Ok, so… what’s the fuss about “en-eff-tee”? Why can’t I right click and save a photo? Why would I spend thousands, if not millions, on an image? I will try to answer some of these questions in this Beginner Guide to NFT.
None of the information is intended as financial advice. All information is meant for educational and entertainment
Brief Introduction on Blockchain
Blockchain is the technology that enables NFT to be possible in the first place. It’s thus worthwhile to understand what it is. Technically, blockchain is a back-end database that maintains a distributed ledger that can be inspected openly. Thousands of copies of each transaction is practically recorded and verified in a single timestamp, which makes it almost impossible to temper with each record.
What is NFT?
To put it simply, an NFT is digital proof of ownership of an asset. Unlike other proof of ownership/ verification like a ticket, passport, ID, etc., one cannot fake an NFT due to its utilisation of blockchain technology. We might go into details in the subsequent blog, but just know that an NFT cannot be forged for now.
Hence, NFTs are not simply .jpeg or .mp4 or .mov files. It is revolutionary -owning the NFT of an asset dictates that you are the rightful owner, whereby no form of dispute could argue against it.
Until recently, we have been most familiar with an NFT representing a proof of ownership of a digitally native asset. Typically this means an art piece or a photograph, produced or edited from one of the following mediums (non-exhaustive list):
Images: Adobe Photoshop, Adobe Illustrator, Procreate
Videos: Premiere Pro, After Effects, Final Cuts Pro
Can I Right-click and Save Your NFT?
But why would I need digital proof of ownership of an asset? Surely I can just right-click and save your “NFT”, rendering your NFT useless? Surely, NFT is useless because life was good before NFTs, and so why would it change anything?
You could right-click and save any NFTs. But so could anyone buy fake Gucci handbags or redraw the Mona Lisa. However, does the fake version hold the same value as the real one? Clearly no.
Generally, physical assets have some form of registration or paperwork that determines person X is the rightful asset owner.
A Gucci bag would have a serial number attached; so is your latest iPhone 13 or M1 Macbook Pro. Alongside your receipts/ passwords, etc., you could quite easily prove the ownership of such items. No one can take your laptop and claims that to be theirs precisely because you have proof of ownership.
For those who wish to understand the concept of proof of ownership in a more definitive manner, check out the example of a house owner below:
How do homeowners prove that they rightfully own the house? The short answer is a property deed — a legal document that transfers the seller’s ownership to the buyer. No one could argue that the house doesn’t belong to you with this deed. This means you will receive the rental should you decide to rent out the unit or accept the sales of the house once you decide to sell the property. In other words, you have economic control over your asset as long as you have a proof of ownership of that asset.
Conclusion
If you can prove that an asset is the “real deal”, the value of that asset skyrockets compared to the copycats. The same will be the reality for digital assets, enabled by NFT.
