We all may know a lot about cryptocurrencies since freelancing on HYVE became one of your main activities last year, but have you ever wondered how they differ from other blockchain-related innovations, such as NFTs?
Do not worry, HYVE’s got you! Our article will cover all the details for every NFT newbie! It all makes so much sense now since we are excited to be launching our Genesis collection, Metalancer!
What do they have in common?
Cryptocurrencies and NFTs are similar, therefore, mainstream investors can be forgiven for confusing or conflating the two. First things first, both of them are digital assets, and while crypto came first, the general public began hearing about both around the same time in the late 2010s.
According to Forbes and mainstream media outlets, NFTs are commonly bought and sold with crypto, directly on-chain, and both tend to attract the same players — meaning that the NFT world branched off from crypto culture.
Secondly, both are built using the same programming and encoded with the same underlying software, secured in digital wallets — but that’s where the similarities end. Ultimately, cryptocurrencies and NFTs rely on blockchain transactions to validate their authenticity and record their ownership and in most cases, you’ll need some type of crypto to purchase NFTs.
What’s Up With NFTs?
NFTs are digital non-fungible tokens that represent ownership of unique items like images, music or video clips. For example, you can copy a digital image an infinite number of times, just as you can replicate one of Picasso’s paintings, but with both NFTs and oil paintings, all the value stays with the irreplaceable original.
Briefly put, those tokens represent digital files that can attest to ownership of anything — e.g., Twitter founder Jack Dorsey sold an NFT of his first tweet for more than $2.9 million.
There you have it, NFTs can only be owned by one individual at a time, and blockchain technology ensures their ownership and transferability. In addition, NFTs are being minted using the same kind of blockchain technology that cryptocurrency made famous, and are typically held on Ethereum. However, they can be found on other blockchains too (Polygon, BNB, Solana).
The ‘F’ in ‘NFT’
NFT stands for non-fungible tokens, in contrast to cryptocurrencies, which are fungible and interchangeable.
Like baseball cards and beanie babies, NFTs are non-fungible, meaning that they’re worth whatever someone is willing to pay for them based on intangibles like desirability, just like the art collectors that spend millions on Picassos whether they like the painting itself or not. It’s all about the status of owning the original and the utility it provides.
The difference between the two
The value of cryptocurrencies is mostly economic, with most of their utility acting either as a currency or an investment. NFTs, on the other side of the coin, have both economic and non-economic value. Artists, for example, can use NFTs to distribute, monetize and even autograph their work — work that some investor or collector might buy using cryptocurrency.
Let’s take a look at this example: in October 2017, Cath Simard uploaded an image to her Instagram account that she had captured while strolling down a Hawaiian road. The photograph quickly went viral and got shared across various social media platforms thousands of times, mostly without any credit whatsoever being attributed to Simard and entirely without any monetary compensation to speak of. This inequity is a perfect representation of many of the problems surrounding Web2.
In Web2, as we all know, clicks and views almost always equate to profit. It’s not difficult to imagine that at least some money was made off of Simard’s work by those who shared it or the platforms it was shared on, yet none of that money went to the artist herself.
Using blockchain technology, however, Simard decided to authenticate the original image as an NFT. This means it will be stored on the blockchain and “certified” as being the unique, original photo she had taken of that road, giving it a specific digital signature that no other version of the photo will ever have, just like a painter signing its work.
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This perfectly encapsulates just one of the merits of NFTs. Visual artists who used to have to work with intermediary institutions like galleries, earning a fraction of the profits gained, now have an easy and direct way to be fully compensated for their work. The other benefit of NFTs is that, because the digital contracts that underlie them are customizable, artists can code in the amount of royalties they make from secondary sales. This means that each time the artwork changes hands, a cut of the profits goes to the original artist, creating a more sustainable creative economy for the industry.
Musicians are taking advantage of NFTs as well. It’s a well-known fact that streaming services like Spotify, YouTube Music, Apple Music, and others treat musicians like, well, garbage. Unless you’re already a massively well-known artist, you’re going to have a hard time making any money off of your art. Spotify, for example, pays artists between $0.003-0.005 per stream, meaning you’d need around 250 streams to make a single dollar. Rapper and producer Black Dave is a great example of someone who has used NFTs to their advantage, having sold songs and entire albums as NFTs for thousands of dollars at a time.
HYVE and NFTs
NFTs have changed so many aspects of society, from how we view and appreciate art to how it gets made and distributed, to how we view basic concepts such as economics, value, and currency, just like cryptocurrencies. Obviously, there are many innovative utilities that NFTs provide, especially in gaming, as well as social interaction, with some just coming out recently.
HYVE aims to educate its users on most of the topics surrounding NFTs, welcoming newbies and experienced veterans alike. We want to explore how NFTs have revolutionized different sectors, as well as how they can help out regular businesses and freelancers.
Our Genesis Collection, Metalancers, will empower users with next-gen utility, enabling collaboration in the most innovative ways. We look forward to having you around, because we can't wait to share more exciting details with you.