If you, like many others on the internet, have come across the term 'NFT,' you are probably aware of the current craze. Did you know that in 2021, about $41 billion in bitcoin was invested in the NFT markets? From Q2 2021 to Q3 2021, the amount of NFT trading increased by 704%. What is it about NFTs that has made them so popular in recent years?NFTs are non-convertible units of data that may be sold or bought on the blockchain system. Nowadays, NFTs are becoming increasingly responsible for digital scarcity and product innovation. How so? That?s what we will be exploring in this blog. <h3 id="what-is-an-nft-and-why-do-we-use-it">What is An NFT and Why Do We Use It?</h3>NFT, or ?non-fungible token? is basically a non-transferable unit of data that could be sold and exchanged and is maintained on a blockchain, a type of digital registry. Digital media such as photographs, movies, and music may be integrated with several types of NFT data units.NFTs may be used to reflect real objects like art and real estate. These real substantial goods may be "tokenized" to make purchasing, trading, and transferring them more efficient while also lowering the risk of fraud. NFTs can also be used to symbolize people's identities, property rights, and other things.An NFT may be created by anybody, including artists, entrepreneurs, art advocates, companies, authors, videographers, social media celebrities, and even regular people apart from them. No prior expertise is needed, and anybody may mint an NFT provided they can verify they developed or legitimately own the material.<h3 id="the-history-evolution-of-nft">The History &amp; Evolution of NFT</h3>Beeple, whose actual name is Mike Winkelmann, is an illustrator, visual artist, and animator. He began making a form of art each day for 5,000 days back in the year 2007.It was officially the first NFT of an artwork to be offered at Christie's. Furthermore, it managed to sell for $69 million on March 11th, 2021. This made it the third most costly piece of work by a living artist. The title of this NFT is ?EVERYDAYS: THE FIRST 5000 DAYS?, by Beeple. Three months following the creation of the Ethereum blockchain, the first NFT project, Etheria, was presented and showcased at DEVCON 1 in London, Ethereum's inaugural developer convention. This took place in October 2015. When Pak's "The Merge" sold for more than $91.8 million in December 2021, it vaulted to the top of the NFT rankings. 30,000 collectors participated in "The Merge," currently the largest NFT purchase ever.<h2 id="nfts-offering-digital-scarcity-and-product-innovation">NFTs Offering Digital Scarcity and Product Innovation</h2>Numerous embedded functions have already been built and integrated with the evolution of smart contracts. This, in turn, has helped push the tokenization system to unimaginable heights.Cryptocurrencies and tokens have evolved as a safe and digital substitute for people throughout the world to obtain, exchange, and store wealth. These forms of wealth may be varying from real estate or property investment security tokens that reflect fractionalized assets to platform-specific tokens that reward the usage of a certain program. It enables brands to keep total control over their digital products without constraining their distribution or fearing that a fraudulently manipulated copy, such as one modified with deep fake technologies, maybe wrongly ascribed to them. Possession comes with accountability, and NFT allows companies to be solely accountable for the original content they create without jeopardizing its viral possibilities. NFTs have the possibility to increase in value due to market speculation and scarcity. Therefore as a consequence, based on where purchasers perceive the asset's worth is, if an NFT holder sells the item again, the resale price may be significantly higher than the original purchase. We can consider it to be similar to classic, tangible art.<h3 id="impact-of-nfts-on-current-economy">Impact of NFTs on Current Economy</h3>With the advent of Non-Fungible Tokens (NFTs), the art and content creation business is undergoing a dramatic transformation. This is because a huge majority of artists want to profit from the creativity and distribution potential that blockchain technology provides. Blockchain technology is working to revive what digitization took away from art, reinventing the art industry with credible tools for authenticity, integrity, and circulation.The power to render branded digital assets both rearrangeable and non-fungible is what the NFTs bring to the game. This may sound counterintuitive, but NFTs may confirm that businesses are the legitimate owners of their digital assets and hence rule out alternative versions as fan-made material.Major players adopting decentralized finance will have a net beneficial influence on everyone else.<h3 id="how-are-nfts-impacting-business-models">How Are NFTs Impacting Business Models?</h3>As NFTs gain widespread popularity, we predict more businesses jumping in and beginning to explore delivering digital items based on IP. This will be done in order to generate extra income and indulge the core fanbase or create exclusive experiences with tokenized access that may become sought-after collectible items. This will help in capturing the attention of the aforementioned experiences. Business development methods for digital media artists will be tried, allowing them to skip networks and cash straight from their consumers.Eventually, NFTs are critical in linking the physical and virtual worlds. They can be quickly swapped without the need for a trusted intermediary owing to blockchain networks. They can also be safely maintained on a crypto asset portfolio for the rest of their lives.<h3 id="conclusion">Conclusion</h3>The NFT industry has been seeing substantial development in the last few years. Implementation is still a relatively new concept. Although the sometimes astronomically large amounts generated by NFT sales have sparked undesired criticism, the innovation that underpins these digital commodities has already been fully functional. With the rise in new use cases emerging on a daily basis, NFTs are greatly broadening the crypto-asset market.

Toulika Das

NFTs Are Making Digital Products Scarce and Valuable

The growth of the Defi ecosystem has been possible because of how popular NFTs grew. Holding or trading of NFTs and other crypto assets has become effectively standard in recent times. In all this hype about NFTs and Defi, the custodial and non-custodial NFT discussion has grown significantly in consideration of the massive scale adaptation of NFTs.Until recently, there was very little to no chatter about the custodianship of your NFTs, so why now? Well, the answer is quite simple, it is to know who controls your NFTs and crypto-assets. Before we dive deep into understanding the differences, let's understand how your crypto wallets and the custodianship of your crypto assets are linked.<h3 id="importance-of-crypto-wallets-for-custodianship">Importance of Crypto Wallets for Custodianship</h3>A crypto wallet, like any other wallet, is used as a store of value. You can use the wallet to make transactions on decentralized applications. There are two main aspects of a wallet, the private key, and a public key.A public key is used to generate an address for the parties involved in the transaction to send and receive cryptocurrency. The private key is something like a password that is used for authentic transactions when a sender wants to send cryptocurrency or <a href="https://techfastly.com/how-to-eliminate-nft-deployment-costs-and-smart-contract-hassles/">NFTs</a>.Custodian services are where the private key of your wallet is held with someone else. The extent of authority is decided by you, the owner of the wallet. You can grant them complete custody or partial custody and their right depending on how you see fit. Non-custodian services are where you hold the private key, and you have all the authority in regards to how you want to utilize the crypto assets you own.<h3 id="custodian-vs-non-custodian-nfts">Custodian vs. Non-custodian NFTs</h3>Let's talk about the difference between the two from various views.<ul><li>Definition: The definition of the two is a basic fundamental aspect of comparison as NFTs stored in a custodial wallet are custodial NFTs, and the ones stored in the non-custodial wallets are non-custodial NFTs. In the case of a custodial NFT, you need to authorize the service provider (a third-party custodian) to control your NFTs. Whereas in the case of non-custodial NFTs, you enjoy the complete authority of your NFTs.</li><li>Purchasing of NFTs: In the case of custodial NFTs, your purchasing power depends based on the control you have over your NFTs. You can purchase custodial NFTs from marketplaces that manage your private keys. The best way to purchase Non-custodial NFTs is by purchasing them from a decentralized platform.</li><li>Convenience: Custodial NFT holders must register their accounts and complete their KYC verification with the exchange. Non-custodian holders don't need an account, and since there is no account, they don't have to get themselves verified.</li><li>Transaction cost: Custodian NFTs have higher transaction costs since the custodian's involvement. Non-custodian NFTs have minimal transaction costs as they are directly linked to your wallets.</li><li>Security: Security is a prominent point of difference when it comes to the comparison of custodial and non-custodial NFTs. The custodial NFTs always depend on how secure the custodian's infrastructure is since the service provider holds the private keys. Non-custodian NFTs are different as it uses personalized security methods that can be better and improved with time.</li><li>Support: Custodial NFTs have the support system provided by the service provider. They come equipped with a standard measure to help you in case you lose your private keys. Non-custodial NFTs have limited support as if you lose your private key, there are fewer measures to retrieve it.</li></ul><h3 id="which-is-better-custodian-nfts-or-non-custodian-nfts">Which Is Better: Custodian NFTs or Non-Custodian NFTs?</h3>After analyzing the key points of difference, it is evident that custodian and non-custodian NFTs are customized for the users. There are pros and cons to using both.Custodian NFTs offer a better support system in case you misplace your private key, but the downside is that you'll have to follow the procedure for the creation of an account, pay higher transaction charges, have limited purchase power, and abide by available security standards.Non-custodian NFTs have a better edge when it comes to lower transaction costs, no restriction on purchasing power, and ease of transaction. With non-custodian NFTs, you will need to be careful when it comes to the selection of security standards and private keys.

Kunal N Mehta

Does the Custodianship of Your NFTs Matter?

The NFT marketplace saw a big boom in 2021, with the sales of NFTs skyrocketing even further. The total NFT turnover for 2020 was estimated to be about $106 million, which further shot up to a stunning $44.2 billion. As per Chainalysis, a blockchain firm, many players in the NFT marketplace are ?making a killing? with wash trading.<h3 id="what-is-wash-trading">What is Wash Trading?</h3>Wash trading is a trading activity in which the seller is on both sides of the transaction; yes, you heard it right, the buyer and the seller are the same people. Wash trading is an unethical practice done to inflate the asset value in the eyes of others. The primary reasons for wash trading, as stated by <a href="https://blog.chainalysis.com/reports/2022-crypto-crime-report-preview-nft-wash-trading-money-laundering/">Chainalysis </a>were:1. To artificially inflate the value of NFTs.2. Using wash trading in NFTs as a mode to launder money.<h3 id="wash-trading-to-inflate-nfts">Wash Trading to Inflate NFTs</h3>As per the report by Chainalysis, there were a total of 262 users who sold to self-financed addresses over 25 times. The figure consisted of 110 profitable trades and 152 unprofitable ones. There were 110 profitable trades with a whopping $8,875,315 in profits alone, and the unprofitable trades came down to $416,984. The profit after dwarfing losses comes down to $8,875,315.<figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://iaxds62ruoojbg1k4180.cleaver.rocks/images/posts/bc2946f75a9d88660f34bc11d14df13a.png" class="kg-image" alt loading="lazy" width="759" height="393" srcset="https://techfastly.com/content/images/size/w600/2022/03/self-financed.PNG 600w, https://iaxds62ruoojbg1k4180.cleaver.rocks/images/posts/bc2946f75a9d88660f34bc11d14df13a.png 759w" sizes="(min-width: 720px) 720px"><figcaption>Self financed statistics as per Chainalysis&nbsp;</figcaption></figure>Wash trading might seem to be an easy way to drive up NFT?s value, it is not a foolproof plan, stated Kimberly Grauer, director of research at Chainalysis. It is because of the gas fees charged for every Ethereum transaction. As per the report, there were 830 self-financed transactions. The seller made prolific attempts to generate profitable trades through wash trading. The total money spent on gas fees was $35,642, and the revenue from sales was a mere $27,258. It shows the desperate attempt to indulge in more self-financed trades, only to recover costs.<h3 id="how-does-money-laundering-happen-via-wash-trading">How Does Money Laundering Happen via Wash Trading?</h3>As per the Chainalysis blog, money laundering activities are small, but they?re still visible in the <a href="https://techfastly.com/before-buying-an-nft-read-the-terms-carefully/">NFT</a> market. Money launderers legalize their money through art. The transfer of paintings is easy as compared to others, art can be subjectively priced, and they use several loopholes in the taxation system meant for art collectors.<figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://iaxds62ruoojbg1k4180.cleaver.rocks/images/posts/09ed42a8e5086a93ae248c930be9040a.png" class="kg-image" alt loading="lazy" width="782" height="424" srcset="https://techfastly.com/content/images/size/w600/2022/03/money-laundering.PNG 600w, https://iaxds62ruoojbg1k4180.cleaver.rocks/images/posts/09ed42a8e5086a93ae248c930be9040a.png 782w" sizes="(min-width: 720px) 720px"><figcaption>Money laundering statistics as per Chainalysis.</figcaption></figure>As per the report, cybercriminals use illicit funds to purchase and sell NFTs. In the third and fourth quarters of 2021, there was a significant rise in funds transferred from scam-associated accounts to NFT marketplaces. The total funds transferred only in the third and fourth quarter of 2021 was about two and a half million. Cryptocurrency-based money laundering witnessed in 2021 was about $8.6 billion.<h3 id="what-does-this-mean-for-the-nft-ecosystem-and-what-are-nft-platforms-doing-to-counter-it">What Does This Mean for the NFT Ecosystem, and What Are NFT Platforms Doing to Counter it?</h3>NFT platforms let everyone sell NFTs by simply linking their wallet and paying the relevant fee without creating an account. Wash trading affects the whole ecosystem as the circulation of overvalued NFTs create an inequitable marketplace that becomes fatal for future growth because of weakened faith in the system.It is believed that there might be a rise in such illicit activities. The Chainalysis blog post stated that they are equipped with software that can trace back self-financed transactions and that they have been tracing such addresses. There are still no laws against wash trading for NFTs like in some securities and derivatives.It is the responsibility of <a href="https://twitter.com/rarible/status/1288609216069017600?lang=fr">NFT platforms</a> to build up regulations in the best interest of their users.Dapper Labs, an organization that provides NFT-based products and decentralized applications, is reported to be working with Chainalysis to keep wash trading and other unethical activities in check.OpenSea, published a blog post on the 17th of Jan informing about the formation of an ?NFT Security Group? the members of which will share and educate about ?vulnerable? reports that will be fixed before being announced publicly so the users are not impacted by any problems. The members will work towards creating solutions to ensure better security revolving around Ethereum blockchain consensus, smart contracts, wallets, and metadata.Alex Salnikov, co-founder and head of product at Rarible, explained to <a href="https://cointelegraph.com/news/chainalysis-report-finds-most-nft-wash-traders-unprofitable">Cointelegraph </a>that Rarible would be tackling this issue by stopping the RARI token distribution, an incentive program exclusively for Rarible users; a decision by the Rarible decentralized autonomous organization. Due to this, he said, ?the issue is no longer relevant for our marketplace?. Rarible has taken up additional measures for the verification of its users.Scams such as wash trading will rise irrespective of the controls and measures implemented by the platforms and decentralized authority. There might be a rise in such illicit activities before there is an industry solution, stated Grauer.You as a user of these platforms might have to perform extra precautions to be safe from such scams and fraudulent activities.

Are Wash Trading Scams A Bad Omen For the NFT 'Image'?

The rise in popularity of Non-Fungible Tokens (NFTs) can be attributed to its unique features such as verifiability, tamper-resistance, usability and tradability. An NFT is a cryptographically unique, non-replicable and verifiable token representing a given asset on a blockchain. With all these properties, NFTs are truly revolutionizing the world of ownership and are reshaping different industries like finance, art, gaming and media. NFTs became popular in the gaming industry through the virtual game CryptoKitties, and the NFT for one of the most expensive CryptoKitties was sold for USD 170,000. NFTs hit the art world in 2021 when Christie?s auctioned Beeple?s ?5000 Everydays? for USD 69.3 million and ranked as the third most expensive work sold at auction by a living artist. Apart from the industries mentioned above, the NFTs are continuously expanding in various sectors, spanning from entertainment and real estate to advertising.NFTs were first introduced on the Ethereum blockchain, and although other blockchains can be used, the majority still use the Ethereum blockchain. The concept of a non-fungible token standard is introduced with the ERC-721 protocol. There are other smart contract protocols for creating NFTs with their distinct features. ERC-1155, also known as the multi-token standard, provides greater flexibility in creating and managing NFTs by offering support for batch operations, reducing gas fees and, subsequently, carbon emissions. Another standard, EIP-2981, enables universal support for royalty payments in all NFT marketplaces and ecosystems. EIP-2981 is another worth mentioning standard that addresses the issue of lack of standardization and interoperability across ecosystems when resale right is to be enforced across different platforms. Finally, F-NFTs or Fractionalised NFTs provide fractional ownership support.<h3 id="advantages-of-nfts">Advantages of NFTs</h3>Collectors, creators and institutions can take advantage of NFTs in various ways:? Collectors: Giant ROI from NFTs is attracting collectors to explore the NFT space. NFT market is emotion-driven. Collectors can buy, hold or engage in spread investing/ speculative trading in NFTs. Scarcity introduced by NFTs makes investment in digital art rarer and of higher value. Apart from investment potential, the buyer also gets the bragging rights of owning new and rate digital assets.? Creators: NFTs offered creators easy access to reach a global audience at the comfort of their homes or workspace. It also reduced the cost of shipping a piece of art across the globe and provided equal access to everyone regardless of their location in the world. The possibility of getting royalties every time the collectors or the speculators sell a creator's art provides the creator with a better value from their work. NFTs enabled creators to assert their ownership of the content created on the network. Smart contracts made it possible for creators to attach any kind of benefits that they like to offer to the buyers of their NFTs.? Institutions: As the NFT transactions are traceable and authentic, the corporates can purchase NFTs as an asset held for future sale. Corporates can use Fractionalised NFTs to offer fractional ownership of their interesting digital projects. In addition, Corporates can use NFTs for decentralized applications and projects.<h3 id="opportunities">Opportunities</h3>According to a Bloomberg report, the NFT Market has surpassed USD 40 billion in 2021. NFTs are at the early development stage and present a profitable business opportunity for startups and corporates working in different industries. The Advent of NFT technology opened up ample opportunities in the following fields:? Metaverse: A metaverse is a collaborative immersive virtual shared space that allows users to interact with each other, create in-world objects and landscapes, construct experiences and all other digital activities. It covers a set of techniques such as augmented reality and the Internet to construct the virtual world. Blockchain offers an optimal decentralized environment for the interactive virtual online world. Metaverse generally has its own built-in currencies and economies with which participants can buy, sell and trade in virtual real estate, avatars, items, accessories and more. It provides profit-earning opportunities to the users as they can lease the buildings (such as studios) to others or raise rare pets and sell them. Due to the complexity of the technology, it is still in a nascent stage.? Secure Digital Collectibles: Digital collectables comprise various types, spanning from digital images, videos, wines, trading cards, virtual real estate, crypto stamps, diamonds, domain names and other intellectual properties. It is very easy to replicate or forge a piece of art in a digital era. With the advancements in technology, Watermarking the original works have also become futile. NFT represents a verified and undisputable ownership. NFT is an efficient way for a buyer to manage and secure the certificate of ownership.? Gaming Industry: NFTs are at a nascent stage in the gaming industry. They offer benefits for both players and gaming developers by offering financial rewards, a play-to-earn model, interoperability of game items and more. There are two ways to earn via play-to-earn games ? earning in-game rewards or trading NFTs and cryptocurrencies. This also leads to the emergence of the concept of the play-to-earn guild in which guild members rent in-game assets to new players, and the lender receives a percentage of income as the new player progresses in-game. Finally, the element of interoperability of NFT games is transforming the gaming industry.? Virtual Events: One of the most prominent developments in the events industry took place in 2021 when Kings of Leon released their new album When You See Yourself in NFT format. NFT-based tickets eliminated the risk of buying invalid or fraudulent tickets. The holder of an NFT-based ticket cannot resell the ticket once it is sold as it is unique and scarce. The NFTs are transforming the events industry's organizational, financial and artistic aspects.<h3 id="challenges">Challenges</h3>There are several challenges that have to be overcome to facilitate the development of NFT applications. Even though the NFTs are trending in the market, very few actually understand this complex technology. Apart from being complex, there are several challenges associated with the NFT technology. Some of the key issues are mentioned below:? Environmental challenges: NFT has caught up with severe criticism from environmentalists. The energy consumption associated with generating NFTs is substantial, especially with the Ethereum blockchain, which at present is the most widely adopted blockchain. According to some studies, the energy utilized is almost equivalent to the consumption by an average EU citizen in a period of over three decades.? Intellectual Property Right Issue: NFTs holder does not get the intellectual property right just because they have owned it. IP rights should be embedded in the smart contract and/or terms of sale of the NFT. Without a license of these underlying rights, one can not reproduce the original work or NFT. This provides the owner with the right to refrain others to spread, publish and change NFT.? Security and Privacy Issues: Following the multi-million dollar sales in the NFT space, scammers and cybercriminals have unavoidably flocked to the NFT market to make quick gains and cheat the unsuspecting users. Impostors are taking the benefit of the fact that the onus of verifying the token is on the buyer. NFTs are not governed by any regulations so far. An NFT holder has to keep the safeguard the security key as whoever has control of the secret key has complete ownership over the NFT. Like other digital assets, NFTs are vulnerable to all related cybersecurity risks.<h3 id="conclusion">Conclusion</h3>NFT technology holds great potential. Presently, NFTs are at a nascent stage with applicability in numerous industries. Keeping in mind the advantages NFTs offer to the creators, it is expected to keep creating a buzz in the creator economy. Though NFTs are not entirely secure, technological advancement is expected to overcome the issues.

MANISH KUMAR

NFT: Overview, Advantages, Opportunities and Challenges

These NFT blockchain tokens are making quite a stir at the moment, and it is expected that the demand for them will only grow.Nevertheless, before you spend a dime on an NFT, or digital collectible, you should understand exactly what you're getting. <h3 id="nft-what-is-it">NFT: What is it?</h3>"Non-fungible token" is the abbreviation for "non-fungible token." Non-fungible tokens are digital assets that can be transferred across a blockchain. Because they can't be duplicated or divided, their uniqueness gives them a wide range of uses.In contrast, fungible tokens are those that are easily replaced by other identical tokens. One example would be cryptocurrency tokens, such as Bitcoins.Among the different types of NFTs, there can be different rules attached to them. These rules are referred to as Smart Contracts, which are governed by their programming code, which handles the transfer of ownership of NFTs. Presently, we're seeing NFTs mainly used for selling "digital collectibles" such as digital art, articles online, music, tweets etc.<h3 id="are-you-buying-what-you-say-you-are">Are You Buying What You Say You Are?</h3>You're paying for a unique item when you purchase an NFT from one of the many NFT marketplaces. To put it another way, you're paying for a very short digital record (approximately a few bytes in size, and commonly containing a serial number or URL) to be transferred to your blockchain address. That is all there is to it.Owning this token allows you to establish that you own a certain item and that the object you own is genuine?similar to having an authentication certificate.Unless you sell (or gift) that NFT to someone else, no one else can have it.Having custody of a house's deed is equivalent to owning an NFT. The deeds, not the house, constitute an ownership record. In the same way, an NFT is a record of an asset's ownership or validity, not the asset itself.<h3 id="heres-what-an-nft-isnt">Here's what an NFT isn't</h3>An NFT isn't a digital asset in and of itself. The NFT is not the picture file if you purchase the NFT for a work of digital art. Authenticity records or ownership records are the only records that are stored on a blockchain. The image file will be stored on a different server.It would be the same as buying a limited edition print of a photograph. When you own the print, you would not own the copyright to the photograph. You couldn't sell your own photo reprints.In addition, you couldn't sell your own reprints of the photo. It couldn't be used for commercial purposes either. But, the fact that you own an authentication certificate makes your print more valuable.An NFT by itself does not automatically grant you any rights to any of its intellectual property. By default, the original author of the work (whose record is stored in the NFT) retains ownership of the copyright.If there are no additional terms or written agreements, you get very few rights by default.<h3 id="terms-associated-with-nfts">Terms Associated With NFTs</h3>There are often additional terms that come with NFTs that outline just what you are able to do with your purchase. Because of this, it's imperative that you read and understand the terms of each NFT you buy.CryptoKitties creator Drabble Labs Inc. has developed a simple license that describes what you can and cannot do with an NFT. You own licensed content rather than any copyright. This license makes this very clear.The ?NFT License? does not automatically apply to all NFTs, but any NFT project can adopt it if they wish. Different types of licenses will likely be developed in the future.Before you buy an NFT, read the terms carefully to make sure you know what you can and can't do with it.<h3 id="why-might-it-go-wrong">Why Might It Go Wrong?</h3>When buying NFTs, there are a bunch of options that might go wrong.NFTs are still in their early stages of development. Traditional purchase methods are currently unprotected by legal frameworks. If an NFT author, for example, rips you off by producing extra copies of your "unique" digital product, you will probably have little recourse.Likewise, when buying NFTs you should check to make sure the seller has the right to sell ownership or outright copyright. A transfer of ownership should certainly be documented in writing, so it's protected by the current legislation.Second, many NFTs simply provide a link to the desired digital object. You may lose the value of your NFT if this link breaks, expires, the owner redirects the URL to another address, or if the hosting account is not extended. NFTs are increasingly being hosted via IPFS, which greatly mitigates this risk.Third, an NFT you buy could come with excessive royalties. This means that if you sell the NFT to a third party, the author may receive a significant amount of the proceeds. This is something you should look into before purchasing your NFT.<h3 id="still-interested-in-that-nft">Still interested in that NFT?</h3> NFTs are the craze of 2022, and you need to know what you're actually getting when you buy one.A lot of promises have been made in this space, and that has sparked speculation. With this in mind, think about the hazards before you spend your money, and do your homework before buying something.It's imperative for you to have the knowledge needed here, from what a blockchain is to how you can use the assets you purchase.<blockquote>PS: This is not an investment advice. This is purely the opinion of the writer.</blockquote>

Hamid Akhtar

Before Buying an NFT, Read The Terms Carefully

Non-Fungible Tokens (NFTs) is a concept that was not known until recently and is now widely used. Consumer spending on digital assets has increased from $1 billion in 2020 to nearly $41 billion at the end of 2021, according to blockchain chainalysis experts. NFTs have transformed art, music, and sports and offer creators the option to monetize their digital artwork.Last year, the NFT marketplace saw eye-popping levels of sales. For example, South Carolina-based digital photography collage by designer Mike Winkelmann was sold for $69.3 million, making it one of the largest NFT auctions.<h2 id="what-is-nft">What is NFT?</h2>NFTs are digital assets that represent real-world objects such as art, music, game content, and videos. They're frequently bought and sold with cryptocurrencies and encrypted with the same basic software as other cryptocurrencies.Despite the fact that NFTs have been around since 2014, they are gaining appeal as a popular way to trade digital art pieces recently. Since November 2017, $174 million has been spent on NFTs.<h2 id="how-are-nfts-different-from-cryptocurrencies">How Are NFTs Different From Cryptocurrencies?</h2>NFT stands for non-fungible token. It is typically built using the same type of programs as cryptocurrencies, such as Bitcoin or Ethereum, but the similarities end there.Cryptocurrencies and physical money are "fungible," meaning they can be traded or exchanged. They're also the same value - one dollar is always the same as another; one bitcoin is always equal to another bitcoin. Crypto's fungibility makes it a reliable way to conduct blockchain transactions.NFTs are different. Each one contains a digital signature, making it hard to convert or compare NFTs. For example, an NBA Top Shot clip is not suitable for every day because they are all NFTs. (For that matter, one NBA Top Shot clip doesn't even fit into another NBA Top Shot clip.)<h2 id="do-crypto-prices-affect-nfts">Do Crypto Prices Affect NFTs?</h2>The value of NFTs depends on a variety of factors - their scarcity, the demand for artwork or even artists, and the price of the underlying cryptocurrency spent. Many online marketplaces for selling NFTs are powered by blockchain. Currently, the Ethereum blockchain provides the most popular power. So, if you're looking to sell or purchase NFTs on one of the most popular exchanges, you probably need ether, Ethereum's native cryptocurrency, to do the job.But the good news is that despite the volatility of cryptocurrencies, not all NFTs are tracking their underlying crypto movements. For example, despite the ongoing correction in the crypto market, the NFT OpenSea market area has seen $2.3 billion in volume so far in January, the fastest monthly volume on record.Discussing the recent cryptocurrency sell-off with Yahoo! Mason Nystrom, a senior analyst at financial analysis firm Messari, described this anomaly. Nystrom said that despite the volatility in the crypto market, the NFT environment might make them independent of the crypto market."NFTs are an extensive category that can include music, art, collectables, game assets, dream games, financial assets, etc. He added, "going forward; we are likely to see a major fragmentation in the crypto market, where one asset (like NFT technology) may work well across the crypto market performing poorly and vice versa."A study published on ScienceDirect, "Do cryptocurrencies drive the pricing of non-fungible tokens?" suggests a downward spiral between cryptocurrencies and NFTs. The study used data from two major cryptocurrency markets, Bitcoin and Ethereum, with original data from coinmarkcc.com and NFT data from secondary markets: Decentraland LAND tokens, CryptoPunk game character images and Axie Infinity, and individual commercial data from Nonfungible.comThe data indicate that when it comes to cryptocurrency market volatility, the knock-on effect on the NFT market is weaker, suggesting that NFTs and cryptocurrency markets are different from each other and don't really affect each other in any meaningful way.

Baba Nadeem

Do Crypto Prices Affect NFTs?

Digital transactions involving internet banking and unified payment interfaces are prevalent. As financial technology advances, the next significant transition is expected in the instrument itself, with currency switching from physical to virtual mode.Despite price volatility, concerns about their carbon imprint, and ever-increasing regulatory obstacles, virtual currencies or cryptocurrencies - bitcoin and ethereum are prime examples - gaining traction.Cryptocurrency is digital money, decentralized (peer to peer), and built on open-source software. An open-source software platform enables the establishment of a private currency and the payment of that virtual currency by users.<h3 id="the-market-of-nft">The Market of NFT:</h3>In early 2021, non-fungible token (NFT) markets grew in popularity. Any digital material can be used as an NFT. The most general categories are collectibles, artworks, virtual world objects, and digitalized characters from sports. An NFT begins registering a digital asset's ownership on a blockchain, commonly on the Ethereum network. After that, the digital asset can be sold with ownership changes, and the bitcoin payment received is recorded on the blockchain.While NFTs are exchanged using cryptocurrencies, they have several distinct characteristics that are important to keep in mind when trying to comprehend them. Even if they have some asset-like features, cryptocurrency is primarily meant as a currency. NFTs, on the other hand, are designed to be used solely as assets. The term "non-fungible" in the NFT name is a good indicator of this distinction. One of the fundamental properties of cryptocurrencies and money, in general, is fungibility, or interchangeability (one bitcoin is the same as another bitcoin, and one dollar the same as another). Therefore, the non-fungibility of NFTs is one of the most valuable asset qualities.Everyone who follows the NFT market knows the significant overlap between cryptocurrencies and NFT market participants. This is partly because purchasing an NFT necessitates the usage of cryptocurrencies, which is difficult for many people. With this in mind, we researched whether there are any crossover effects between cryptocurrency and NFT pricing in our research. First, let's dive into the reports.We expect cryptocurrencies to impact NFT pricing because larger markets tend to spill over into smaller related markets, and cryptocurrencies are a much larger connected market than NFTs. On the other hand, NFT pricing may impact cryptocurrency markets, as NFTs and their popularity demonstrate a strong commercial case for blockchain technology. As a result, this addresses an open business question about the blockchains and the cryptocurrencies built on top of their practical applications.<h3 id="nfts-on-the-table">NFT's on the table</h3>There can be one official owner for NFT at any time, and when you buy one, it becomes your legal possession. In addition, because the records are preserved in blockchain, which provides a public record that is 'unhackable' and helps against misappropriation, it is more secure than a regular digital transaction.To make, or technically 'mint,' an NFT, you'll need a digital wallet compatible with the marketplace you want to use. Then you'll need to upload a file to 'tokenize.' Tokens of this type are created using the same programming as cryptocurrency, and their generation may require payment of platform fees. In addition, a 'transaction fee' may also be charged when a buyer purchases an NFT.Wazir-X, India's largest cryptocurrency exchange, just established the country's first marketplace for NFTs, built on a blockchain technology developed by WazirX's parent firm Binance, one of the world's largest cryptocurrency exchanges. WazirX charges authors a 5% service fee on the revenues of each sale, and the platform showcases exclusive artwork from painters, photographers, and media professionals from India and other South Asian countries. However, several other businesses lurk in the shadows, waiting for more regulatory clarity before entering the NFT field.<h3 id="nfts-play-with-ip">NFT's Play with IP:</h3>NFTs can foster the development of a new generation of artists, musicians, writers, and digital content providers. Artists can list and sell their work directly on marketplaces, without the need for agents, just as e-commerce sites like Amazon have enabled manufacturers to sell their goods directly to customers and modified, if not eliminated, the traditional roles of intermediaries. Likewise, using the medium of NFTs, artists can list and sell their work directly on marketplaces, without the need for agents - especially given how easy it is to build a community of fans on social media platforms!Consider the following scenario. On an appropriate platform, a writer creates NFTs, each of which is linked to a digital copy of her book. Every buyer of an NFT receives a copy of the title and pays for it with a direct bank transfer to the author's digital wallet.If an owner wishes to resell an NFT after purchasing it (imagine secondhand bookstores, but online), a smart contract might ensure that the author receives a percentage of resales royalties. The traditional publishing business stands to gain as well. Many parties gain a percentage of each sale in the case of a paper book; with NFTs and smart contracts, contractual pay-outs can be embedded into a transaction, resulting in automated and rapid pay-outs to all parties.Significantly, the assets in question in the previous scenario are books, but the NFT buyers only receive titles to one copy of each book. The author/publisher retains the underlying copyright in work. In practice, the sale of NFTs frequently includes intelligent contracts and text-based terms and conditions that specify the exact intellectual property (IP) rights that are being transferred. However, if you're planning to purchase Beeple's 'Everyday,' double-check that the terms of sale include a transfer of full copyright in the image to you!<h3 id="crossover-of-cryptocurrency-and-nft">Crossover of Cryptocurrency and NFT:</h3>The ambiguity around such assets is exacerbated because cryptocurrencies and NFTs are not regulated in India, even though they are not prohibited.However, cryptocurrencies provide an alternative private currency. Nevertheless, the RBI or Reserve Bank of India has maintained a cautious stance toward such assets over the past decade, citing worries about price volatility and fraud.It published a press release in 2013 warning consumers of the financial, operational, legal, and security dangers connected with bitcoin transactions. In addition, the government indicated that it does not consider cryptocurrencies to be "legal tender or coins" and that it will take all necessary steps to avoid the potential of crypto-assets being used to finance illegal activities.Let's examine the internal relationships between NFT markets and cryptocurrencies using this concept of trader crossover between couple of market sets. Moratis (2021) reveals that cryptocurrencies have a high level of volatility shock transmission, with Bitcoin dominating this transmission. We study whether cryptocurrency volatility spills over to NFT markets, since there has been trading crossover between cryptocurrencies and NFTs and the potential influence of bitcoin pricing on NFTs.We will also look into any movement between cryptocurrency and NFT, as the movement has been proved to be a significant element of cryptocurrency markets. Researchers and practitioners alike would benefit from identifying links among the couple of market sets since we could then look at trends in bitcoin pricing to predict likely trends in NFT markets.The research adds to the limited literature on NFT pricing. The pricing trends of NFTs have only been studied once before. That study reveals that pricing does not show essential efficiency indicators in one NFT market, but some are developing signs of price behavior modifications.Let' study the primary relationship between NFT pricing and cryptocurrency market pricing. We discover modest volatility transmission and considerable evidence of co-movement, providing a framework for predicting how NFT pricing will evolve as markets mature. In addition, the research leads to a better understanding of how pricing behavior evolves in new marketplaces at a more general level.<h3 id="will-cryptocurrency-crash-impact-nft">Will Cryptocurrency Crash Impact NFT:</h3>NFT is a cryptocurrency; hence, the current cryptocurrency market downturn will be impacted. On the other hand, many cryptocurrency specialists are unsure how NFTs will be affected. According to Edward Moya, a senior market analyst at OANDA, the long-term outlook for cryptocurrencies remains positive. He further notes that many people are still interested in NFTs since they provide exclusive access to vintage artwork. Moreover, NFTs are still expanding in popularity as more composers of various musical and other works enter the market.Many internet galleries are unlawfully making NFTs of artists' works and auctioning them for large sums. As a result, artists want a piece of this new trend.Finally, a decrease in NFTs is expected. However, with a bullish trend in cryptocurrencies projected, NFTs will grow exponentially.<h3 id="how-to-purchasesell-nfts">How to purchase/sell NFT's?</h3>NFTs are typically stored on public blockchains such as Ethereum, Flow, Algorand, Binance Smart Chain, and similar platforms. Users can construct them utilizing third-party NFT markets like OpenSea, Raible, or Nifty Gateway, or developers can use developer tools. Using these marketplaces is a more straightforward way to create and sell NFTs for the average consumer, and it resembles placing a product on a popular e-commerce platform.NFTs are typically bought and traded with cryptocurrencies like Ether. In addition, some systems, such as Nifty Gateway, also allow for credit and debit card purchases. However, to enable the transfer of an NFT, those platforms must also carry out crypto-asset transactions on a blockchain in the backend.<h3 id="usp-of-nft">USP of NFT:</h3>NFTs, strive to be authentic and unique, which is a significant value proposition. For example, a limited-edition, signed poster by an actor or sportsperson is a fair analog to the traditional world. However, the poster's value lies not in the underlying image alone but in the fact that the celebrity has supported it, although just once or twice. NFTs are also a step ahead since they can be programmed using smart contracts, allowing for the automation of a range of formerly manual processes.NFTs are simply a digital representation of title to an underlying asset; whether or not an NFT is a security will be determined in large part by whether or not the underlying asset is a security. An NFT representing a corporate share, for example, is likely to constitute security subject to Indian securities law. In contrast, an NFT representing a piece of digital art would serve as a certificate of title.However, it is essential to note that possessing an NFT representing an asset does not indicate legal ownership of the underlying asset.<h3 id="conclusion">Conclusion:</h3>For cryptocurrencies and NFTs, there are no clear regulatory benchmarks. Some nations, including Japan, Australia, Russia, and Switzerland, have created regulations for cryptocurrencies, while others, such as China, Thailand, Indonesia, Saudi Arabia, and Taiwan, have outright outlawed them.In a recent joint statement, securities, banking, insurance, and pension regulators warned the public about the high dangers connected with virtual currencies and their unsuitability as investment, savings, or retirement planning products.Given India's expertise in computing technologies and the fact that the crypto business is at the forefront of technical innovation, being a crypto innovation hub might benefit the country substantially. Furthermore, by creating appropriate compliance standards, an ideal regulatory framework would accelerate innovation while reducing the hazards posed by bitcoin.The tax treatment of NFTs should, in most cases, be determined by the type of the underlying asset. A digital art NFT, for example, could be regarded as an intangible asset or suitable for income tax and the Goods and Services Tax (GST). Therefore, as soon as possible, taxes should be declared and paid.However, new tax difficulties are likely to arise because of the cross-border and digital character of NFT transactions. The question is whether NFTs are cryptocurrencies or virtual currencies, and if so, how would any future legislation restricting or forbidding crypto-asset transactions affect them? NFTs may be included in a broad definition of cryptocurrencies or virtual currencies, but a more detailed definition should ideally omit them because they are non-fungible.Interest in cryptocurrencies and related assets like NFTs grows despite the hazards and regulations. As a result, NFTs have emerged as one of the most popular crypto trends in 2021.

Yash Modi

Crossover between NFT and Cryptocurrency Pricing

Non-fungible tokens (NFTs) are still generating excitement in the crypto sphere and even well beyond. We have only recently seen the crazy success of pre-registrations on the future Coinbase platform specializing in NFTs. This time, ShapeShift is creating the buzz in the NFT world, wanting to cause the extreme scarcity of one of its unique tokens.<h3 id="shapeshift-wants-to-destroy-65-of-the-stocks-of-an-nft">ShapeShift wants to destroy 65% of the stocks of an NFT</h3>Between digital art objects and collectible cards, NFTs sometimes elicit a euphoria bordering on hysteria. The prices of certain NFTs can thus explode towards astronomical sums.These are early NFTs (circa 2015) created by Spells of Genesis and donated to ShapeShift as part of their partnership supporting the development of their first blockchain-based games as shared by ShapeShift. Also, these could end up being some of the rarest and most historic NFTs of all time.Cryptocurrency exchange service ShapeShift announced in a post that it will contribute in its way to this sweet NFT madness. Its new decentralized autonomous organization (DAO) indeed intends to rarefy an existing collectible card in the form of a digital token.It is more precisely the card "ShapeShift, the Wanderer" (SHAPESHIFTCD), from the game "Spells of Genesis," and minted (created) in 2015 on the Counterparty (XCP) blockchain. Already one of the oldest NFTs in existence - CryptoKitties and CryptoPunks dating back to 2017 only - these tokens had only been issued in 1,000 copies, but that still seemed too much for ShapeShift:"The ShapeShift company plans to burn (destroy) 649 SHAPESHIFTCD in its possession (?), to keep 16 for sale in the name of the company by the end of the year and to donate the remaining 16 copies to the ShapeShift CAD treasury. "<h3 id="what-makes-an-nft-one-of-the-rarest-in-the-world">What makes an NFT one of the rarest in the world?</h3>By thus burning 649 of the 681 digital collectible cards in his possession, the purpose of ShapeShift is transparent and explained in his announcement: "[These cards] could end up being some of the rarest and most historic NFTs around. (?) These cards could thus prove to be a valuable and essential asset in ShapeShift's DAO treasury. "The idea that interprets the vote of the holders of FOX (the native token of the ShapeShift project) is to gradually unlock the cards owned by the DAO to benefit its cash flow over the long term.Of the 16 cards received by the decentralized organization, five would be immediately available for sale, five would not be on sale for one year, and six would not be salable for two years.If FOX owners decline this deal, no SHAPESHIFTCD will be distributed to ShapeShift DAO.However, the ShapeShift non-depository cryptocurrency exchange has burned hundreds of themed collectible "cards" from the Spells of Genesis blockchain-based mobile game. The team said the remnant cards in their possession would be placed under the control of their new Decentralized Autonomous Organization, or DAO, and released in limited installments over the next two years.According to the channel's data, ShapeShift has engraved close to 817 digital cards named "ShapeShift the Wanderer." This was followed by an October 12 announcement that the exchange intended to burn most cards for them to be"among the rarest [Spells of Genesis] cards in existence and among the earliest existing NFTs.There are now only 183 active editions, known on the channel as SHAPESHIFTCD. Many of these are assumed to be lost, eventually making it one of the rarest blockchain collectibles around.As per the exchange, the team plans to move the 32 remaining cards in his possession from the counterpart blockchain to the Ethereum blockchain on the Emblem Vault bridge, which permits crypto users to wrap the counterpart tokens as assets via ERC-721 and trade them on Ethereum via platforms Like OpenSea.ShapeShift will retain 16 cards for sale before 2022 and donate 16 to its DAO treasury of the unburned total. ShapeShift has reportedly said that they will unlock the cards in stages over the upcoming two years, but FOX token holders will vote whether DAO sells or HODL.Whether the DAO sells these NFTs for ETH, holds them for the long term, or combines them, they will become a valuable and essential asset in ShapeShift DAO treasury as per the exchange. Also, NFTs won't end up being beneficial and become a non-useful asset.The move seems to be an attempt to generate ad-hoc interest and take advantage of crypto trading cards, which will predate CryptoPunks and all of the NFT's remaining major offerings emerging from the recent boom. As Shaban Shaame, CEO of software company EverdreamSoft, Spells of Genesis cards are "not particularly easy to acquire," given their counterparty's blockchain location. However, the Emblem Vault bridge has paved a path for users to trade the tokens on Ethereum.

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