What are non-expendable tokens (NFTs) and what is their trend in Malaysia? – Health Guild News

By November 22, 2021NFT
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Non-fungible chips (NFTs) first exploded some time ago and, like many things online, the trend has also hit the shores of Malaysia.

Globally, fans consider NFTs to be the next great art collection, and some of the most famous NFTs are digital works of art.

Great, but what are NFTs?

Before continuing, it must be said that being a relatively new concept, NFTs are still subject to much discussion and often cannot be fully understood at once. It will take time, research, and looking for other perspectives to form your own understanding of NFTs and their uses.

That said, there is an easy way to start understanding them.

Consumables are assets that can be easily exchanged. For example, each 10 RM note in your wallet has exactly the same value, so it doesn’t matter which 10 RM note you use to pay for lunch. The cryptocurrency is also expendable, as one Bitcoin has the exact same value as another Bitcoin.

However, if something is not expendable, you cannot easily exchange it for something else because it has unique properties.

So think of NFTs as a unique digital signature that you can attach to assets. These assets can take the form of a piece of digital art, a video clip, a snippet of a song or even a tweet, which are then bought with cryptocurrency or fiat money (currency issued by the government as our Ringgit ).

While these are digital examples, NFTs can also be used to represent physical objects such as trading cards, which are popular with sports fans and comics.

In general, NFTs can be considered essentially as deeds or securities that show that you own a particular asset. Proponents argue that NFTs are more reliable than paper writings because they are stored in a blockchain.

Wait, what is a chain of blocks again?

A blockchain is one distributed, decentralized digital public ledger which exists through a network. The goal of the blockchain is to allow digital information to be recorded and distributed, but not edited.

View each new piece of information compressed in a block. This block is then joined to the end of the previous block and all these blocks are connected by a string. It is how data is recorded and maintained in a way that is traceable.

In addition, a blockchain allows data to be distributed among several different network nodes in different locations.

Therefore, if one copy of the data is manipulated, the other copies will show the original records to help identify the node with incorrect information and a clear and transparent order of events can be given.

This security is the reason why blockchain technology has found its way into various industries such as insurance, finance, real estate, voting and more.

Okay, back to the NFTs. What exactly gives value to these things?

To put it briefly, it works like all other merchandise, so there must be demand so that it has value.

One factor that drives the value of an NFT is scarcity. People love to have the right to brag, so being able to have a unique NFT satisfies that feeling.

Another factor is the usefulness of an NFT, whether in the physical or digital world. NFTs are not just collectibles, as they can also be used in games or for future opportunities as part of a “club,” for example.

In games, its use is immediate, such as providing characters, enhancers, and more. Meanwhile, some NFTs can be “tickets” or “subscriptions” to exclusive events, profits, etc., with an example of this use showing the Bored Ape Yacht Club selling merchandise, organizing social events and even a party at yacht for partners. .

It also matters the provider of the object to which the NFT is linked. For example, people are more likely to give more value to an NFT made by Marvel of an MCU character than to an NFT of that character drawn by an artist not affiliated with Marvel. It is a behavior similar to why people prefer to buy from popular brands.

So technically, anything can be an NFT, but it may not necessarily be valuable for people to buy.

Explain to me the pros and cons of NFTs.

As time goes on and we learn more about NFTs, their pros and cons are likely to change. For now, however, they can also be simplified.

The pros:

  • For artists, NFTs can be a way to earn more revenue. The current popularity of NFT offers exhibition opportunities, and artists who make NFT can access a market beyond art dealers and other elite groups.
  • For owners, NFTs are a proprietary digital signature that cannot be revoked. Even if an artist produces two works of art of an identical nature, both digital assets will have a special “serial number” attached to prove ownership of each. Therefore, the NFT you have is still unique in its own right.

The cons:

  • For artists, “gas commissions,” which are the costs of transactions made on the platform where the NFT is hosted, can be costly. This is because rates fluctuate depending on supply and demand, and if an NFT is sold for only a little higher or equal to the price of the gas rate, the artist can earn few or even all have losses.
  • For owners, ownership of an NFT does not mean that you own the copyright of the asset. This means that you cannot control its distribution or duplication.

These are just some of the major pros and cons, with another debate surrounding NFTs as their impact on the environment. Blockchain technology generally has a high energy cost and a carbon footprint due to the supercomputers needed to “coin” (convert a digital file into a blockchain asset) an NFT.

However, there have been some recently news from a Canadian technology company alleging that it has developed a self-sustaining system by which oil waste is converted into environmentally friendly energy that drives cryptocurrency (the creation of blockchain blocks).

It’s still the early days, but it just shows that what we know about NFTs today may be very different tomorrow.

How are the NFTs in Malaysia?

Well, according to the news, it looks pretty good. Not only do we have individual artists like Red Hong Yi, Katun, Namewee and more, who make thousands or millions of ringgits selling NFT, but we’ve also seen big companies get excited, such as Kadokawa Gempak Starz with its NFT card package sales.

“Doge to the Moon” by Red Hong Yi, which sold for more than 325,000 RM, and “Garden of Bloom” by Katun, which was part of a sale for a total of 1.6 million RM / Image credit: Red Hong Yi / Katun

We also have NFT markets based in Malaysia as Stage i TRART to facilitate the NFT transaction. It can be said that it is also a growing trend in Malaysia and the possibilities for its growth seem endless.

However, anyone who wants to create or buy NFT should definitely conduct their own research to understand as much as possible before making an investment.

This is important to protect yourself from risks because NFTs are not yet regulated in Malaysia. Laws are slow to catch up with trends, with the US just announcing recently which will now regulate the purchase, sale and creation of NFT.

Is this the trajectory we see in Malaysia as well?

If NFTs are finally considered securities (a negotiable financial asset), they will be under the scope and jurisdiction of the securities regulators, such as the Malaysian Securities and Exchange Commission (SC). Until then, it looks like a relatively open market.

  • Read more about what we’ve written about NFT, blockchain and crypto here.

Featured Image Credit: Cotton / Hong Yi red

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