralized finance (e.g. cryptocurrencies), decentralized identity management, vaccine passports, and of course, NFTs. 

They are also applied in industries such as supply chain and media and entertainment, among others. 

Blockchains are essentially immutable (unchangeable) ledgers that stores records of things such as transactions, IP, ownership, and others. 

Blockchain ledgers are considered “immutable” because once data has been written to a block in its system, this record cannot ever be changed, edited, or tampered with.

According to “Blockchain: The Next Everything” author Stephen P. Williams, “The records are collected in groups, or “blocks,” and linked together in a “chain” by cryptographic codes. 

“The ledger is stored on all of the participants’ devices (called “nodes”) that have joined the chain. 

“Public blockchains of cryptocurrencies such as Bitcoin (BTC) and Ether (ETH), can be joined freely by anyone, and the transactions are visible to everyone (although identities can remain largely private).”

Are NFTs cryptocurrencies?

Short answer: No.

NFTs are not cryptocurrencies, although it is understandable to conflate the two. 

This is because popular cryptocurrencies such as Bitcoin and Ether are built on the same technology that NFTs are — blockchain.

BITCOIN VS BLOCKCHAIN: WHAT IS THE DIFFERENCE, EXACTLY?

Dashveenjit Kaur | 26 April, 2021

Unlike cryptocurrencies, NFTs do not innately possess monetary value — their existence is representative of items with varying monetary values instead (such as art, songs, property, etc.). 

This makes them economically non-fungible, whereas cryptos like BTC and ETH are fungible (can be traded and has innate value).

NFTs merely serve as a representation of a physical or virtual asset — akin to a certificate of authenticity, except in a far more secure manner. Hence the ‘token’ part of ‘non-fungible token’. 

The science behind NFTs

Aside from its immutability and uniqueness (no two NFTs are the same), there are three other unique properties of NFTs that allow them to carry out their intended function, some of which cryptocurrencies do not possess.

Indivisibility

A non-fungible token cannot be divided into sub-tokens (or sub-blocks). This is unlike cryptocurrencies like Bitcoin, whose monetary value is based on its difficulty in obtaining a single piece of a block. 

These blocks can then be sub-divided and have their monetary value split amongst multiple owners and have their ownership verified on the public blockchain. 

However, NFTs cannot be split (hence, indivisible) because it would be contrary to its purpose as a singular token of data information if multiple people are able to claim ownership. 

There can, however, be fractional “ownership” of an NFT, but only in concept (e.g. as a percentage share of the NFT) – the asset itself stays intact. 

Indestructibility

As the token asset is built on a blockchain, it is by nature indestructible, even if the asset represented by the NFT is physically destroyed. 

This is because the data (i.e. chain of ownership) stored on the blockchain will continue existing for as long as the blockchain platform exists. 

This then makes it useful to prove the history of ownership of a tangible or virtual object (such as a classical work of art) that may have been destroyed.

So this can, for example, be applied to make it easier to identify circulating fakes or to serve as a secure and indestructible record for archival purposes.

Provenance

The asset’s NFT-based ownership record will be maintained wholly on the blockchain it is built on. 

As such, every NFT that was created for an asset can be traced back to its origin.

This gives the blockchain owner the ability to verify if a physical or digital asset is genuine, even if it has been sold or exchanged hands thousands of times. 

So we’ve explained NFTs, what now?

As NFTs exist on blockchains, it is important to ensure that the NFTs you own are built by and operated by reputable services. 

An example of an established and reputable blockchain is Ethereum. And yes, we are aware that it might be confusing as its cryptocurrency Ether (ETH) is also often referred to by the same name.

However, Ethereum is actually a blockchain service provider (or platform) that builds NFTs and offers ETH trading among other services.

Most NFTs available today are built on the Ethereum blockchain, and can be traded on Ethereum-supported NFT “marketplaces”. These marketplaces facilitate transactions for NFTs. Some examples of Ethereum-supported NFT marketplaces include OpenSea and Mintable, among others. 

However, NFTs built on other blockchains, such as Solana, also exist. An example includes FTX.US. 

As you’ve learned, NFTs can serve as a secure way to establish the authenticity of an asset that’s digitally represented. 

As such, they’re highly applicable in industries where verification of assets is essential, such as auction houses and property management, and have other enterprise uses, even in cybersecurity.

The post NFTs explained: Here’s why they’re not cryptocurrencies appeared first on Tech Wire Asia.

Case in point: Sotheby’s recently intended to auction off the source code files of the inventor of the World Wide Web, Tim Berners Lee, much to the delight, but also perhaps, confusion of many.

Sotheby’s, a high-end auction house, is one of the many players in the art scene who have jumped onto the digitalization train to reinvent parts of their businesses. Whilst NFTs have been somewhat popular in an on and off fashion, they have actually been around since the 2010s. 

Many still seem to have a very superficial understanding of what NFTs are, believing them to only be of use within the art, collectors’ or e-sports scene. However, they have far-reaching uses beyond those, and can actually be of importance to enterprises in surprising ways.

NFTs and blockchain

NFTs are essentially digital tokens that carry data and are stored in an immutable blockchain ledger. Its main purpose is to represent assets and prove their authenticity and ownership.

According to Blockchain: The Next Everything author Stephen P. Williams,

“Blockchains are immutable ledgers that store records of transactions, intellectual property, ownership, and more.

“The records are collected in groups, or “blocks,” are linked together in a “chain” by cryptographic codes. The ledger is stored on all of the participants and devices (called “nodes”) that have joined the chain. Public blockchains, such as bitcoin and ethereum, can be joined freely by anyone, and the transactions are visible to everyone (although identities can remain largely private).”

Blockchain ledgers are considered “immutable” because once data has been written to a block in its system, this record cannot be changed.

It is important to note that NFTs are not the same as cryptocurrencies. This was recently pointed out by Chinese financial giant Ant, whose subsidiary Alipay has come under fire by netizens confused between the two. Alipay allows and supports the auction of art using NFTs on its platform.

Unique properties of non-fungible tokens

NFTs are essentially digital tokens that carry data and stored in the immutable blockchain ledger. 

When an asset with the NFT token undergoes a transaction digitally or in real life, the blockchain creates a new ‘block’ with the information of the new owner. 

There will be a chain of information for every transaction carried out, and traceability of ownership along the chain is easily done in order to establish the authenticity and provenance of the item. As such, NFTs can serve as a secure way to establish the authenticity of an asset that’s digitally represented. There are three unique properties of NFTs that allow them to carry out their intended function. 

Indivisibility

A non-fungible token cannot be divided into sub-assets, because it would be contrary to its purpose as a singular token of data information if multiple people are able to claim ownership. This is unlike, say, a cryptocurrency like bitcoin, which can be sub-divided and have its monetary value split amongst multiple owners. There can be fractional ownership of an NFT, however, but only in concept (e.g. as a percentage share of the NFT) – the asset stays intact.

Indestructibility

As the token asset is built on a blockchain, it is by nature indestructible, even if the asset represented by the NFT is physically destroyed. This is because the data (i.e. chain of ownership) stored on the blockchain will continue existing for as long as the blockchain exists.

Provenance

The asset’s NFT-based ownership record will be maintained wholly on the blockchain. As such, every NFT can be traced back to its origin, thus giving the blockchain owner the ability to verify if a physical or digital asset is genuine, even if it has been sold or exchanged hands thousands of times.

Practical applications of NFTs for businesses

Because of its ability to establish authenticity, provide complete traceability, and remain secure and indestructible, NFTs can be applied to situations where these properties are essential. Some of these include patenting, intellectual property, supply chain, and real estate.

Patenting

Patents are considered an illiquid asset of an enterprise as they are a form of intellectual property. A real-world use-case scenario of NFTs in patenting can be found with IBM’s collaboration with IPwe, an IP ecosystem platform. IBM will tokenize patents, which can then allow patent owners to commercialize their patents in an open, safe, and accessible trading environment.

Intellectual property

Corporations can possess multiple assets that have intellectual property rights, as can artists, musicians, or content creators. Similar to how NFTs are used for patents, the same can be applied for IP rights. Unlike patents, IP rights can be shared amongst different buyers, so the fractional ownership of the asset can be leveraged as well to allow enterprises to use it as an additional revenue stream. However, this is still an emerging market due to legal complexities around the world. There is, however, an NFT licensing framework developed by Kittycraft that can inform or inspire more serious licensing frameworks around NFTs in the future.

Supply Chain

Supply chains can comprise multiple touchpoints, where some would require traceability, transparency, and proof of ownership. Bangalore-based startup Koinearth developed marketsN, which implements NFTs for enterprises and supply chains. Benefits include better market visibility, trading of illiquid assets, and ownership transparency. With these features securing parts of the supply chain, it can help enterprises attract investors more readily.

Real estate

Real estate can be a very time and labor-consuming affair and has often been seen as a stagnant investment for large corporations, especially those with assets in different countries. NFTs can optimize this process by implementing it in infrastructural, architectural, or physical assets such as buildings, title/ownership deeds, and more. 

Since NFTs can be digitally represented, it would be easier to trace and track ownership and authenticity of the digitally represented asset from anywhere around the world. A real-estate startup Propy has already commenced operations using NFTs for real-estate transactions.

There is still room for NFT service providers to innovate further. With an increased understanding of its technology from the public and private sectors, coupled with progressive policies regulating NFT use, NFTs will gain more popularity and see encouraging market growth down the road.

The post NFTs and moving beyond the hype: Enterprise use cases appeared first on Tech Wire Asia.

Non-fungible tokens (NFTs) adoption are slowly picking interest among Internet users in the last couple of months. While many still do not understand what NFTs are or how they work, users in Southeast Asia represent a high percentage of global NFT users.

According to statistics from Finder.com’s Global NFT Adoption report, Southeast Asian users make up the most NFT users based on the 20 countries surveyed. The Philippines has the most NFT owners (32%) out of the 20 countries compared, followed by Thailand (27%), Malaysia (24%), the UAE (23%), and Vietnam (17%). On the other end of the spectrum, Japan has the smallest percentage of Internet users with NFTs (2%), followed by the UK and the US (3% each), Germany (4%), Australia (5%), and Canada (6%).

NFTS AND MOVING BEYOND THE HYPE: ENTERPRISE USE CASES

Jamilah Lim | 30 November, 2021

NFTs are essentially digital tokens that carry data and are stored in an immutable blockchain ledger. Its main purpose is to represent assets and prove their authenticity and ownership.

They carry data and are stored in the immutable blockchain ledger. When an asset with the NFT token undergoes a transaction digitally or in real life, the blockchain creates a new ‘block’ with the information of the new owner.

There will be a chain of information for every transaction carried out, and traceability of ownership along the chain is easily done in order to establish the authenticity and provenance of the item. As such, NFTs can serve as a secure way to establish the authenticity of an asset that’s digitally represented.

While the Philippines has the highest number of NFT owners, the survey also showed that Nigeria is expected to have the biggest growth in NFT adoption from 13.7% to 35.3% – an increase of 22%. Other countries that are expected to see huge growth in NFT adoption include Peru, Venezuela, and United Arab Emirates.

Surprisingly, Singapore’s internet users are still far behind compared to their global counterparts. From a survey of more than 28,000 internet users, just 6.8% of Singaporean own NFTs, which is below the global average of 11.7%. Interestingly, an additional 11% plan to own NFTs in the future meaning the adoption rate will hit 17.8%.

Finder.com’s cryptocurrency editor Keegan Francis believes that it’s still very early days for NFTs in Singapore. 41% of Singaporean internet users currently know what NFTs are and the adoption is expected to grow with awareness.

“Singapore’s forecast to have the 7th biggest increase in NFT adoption among the countries surveyed, behind countries like Nigeria, Peru, and Venezuela but ahead of those like Malaysia and Hong Kong. Men are currently the biggest adopters, with 7.4% saying they own NFTs compared to 6.2% of women.”

Francis also pointed out that NFT adoption is much higher in countries that have a lower average wage of working citizens.

“In some of these countries, people are quitting their jobs because they can make money trading NFTs or earning them in games. NFTs can be a great gateway to cryptocurrency ownership, especially because many NFT games don’t require ID. If you want to buy NFTs directly then you’ll need to set up a wallet, purchase cryptocurrency, and choose an NFT marketplace”.

With cryptocurrency usage also increasing in Singapore, it won’t be surprising if NFTs follow suit in the next couple of months. Either way, the trend is increasing and users are beginning to realize the full potential the token can offer to them.

The post NFT adoption on the rise in Singapore appeared first on Tech Wire Asia.