NFTs: Hype, Hope, or Here to Stay?

Are NFTs hype, hope, or here to stay? Before addressing the question, it is useful to establish a common understanding of what NFTs are by breaking down the concepts of “non-fungibility” and “token.” Assets like the US dollar and cryptocurrencies like BTC and ETH are considered fungible and users treat them as interchangeable. When we are presented with two USD 1 dollar notes, we treat them as identical and substitutable. In contrast, NFTs are unique and different, hence users regard them as non-interchangeable and non-fungible. The “token” in an NFT is a digital token on a blockchain tied to metadata about the asset it represents. The token ID is the NFT’s defining feature; it is a “unique 1-of-1 barcode that distinguishes the NFT from any other token on the blockchain it is on.” For the very first time, proof of ownership can be represented via tokens and recorded immutably and transparently on the blockchain. Furthermore, the token ID is tied to the owner’s blockchain address, which means the NFT is entirely controlled by the owner. This is significant as digital assets in the Web2 world are typically owned and controlled by the centralized platforms on which they are created. Currently, when we buy digital items, like e-books or digital music, we are simply acquiring a license to use them. We don’t own the e-book or the music file and cannot lend or pass them on. NFTs challenge this model by allowing the owners to own and transfer the assets at their discretion…