In keeping with the current hype, a non-fungible token (NFT) seems to be available to every online content which is available out there right now, an intriguing trend which has colored the beginning of the year 2021.
Actually, at a time when more contents than ever before circulate online, NFTs serve as a great solution for people to distribute and exchange their contents.
By definition, non-fungible refers to things that are not interchangeable for other items because they have unique properties.
You can use “non-fungible” to refer to your journal, your personal computer, your smartphone, or your home. You own these properties and they bear a mark of your ownership, cannot be swapped 1:1 with similar items possessed by other people.
The NFTs help people trade goods online in an efficient and quick manner through the peer-to-peer network which is not slowed down by traditional gatekeepers or intermediaries. Because the transactions are done through the blockchain, it is hard to tamper with them and they will be contained in a record which cannot be taken down.
This is why people have also begun to use NFTs to sell physical items as well. For instance, somebody was selling an NFT to a house in Kransberg, Germany through the NFT Marketplace OpenSea. When you buy the NFT to the house, you can unlock a content which will help you contact the owners and arrange a deal with them.
This article will address how NFTs can revolutionize digital content sharing and will be divided into several sections, namely:
–How digital signatures encrypt NFT transactions, and
–Myths and facts about NFT.
How NFT transactions are encrypted with digital signatures
When you buy an NFT what you get is something like a certificate of authenticity for the products represented by the NFT. The transfer of the NFT from the previous owner to you is done thanks to a cryptographically signed transaction. By the way, in cryptographic and blockchain terms, digital signature does not refer to an e-signature that people draw with their handwriting using a digital stylus.
In blockchain, digital signatures are mathematical algorithms used to validate signed data. In the case of the transfer of an NFT, the transaction authenticity is guaranteed by a cryptographic signature. When the transaction is submitted to the blockchain, the nodes of the peer-to-peer network can validate if the request to transfer the NFT comes from the legitimate owner. Group consensus can also execute the transactions only when all parties involved in it have submitted a valid cryptographically signed request. The digital signatures can help make transactions secure and more efficient.
Owning an NFT of a digital content is not always the same as owning the copyright to these content. It all depends on the rulebook around the specific NFT, and the agreement between buyer and seller.
Myths and facts on NFTs
Yet, despite its various benefits, the NFTs are also surrounded by a lot of myths, which might not necessarily reflect reality.
The first myth is that the NFTs will end content piracy once and for all. Unfortunately, this is not true as we have factually seen counterfeit artworks and digital contents being sold as NFTs over the blockchain, or unauthorised NFTs of authentic art, also sold online.
Tracking down these counterfeit NFTs will be difficult since no one is actually around to supervise their authenticity and legal compliance.
The second myth which we will address here is that the NFTs will, in and of itself, result in a fairer compensation scheme for content creators. This is also not always true, because the factor determining whether the content creators will be paid fairly or not for their works will depend on the kind of “contract” or consensus they make over the blockchain. What is true and interesting, tho, is that being the NFT always trackable in the blockchain, special rules can be set such that each time the NFT is sold in the blockchain for cryptocurrency, the initial creator receives a percentage of the transaction, enabling artists to keep earning money as their art change hands.
Yet, owing to its decentralized nature and the fact that there are no middlemen with absolute power and authority over the transaction, we can safely say that the NFTs can equalize the bargaining power between the content sellers and their buyers.