Non-Fungible Tokens: NFT's and Blockchain are a game changer, here's why!
NFTs will become pervasive in 2022, along with Web 3.0, DeFi, and blockchain technology. All of these facets align with each other in one way or another.
NFTs are STRONGLY MISUNDERSTOOD by most individuals. NFTs are not just collectibles such as digital art, sport cards, CryptoKitties, and Mutant Apes. THEY ARE NOT PDFs!!!
NFTs are cryptographically secure digital records that verifies ownership and provides provenance (who first made or 'minted' it) of a digital asset. A digital asset (the NFT) is secured on a blockchain through something called smart contracts.
***Blockchain is the underlying technology that powers NFTs. Blockchain is simply a ledger system where record keeping takes place. However the blockchain ledger is public.***
Smart contracts --> A digital contract that provides legality to the buying, selling, trading, and ownership of digital assets on the blockchain! Smart contracts have the terms of the agreement between two parties. The contract is "smart" because they have no use for a third party.
For example, let's say someone in ten years is selling a car. A seller comes along and buys the car. Now traditionally these two individuals would have to go to the DMV and wait in a horrendous environment just to simply say "hey we are transferring ownership." However, in the future the transaction may go like this...
Car registration = NFT (Digitalized form written and stored on the blockchain)
Smart contract = Have access to the data about the NFT (the car registration).
So when the car is purchased there will be new coding of ownership that automatically changes when the transaction occurs, all without a third party like the DMV! This will all take place on the blockchain.
This is a great transition to DeFi (Decentralized Finance). This whole example was an exemplification of DeFi. This is because the buyer and the seller had no use for a third party intermediary like the DMV.
The internal exchanges on the blockchain that allow users to trade between themselves, without an intermediary are called decentralized exchanges. Allowing individuals to sell assets independently from third party companies or individuals. This is far more efficient and safer.
This whole system reduces the risk of theft and speeds up the transactions by eliminating the need for third party intermediaries. These intermediaries are no longer needed because everything (maybe a car registration, that in the future will just be digitalized) is safe and can be verified, again but using blockchain ledgers and smart contracts. The NFT is simply the digital asset that someone owns, and as it moves ownership, it's all recorded, legalized, and safe using the blockchain and smart contracts.
Keegan Santasiere (@keegsanta)
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