What in the world is a Nonfungible token? Is this another means to scam people or the fact that just like digital currencies are on the rise, there is a need to sell other non-tangible items such as relics, art, and music?
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Apart from digital currencies such as Bitcoin and Ethereum that is issued on the blockchain, one can issue digital proof of ownership of nonfungible assets such as art, real estate, tweets, and music. These digital proof of ownership are called nonfungible tokens or NFTs for short.
NFTs are unique digital items that are not easily exchangeable for another value or item. They are used as a means of identifying someone or something unique and provide individuals with the right to claim ownership of digital assets that are accessible to others on the internet.
NFTs are digital tokens created on a blockchain through a process called minting. The Blockchain is an electronic ledger of transactions that keep the record of NFT ownership. The difference between a fungible token and nonfungible tokens is that FTs are exchangeable without loss of value or change in attributes while NFTs are not. 1000 Naira will always be Worth another 1000 naira while NFTs are different as each signature makes it impossible for one not to be exchanged with another.
Another difference between FTs and NFTs is divisibility. NFTs are indivisible which means they cannot be divided into smaller denominations like bitcoin. Where a person borrows something with an NFT, it can only be returned whole. Simply put, NFT is a digital Nafdac number or trademark of a person’s music, art, etc.
Through this medium, ownership of music, art, real estate, tweets, electricity, experiences, event and movie tickets can now be sold and bought as NFTs. They can be bought, sold, and transferred safely, securely, and recorded on the blockchain ( an online ledger).
Nigeria is not exempt from the NFT wave as practitioners in the Nigerian creative sector are already taking advantage of it, with Jason Osinachi selling two NFTs for $16,227 and $23,633 as reported by Techcabal.com. Another artist like Oyindamola Oyewumi’s picture of the co-founder of Twitter was listed by the co-founder and sold for 6000 dollars.
Ever since she has been selling her works as NFTs and getting cash returns. This proves that Nigerian artists are keying into the Nonfungible Token marketplaces and are making good returns. Nigerian art creators are using NFTs to leverage the shift of art to the digital world. Despite a government ban on cryptocurrencies, they are increasing their net worth, while they are at it.
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Legal considerations of NFTs in Nigeria are:
- Intellectual Property rights: Buyers believe that once they acquire an NFT, intellectual property rights (IPRs) are automatically transferred as well but it is not that simple. Generally, when a buyer buys an NFT, the original work does not belong to him and what is posted is a copy of the work. Artists s do not explicitly state that they have given up their intellectual property rights to the buyer.
- Ownership of NFT: NFT buyers do not own the NFTs. What they own are blockchain receipts (digital files) that act as a receipt for the purchase they made and not the actual NFT. Although some rights are transferred to the buyer such as the ability to resell the NFT at any time, the owner may still obtain a royalty fee from every sale, thus, limiting the ownership rights of the buyer. potential buyers are advised to look at how their rights may be impacted when they are about to purchase an NFT.
- Data Protection
- Regulation of NFTs by the security and exchange commission
To get started one must do the following.
- Create a digital wallet: This is where you will securely store the cryptocurrency that is used to buy, sell, and create NFTs. The wallet also allows you to safely sign in and create accounts on NFT marketplaces. Examples are MetaMask, Coinbase, and Rainbow.
- Purchase an amount of Etherum or other digital currency: This is funded with a master/visa card linked to your bank account. The easiest way is by choosing a dollar amount you are willing to invest and purchasing exactly that much Ethereum. The Rainbow and MetaMask wallets mentioned above both allow you to purchase crypto right inside your wallet but Coinbase Wallet requires you to purchase from a separate exchange and transfer it to your wallet.
- Connect the wallet to the NFT marketplace: The marketplace for listing articles are Rariable and Hashgreed. Click on the wallet WalletConnect option if you’re using the Rainbow or MetaMask wallets. Click on WalletLink if you are using Coinbase Wallet. No matter the wallet you are using, the next step is roughly the same. After selecting your connection option, a QR code will appear on the screen. Use your wallet app to scan this code. Once you’ve scanned the code, confirm that you’d like to connect your wallet to the marketplace. Other market places include Zora, Super rare, Nifty gate wayetc.
It is clear that NFTs are an innovation of the future with seemingly endless possibilities. The fact that starving artists in Nigeria could bid that past goodbye if creators and artists can make money and generate lasting value from their craft. Nigeria is riddled with talented roadside artists who have unlimited imagination but very limited reach and this could be the thing that pulls them out of poverty if they can act fast and avail themselves of the opportunities that NFTs offers.
Featured Image Source: Ledger Insights
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