24.03.202108:43 Forex Analysis & Reviews: NFT to be, Bloomberg believes! 6 reasons why tokens are the future

NFT PER TWEET

Jack Dorsey, the CEO of Twitter and one of its co-founders, put up a token for sale on his first tweet 15 years ago, which contains the entry "Just setting up my twttr".

Today, the operator of the auction site Valuables, where the auction took place, announced that the new owner of Dorsey's tweet was Sina Estavi, chief executive officer of the Malaysian blockchain service Bridge Oracle.

After the purchase, Estavi noted in his Twitter account: "It's not just a tweet! I think people will understand the value of this tweet in years to come..." Estavi goes on to compare Dorsey's first tweet to a Mona Lisa painting.

NFT- HYPE OR NEW REALITY?

While the older generation is struggling to wade through the wilds of cryptocurrencies and mastering bitcoins, blockchain technology has rolled out a new resource – tokens.

Actually, the beginning of the scheme was laid in 2017, when Nikil Viswanathan and Joe Lau founded the company Alchemy. Her first client was Matt Hall, co-creator of CryptoPunks, low-pixel images of people.

Since then, CryptoPunks ' assets have been traded for more than $ 130 million. The amount of the largest transaction was $ 7.6 million. And the total weight of projects in Ethereum on the Alchemy platform was $ 25 billion.

Not all tokens survived. So, only non-fungible tokens aroused the real interest of investors . The non-fungible are still quoted, but without much hype.

WHAT IS THE TRICK OF TOKENS?

A token is a digital signature that indicates the owner of an object. Moreover, it can be the object itself or its digital image, which in this case becomes an independent object. It's like a title deed. Of course, it is not identical to traditional cryptocurrencies.

First of all, bitcoin is aimed at participating in calculations, and the more it is used, the higher its quotes. It is also used for long-term investments, but the volatility makes cryptocurrencies an unreliable way to store funds.

A token is a completely different matter. It is initially focused on storage. And although tokens are also used for calculations, it is of real interest precisely for investment.

It's easy to understand. So, any currency expressed in units is always the same within its own limits.

Another thing is a diamond. Each diamond is unique. Moreover, the price of some diamonds may rise over time and some may fall. Diamonds can also be used to pay for services, goods, etc. However, it is better to buy a few good copies and leave them for a rainy day.

Tokens are diamonds. At the same time, you don't have to go to the other side of the world for the diamonds themselves – you buy ownership of them while sitting on your chair.

The artists were the first to react to this possibility. The NFT market is developing in spurts from one major transaction to another.

Now that the token market is wild and unconstrained, there are many strange works of art that you wouldn't pay two dollars for on the street. However, their value is that they are pioneers in the field of blockchain sales. And the most loyal, like CryptoPunks, eventually develop the value of their assets precisely because of the activity on the new exchange. This explains their high liquidity.

At the same time, the Makersplace, OpenSea, Nifty Gateway, SuperRare, and Cryptokitties platforms are already trading real estate property rights and other real things.

So, recently, digital artist Winkelman, known as Beeple, sold a collage of 5 thousand of his previous works, exhibited on the token exchanges for $ 69 million. The most interesting thing is that the auction was organized by the world-famous trading house Christie's. The payment was made in the Ethereum currency.

Bloomberg reports that the demand for digital art-related NFTs has increased almost 10-fold since the deal took place. Now the total market for such tokens according to the data CoinMarketCap.com amounts to $ 20 billion. This figure has surpassed even the records set recently by bitcoin.

Interestingly, the spikes in demand do not depend much on the traditional tool which is the experts opinion. So, while analysts publish sad forecasts about digital bubbles, the tokens of virtualized art are growing.

But investors are not only interested in fine arts. For example, Theta Token, which checks transactions within the same network has increased its capitalization by 4 times and now its value is estimated at $ 10 billion. This project will allow producers of entertainment content to issue tokens, for example, for excerpts from movies or shows.

New tools have already appeared to serve the fresh market. Now some sites also offer loans for tokens. Stani Kulechev, Executive Director of the liquidity software provider Aave, predicts the growth of the crypto-lending market by the end of the year to $ 50 billion. The NFTfi project, which is just over six to eight months old, has already managed to provide loans totaling about $ 1.8 million on collateral to startups such as virtual cats CryptoKitties and land plots in the virtual world of Decentraland.

Stephen Young, Chief Executive Officer of NFTfi, says that such NFT-backed loans add liquidity to the initially illiquid token markets: "Our users have done everything from covering margin requirements to paying rent while going through tough financial times." "The default rates are high here," says Steve, " from 10 to 30%, but even at these rates, lenders do not complain about the growth in demand."

Some old-school investors still find it difficult to understand the value of ownership, for example, of an excerpt from a song. Therefore, conservatives, accustomed to understandable stocks and bonds, predict the NFT decline.

However, the unique token technology will survive and evolve, and here's why.

SIX REASONS WHY NFT WILL SURVIVE AND BECOME A NEW WAY OF INVESTING IN THE 21ST CENTURY

1. Decentralization.

With the help of Alchemy, it became possible to create a completely new type of business models, known as DeFi (decentralized finance). There may not be a central element here – a corporation that makes decisions or controls financial transactions. With the help of Ethereum, this is possible because smart contracts work in distributed networks.

For example, on the OpenSea exchange, the artist directly contacts the buyer. Of course, the whole chain is somehow connected with the offline sector. However, there are not so many intermediate links.

2. Security.

Blockchain technology provides absolute security. Ownership documents can be lost, burned, or stolen, just like the object itself. However, thanks to the blockchain because you can log in to your account from anywhere in the world and confirm your ownership. Even if a Picasso painting that belongs to you is stolen, it will be impossible to sell it on the black market, because everyone will be able to check at any time who the owner is.

In other words, we are dealing with the evolution of property rights. Now the value of an object is not determined not so much by its subjective value, but by the ability to confirm and protect its ownership. The stolen item loses in value. While the uniqueness of, for example, the first historically descended from the conveyor Iphone is not in doubt, its price on the black market will be much lower. However, previously, a collector could buy this object on the black market and store it in a private collection. Or even replace it with any other similar iPhone.

But with tokens, the situation is changing. If the name of the owner of the first iPhone can always be checked, the possession of an illegally obtained item only creates a minute-by-minute danger for the owner. Such an iPhone cannot be faked, because its location is always known.

In other words, the complete transparency of the market makes unique tokens such an attractive investment tool.

3.Ownership.

Today, the field of copyright law is experiencing enormous difficulties. First, each state has its own view on the legal regulation of copyright relations, and so far there is no way to reduce all local regulations to a single denominator, although attempts have been made repeatedly.

However, it is not just a matter of legal conflicts. There are much more fundamental problems facing traditional copyright advocates.

For example, in connection with the widespread distribution of presets for creating electronic music, for many years there have been questions among musicians - how to determine the author? After all, the beat that underlies a musical composition can belong to a completely different person. In this case, they talk about the derivative works, as it was in the above-mentioned case with the Beeple painting, which, in fact, is a collage of previous paintings.

Things are no better in the pop music market, where non-uniqueness is a decent percentage of the products produced.

And so far, legal practice does not know how to regulate such disputes. Each time, the court's decision depends on the opinion of the expert commission, which determines how much the melody is borrowed. Unfortunately, creativity and effort are sometimes difficult to determine as a percentage. Similarly, it would be difficult to determine who is the author of the picture Everydays: The First 5000 Days, if Winkelman used other people's works for the collage.

In the case of tokens, everything is extremely simple due to its following property.

4. Using a token only increases its value.

Unlike traditional copyright, the violation of which entails losses for the owner of intellectual property, the use of other objects of art or any other people's work increases their value.

Thus, the melody token issued by the author and purchased by the buyer itself increases in price due to the fact that the transaction symbolizes the public recognition of the value of the art object. Roughly speaking, the good is bought and the bad is not. The only exceptions are pioneers like CryptoPunks, whose uniqueness lies in the moment of entering the market. Of course, the stock exchanges still buy works of various levels. But in general, the market is following the path of selectivity and this is normal.

In the future, the use of the melody by any other artists only plays into the hands of the token price.

This state of affairs is radically different from today's situation, when authors are forced to fight for their property and non-property copyrights for years. In the new reality, there is no need for courts, since any use of the object automatically increases the cost of NFT, and the owner only benefits from any hype around the object that belongs to him.

5. Tokens make it possible to secure ownership of digital objects, as well as objects that exist or have existed for a short period of time.

We have long since moved from a postmodern form of society to a digital one. The next step is the hyperrealism society. "If you think about the children who are growing up today, they are digital natives," says Viswanathan, the founder of Alchemy, meaning that society has yet to master the digital reality.

We spend more and more time in virtual reality, creating objects that are difficult to evaluate in offline currencies. There are already markets for selling items for game characters. In the future, the share of transactions with virtual objects will only grow. Unique items created in virtual reality will also require a legal framework to regulate turnover in the future. The technology of tokens simplifies the process of selling and controlling property rights at times.

"Digital technology really allows you to showcase your possessions and luxury goods better than in the real world," says Alchemy co-owner. Hall, co-founder of CryptoPunks, supports it: "It will soon be logical for people to own things digitally." The issue of ownership of virtual or augmented reality objects is only a matter of time.

The same applies to such art forms as light graphics, flash mobs, body art, and performance art. The ownership of the results of such artists does not lend itself to traditional settlement. What may not have photographic traces cannot be uniquely identified and confirmed by the relevant authorities today. However, tokens solve this problem.

So far, photo and video files are still used for identification on most platforms. However, it is possible to anticipate the moment when the tokens will be sold for the event itself or part of it without such a fixation. For example, a token for the first 20 minutes of the Olympic Games, the second 20 minutes, etc. In the case of well-known and popular events, even fixing is not required. A token for 1/10 of a Da Vinci canvas is definitely a good investment, which can also be paid at any time.

6. Tokens take investing in companies and events to a new level.

First, NFT is the next step in comparison to crowdfunding. In fact, this is the equivalent of a full-fledged investment in stocks. At the same time, you do not need to have an account with a broker or follow a bunch of formalities. You buy a token sitting at home and become a contributor to the company.

There is no need, for example, to attend the shareholders ' meeting yourself. You can give your token to vote either to your representative or to another shareholder whose policy suits you, thereby voting for its course. This is reminiscent of legal systems in which the head of state is not elected by the people, but by representatives from each region, as in the United States.

For example, Chiliz, a fan token purchase that can also be used to vote in polls of sports clubs such as FC Barcelona, is a prime example of such a strategy. Since the beginning of the year, this startup has grown 23 times to the amount of $ 3 billion. Recently, the project announced the beginning of working with professional sports teams to purchase items.

In the same way, you can finance an event, for example, the Olympic Games or Nascar races in full or in part.

There are also tokens that serve NFT. Such is Whale with a wallet containing thousands of NFTs, which allows members to "rent" NFTs from the collection and buy exclusive digital goods or even NFTs from the pool.

So far, the problem with tokens like Whale is its low liquidity. Its daily turnover is about $ 1 million, although the company itself is estimated at $ 214 million. Despite this, the Whale coin has doubled since February, which shows the interest of investors in the tools for using tokens.

One day, you will be able to purchase a token for the first time wearing a dress from the new Valentino collection, and you do not have to wear it yourself. Probably, one day someone will buy a token to be the first in the world to learn about the upcoming disaster, or say about the candidacy of the winning presidential candidate. We can't even imagine all the possibilities of the new instrument.

However, one thing is certain: in a world where content is distributed everywhere almost without any restrictions, tokens are a fundamentally new way to solve all the pressing issues of many industries at once.

OUTCOMES

Of course, the token market is just starting. And, as in the case of cryptocurrencies, it is waiting for a mandatory legislative settlement. The first steps in this direction have already been taken. For example, the purchase of a token for investment, the so-called security tokens are already equated by US lawmakers to the acquisition of company shares. Each such decision will probably deal a blow to the NFT, but thanks to its unique advantages, it will survive and be modified.

NFT is by no means an analogue of bitcoin. They are different in nature and their volatility is also very different.

In general, the society is revising its attitude to property rights. The physical possession of an object has long been less important than the ownership itself, which confirms the phenomenon of bitcoin that was also predicted to die quickly. The threats from the pandemic and the failures of local health institutions have only increased interest in blockchain-based opportunities.

Crypto investor and author of articles for Bloomberg Opinion, Aaron Brown, says: "NFT is a useful tool that will survive. However, the trading mania and some market tools are likely to disappear." Well, time will tell. So far, the blockchain technology itself has not revealed its full potential. And given the growth of traders and investors to bitcoin and its counterparts, we can only expect an increase in demand for NFT technology and its derivatives.