Unlike Bitcoin or USDT, which are considered as fungible tokens, because there is no difference of one bitcoin from another; non-fungible tokens (NFTs) are unique, digital items with blockchain-managed ownership. Examples include collectibles, game items, digital art, event tickets, domain names, and even ownership records for physical assets.
A close example to NFT may be some weapon/armor from online-games, that can be won and collected by players during the game and then sold on the game market. The difference of NFT and its most compelling feature enabled by interoperability — is free trade on open marketplaces. Users became able to move items outside of their original environments (games, picture and music platforms, etc.) and put them into a marketplace where they can take advantage of sophisticated trading capabilities. It could be anything, even eBay-style auction with the ability to sell in any currency, like stablecoins and application-specific currencies.
This is a breaking thing, such tradability of assets means a transition from a closed economy to an open free digital market economy, which has no need to be managed by developers.
As an analogue of collectible items, NFTs can represent any crafts (paintings, songs, even real property!). However crypto-technology helps to “pack” such items in the way they can be transferred freely from one crypto-wallet to another.
It is not just replicating a real collectibles market, but also gives high-level protection to such transactions, and an opportunity to trace the history of the item.
Unlike classic art objects, and mainly because of its nature, NFTs can be easily distributed and enter the market turnover even before the piece of art is created by the artist! That means artists may avoid publishers, record-studious to receive funds that will help to finish the art. So NFTs stand as an important tool for investing in new artists and their pieces of art by selling NFTs even before their upcoming record. E.g. fans are already able to buy “pieces” of songs and recordings before their favorite artist is top-ranked by music society — and then share the rewards of this investment. Some platforms allow artists to sell some percent of the copyrights to their upcoming records and also keep some copyrights for themselves.
Using NFT music platforms any person can buy a piece of a copyright and then use that asset’s monthly earnings to either earn interest (via the Copyright Pools), or get an instant crypto-loan.
As for NFTs liquidity. Buying a real copyright is a very difficult process at the moment. There is a need to have relations with agents and studios or publishers; also thousands in legal fees could be spent prior to any deal would be concluded, and certainly any of the IP rights can’t be bought in small parts. NFTs and blockchain make the asset liquid and easily tradable.
“Like many other arts — NFTs are “signed” by their creators. To enter digital marketplace is much easier than to make the same in real (artists do not need to hold exhibition, signers — do not need to record an album and promote it via studios), for that reason NFTs enable young unknown artists to express themselves and share their art with public without unnecessary formalities. In turn, the public can very quickly assess the level of talent and determine the value of the work. This technology also simplifies both: the process of earning royalties and earning from the resale of such digital assets. Unlike most deals with physical works of art, in case of NFT, not just collectors will profit from resales, but authors will be able to receive an automatic commission on each resale of their work or, for example, its broadcast (in case of a video or animation). This is a truly significant advancement in copyright protection. Due to NFT help, films, videos, music could be published on streaming services with an absolute guarantee that viewers and listeners will receive high-quality, licensed content, and by paying for it, — they will directly support the authors. From a legal point of view, this is an ideal structure that can minimize risks of violation of copyright and related rights, eliminate disputes in this sphere and make contractual relations transparent and understandable for the parties.” — a specialist in the field of IT law, Senior Partner of the law firm “Legal Welt” — Sergey Malomuzh