Introduction
NFT is an element of Cryptocurrency that is derived from the smart contracts of Ethereum. It was first considered to be an improvement element in Ethereum but then was considered a distinguished entity. NFT is unlike the classical cryptocurrency e.g.: Bitcoin, Dogecoin, etc. Bitcoin is a general coin that is a common digital currency like a real Dollar or a Rupee and can be exchangeable. However, NFT is unique which cannot be exchanged like a Bitcoin or a Dogecoin i.e., they are non-Fungible making it one of kind.
Trading values of the NFT market – the 24-hour trading volume of an average NFT Market is $169,892.38 (as of December 1, 2021) and the 24-hour trading volume of the entire cryptocurrency market is $129,368,542,513 (as of December 1, 2021)
November 2021 Sales in Volumes (NFT) - $5,076,108.44
Technical components of a Cryptocurrency
1. Blockchain – A distributed and attached-only database that maintains a list of records linked and protected using cryptographic protocols. The most widely used blockchain platform – Ethereum. Ethereum is the widely considered blockchain platform for NFT’s which helps to create a secure environment for executing the trades.
Various other blockchain platforms are used – Flow, EOS, Hyperledger, Fast Box, etc.
2. Smart Contract – These are used to execute digital negotiations. The Blockchain-based contracts have Turing-complete scripting languages to achieve the transactions over consensus algorithms. These contracts have been bought into use to carry out fair exchanges without the involvement of a third – party. The NFT’s rely on these systems to execute the transactions
3. Address and Transactions – One of the essential factors of cryptocurrency. The address is a unique identifier which is in a case similar to our bank account which has a unique number with a public and a private key to transact.
4. Data Encoding – Process of converting data from one form to another
NFT’s Properties
1. Verifiability – NFT with its token metadata, ownership can be verified
2. Transparent Execution – Minting, selling, and purchasing are publicly accessible.
3. Availability – Making sure that the NFT never goes down and the tokens are always available to sell and buy.
4. Usability – every NFT shall be most up-to-date with all the information that is required
Opportunities in NFT's :
Sports and Gaming Industry
NFT is seeing a rise in the sports and the gaming industry. NFT provides an ownership record of items or moments in the games and promotes economic marketing in the ecosystem. In e-Sports the game developers can bring in NFT’s for the features in the game – e.g., Skins and Weapons and can hence earn royalty over the items each time when they are resold in the market.
NFT’s can benefit the sports players if a mutually beneficial model is created which will be of use for both the Players and the Developers.
NFT’s are excellent in identity management. It gives an involvement of the Fans in the newest form. Sports NFT is a substitute for the traditional Trade-in cards, vintage jerseys via blockchain technology where the players trade their virtual goods with collectors around the world.
Currently Established NFT Markets
CryptoKitties
Cryptocats
NBA Topshot
Meebits
Gods Unchanged
Virtual Events
When we buy tickets in a traditional event-based market, consumers buy them from the 3rd party vendors, therefore there is a risk of ticket counterfeiting and the ticket shall be invalid in some cases.
Therefore, an ecosystem of NFT-Based ticketing systems should be introduced to tackle the current scenario. NFT based tickets shall be unique and non-replicable hence the factor of reselling the ticket once sold stays out of the process.
Digital Collectibles
There are various types of digital collectibles – trading cards, digital images, videos, etc.
NFT helps transforms player events or player image rights into digital formats and hence can be sold to individuals all around the globe. NFT’s helps the artists and the players to get a predetermined royalty fee each time their digital artwork exchanges in the markets
NFT in India
NFT’s in India has seen participation from the Bollywood industry. Amitabh Bachchan and Salman Khan are the two actors who have come up with their own NFT’s.
Legal Position of NFT’s in India
India is currently in the process of building strong NFT laws. However, changes can be seen after banning or reframing the Cryptocurrency & Regulation of Official Digital Currency Bill, 2019 which has been reconsidered in the current Winter Session of the Parliament.
FEMA (Foreign Exchange Management Act) Laws for NFT’s – NFT has not been governed by any specific act in India, but few FEMA laws regulate crypto trading.
IP and NFT – NFT does not grant copyright privileges unless the owner transfers his copyright through assignment or license under the Copyright Act. Digital asset owned by a buyer is also protected under the Copyright Act from unauthorized reproduction or distribution
NFT and Income Tax - A non-resident "e-commerce operator" is required to pay a 2% equalization levy of the amount of consideration received or receivable by him. Foreign entities who wish to sell NFT’s in India will have to pay an equalization levy if they want to operate in India.
Cross Border NFT Transactions – There is no general rule that regulates cross-border NFT. NFT comes under FEMA as Intangible assets.
Sources :
CryptoKitties | Collect and breed digital cats!
Mad Dog Jones - REPLICATOR, A Multi-Generational NFT | Phillips
