NFT’s (Non-Fungible Tokens) have been the buzz of the town for a while now, and trying to understand them is not easy. Because it can be intimidating, and that’s why we’re here – To untangle the information.
It’s easier to understand if we break it down.
- A non-fungible asset is something that is unico and isn’t easily replaceable. That unique physical item could be a rare shoe, a piece of land, or a vintage car. The thing/item is different from a fungible asset like cash.
- A token is a virtual currency that resides in a blockchain and is a specific asset, like a piece of digital artwork.
An NFT can be an audio file, a video clip, virtual land, or a piece of digital artwork – It can essentially be any digital asset.
However, An NFT isn’t expensive because it’s a piece of artwork. The key is in the code, which is on a digital ledger(Blockchain) that points to where the artwork lives – this is usually a server.
The Creation of an NFT
- A “creator: makes a set of digital artwork, each one with a set of characteristics that make it unique
- The “creator” then “mints” a unique piece of code that then IDs each of the Blockchain (a distributed ledger of digital transactions), and in doing so, secures its authenticity and scarcity.
- The artwork is then put up for bid on an NFT marketplace
- Collectors buy the NFT’s with their cryptocurrencies.
In the physical world, physical collectibles have a couple of different challenges.
- It’s time-consuming and hard to authenticate because it can be replicated, forged, faked (i.e., Louis Vuitton purses)
- It’s challenging to trace ownership history as there’s more often no public record existing.
With NFT’s and Blockchain, those challenges are solved because, in publishing work on Blockchain, the artist creates a public and unique record of its authenticity.
Why is this important for Latinos?
Because of its newness and alternative system, Blockchain can be used to achieve racial equality. This is because the traditional barriers you get in having access to capital are no longer present with Blockchain (i.e., getting a bank loan).
Equality is a natural byproduct of blockchain-driven evolutions of the crypto economy. Human biases are less likely to survive in a decentralized, networked society that benefits not only minorities but also society. It essentially stabilizes the playing field, due to the lack of regulation.
As more and more Latinx artists are emerging, this can be something that can help them build a portfolio of NFT’s that can’t be a source of income down the line. It’s also getting a lot of attention and investment from Venture Capital firms.