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Decoding NFTs: A peek inside Australia’s emerging NFT startup space

In February 2022, video game retailer GameStop agreed to a $100 million contract with Australian blockchain startup ImmutableX – a platform to develop carbon-neutral Non Fungible Tokens (NFTs) on the Ethereum blockchain – to establish an NFT marketplace to help game developers create their nonfungible tokens. 

Dozens of startups both locally and internationally have begun to launch NFT technology platforms that allow users to create and sell digital assets with a unique identifier. The NFT market is rapidly growing with a market cap of over US$10.4 billion in the third quarter of 2021. 

According to DappRadar, almost US$4.2 billion was traded in NFTs in October 2021 alone, up to $148 million from September, the same year. 

So what the hell is a nonfungible token?

To put it simply Nonfungible tokens are a unique type of digital asset that can be brought and sold and their ownership, uniqueness and authenticity can be verified using cryptography.

Each NFTs value stems from its uniqueness and “exclusivity”, the proof of which uses the Ethereum blockchain to keep track of who owns a particular digital asset. Ethereum is a cryptocurrency (like bitcoin), but its blockchain also supports NFTs.

NFTs can be traded between buyers or sellers like an art collector sells art; however, they are not interchangeable like cryptocurrencies or the US dollar.

The concept of the collectibility of art and rare objects has been around since the beginning of time, decades ago trading baseball and football cards was a huge part of kids growing up, especially in Western countries.

Baseball cards would be issued as part of a series of cards. The card series were controlled by the Baseball or Football league and there was no way of really verifying what cards were genuine and who owned each individual card. Valuable and rare cards are often traded at massive prices, with the most valuable cards regularly selling for millions of dollars.

You can think of NFTs as being collectable like a rare baseball card or the Mona Lisa, you can create an NFT from images, artworks, famous pictures, movies, games or other digital assets, with the unique method of verification of ownership, uniqueness and provenance using blockchain technology to prove the ownership of the asset.

Nonfungible tokens or NFTs have become a trend, thanks to the headline-grabbing frenzy of activity: memes selling for the price of a Rolls-Royce, tweets fetching ridiculous bids, and digital artwork selling for millions.

Even though they have been around for seven years, NFTs have recently gained traction as a popular way to trade digital artwork.

Is NFT a copyright?

Ownership of an NFT does not imply that the digital asset represented by the token has copyright or intellectual property rights.

While someone may sell an NFT representing their work when ownership of the NFT changes, the buyer does not always obtain copyright privileges, and the original owner is allowed to create other NFTs of the same work.

Why is it ridiculously priced?

While the rise of NFTs and their related marketplaces has left many people perplexed, suspicious, and puzzled, there’s a reason why NFTs fetch ridiculous prices. By providing a system of verifiable digital ownership, NFTs profoundly transformed the market for digital assets, allowing for new forms of transactions. 

The fact that the object is solely owned by the person is the primary factor that adds value to the NFT. If you buy a Frida Kahlo piece, for example, there may be multiple copies but only one original. That is what makes the item valuable and irreplaceable. 

NFTs differ from other types of digital currencies in the way they cannot be exchanged from another. That is why they are such an important investment tool. 

Exclusive ownership rights, underlying value, market perception, hype/trends, and future value are all factors that contribute to NFTs’ high value. However, amid a swarm of new businesses, it can be difficult to tell which assets are actually generating value and which are merely riding the wave of hype.

But what’s on the NFT catalogue?

NFTs can be anything digital (for example, paintings, music, a meme shared with friends, or even an audio recording of farts). Still, the current buzz is focused on selling digital art.

For example, the individual who paid $6.6 million for a video by Beeple, the founder of Twitter, sold his first tweet for just under $3 million, or Nyan Cat, which sold for $531k.

What or rather who are NFTs for?

NFTs offer a one-of-a-kind way for artists and content creators to make money from their work. Artists, for instance, don’t have to sell their art through auction houses anymore; they can sell it as a Nonfungible Token directly to the consumer, allowing them to keep a larger percentage of the profits.

In fact, the International Cricket Council recently resolved to make digital copies of key moments in cricket history.

Emerging Australian NFT Startups

Last year, an avalanche of capital flowed into bitcoin and blockchain, including NFTs and the Metaverse. Bulltalk.io is a decentralised network that integrates Twitter, Telegram, Reddit into a single powerful platform with more advanced features. It allows users to turn their content into nonfungible tokens that are unique and valuable (NFTs).

Similarly, State of Address, founded by four Melbourne entrepreneurs, uses nonfungible tokens (NFTs) to turn products of architecture and design into investable assets that are unique, scarce, and transferable.

In recent years, other startups such as Block8, Chronobank.io have also emerged. 

What platforms let users buy/sell NFTs?

You can buy, sell, and trade NFTs on an NFT exchange, just like you can on a cryptocurrency exchange. In the world of NFTs, OpenSea is well known. If you want to browse a wide range of NFTs, from digital art to rare collectables, here is the exchange for you. OpenSea, like many other exchanges, is based on Ethereum (ETH), and you must buy ETH, its native coin, to pay your bids, trades, and cover any costs you may incur.

Another marketplace for you is Nifty Gateway, which is powered by cryptocurrency exchange Gemini. Recently, Meta, a Facebook-owned company, announced intentions to allow users to create, promote, and sell NFTs on its platforms.

Some of the other platforms which allow NFT purchases are: 

  • Rarible: It is one of the most popular places to buy NFTs. It is an open marketplace where sellers can create NFTs and buyers can purchase them. 
  • Foundation: This is a platform for artists and collectors to buy and sell creative art. Foundation is a decentralised marketplace that makes it easier to create and sell NFTs.

Is there scope for NFTs? 

In the post-pandemic world, new young retail investors who are unconventional and open to change have emerged. This can be observed in the Reddit saga (In 2020, amateur investors started hyping the prices of certain stocks through the exchange of information on online forums such as Reddit by investing through retail brokerages and platforms such as Robinhood).

NFTs have fundamentally altered the digital asset market. Previously, there was no way to differentiate between the “owner” of digital artwork and someone who saved a copy on their desktop. For anything to have value, there need to be exclusive rights to its ownership, which everyone can see. This is exactly what NFT offers.

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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