One of the attractive features of Non-Fungible Tokens is that people can use them to represent real-world assets which may not otherwise be tradable in an open market environment. Sign up on this platform, it charges zero commission on both profitable and non-profitable trades. It includes items such as property deeds and stocks. NFTs can also be uniquely designed.
It is supported by blockchain and cryptographically techniques to create complex and unique designs that cannot be replicated or duplicated. In addition, these features are very resistant to tampering and counterfeiting. In the below-mentioned portion, we look at the advantages of Non Fungible Tokens, such as their ability to represent unique assets, their cryptographic and blockchain-based design, their ability to maintain single ownership and the economics of how users may trade these tokens.
Unique Assets with Non-Fungible Tokens?
Assets such as stocks are tradable on several global exchanges; however, the risk profile of these assets is often lower than those based on traditional commodities like oil, gold or equities. For example, if you are managing in a supply chain environment and you have a document register of ownership of oil tankers or shipping containers, it would be helpful to ensure that this register was tamper proof and could not be altered as an asset such as a tanker would have significant value, ownership transfer would need to be transparent and traceable.
Similarly, suppose you are managing intellectual property on the blockchain (such as music composition rights) or listing real estate on the blockchain with NFTs. In that case, this can help improve transparency around the ownership of these assets, which are difficult to identify in the traditional finance system.
These relationships are the catalyst that enables finance and tech to facilitate commerce and trade. In addition, effectively managing these relationships can enable a company (or an individual) to grow its business, build customer trust, and even lay the groundwork for future development.
A fundamental element of global finance is understanding how NFTS and cryptocurrency might impact or inform supply chain relationships in a given landscape. In addition, the logistics involved with international trade necessitates a clear understanding of how international law works for currency exchanges and legal compliance on both sides of the transaction (importing/exporting).
- Every NFT is unique:
They can be represented as electronic tokens, which can be stored on a blockchain and transferred between peers in a decentralized fashion. In the case of cryptocurrency, NFTs are often connected to Ethereum’s Blockchain, which enables them to use intelligent contracts and assign ownership rights to the token. However, unlike cryptocurrencies, each NFT has its own identity, which makes it exclusive and more valuable.
- NFTs cannot be exchanged with other NFTs:
NFTs cannot be exchanged with other NFTs. To exchange an NFT, one must sell it to another user who is willing to pay more for it than its face value. Moreover, it ensures that there are no arbitrage opportunities in buying and selling assets on various markets due to asset fungibility or liquidity issues (what this means will be discussed later).
- NFTs can represent anything digitally:
NFTs can represent anything that has a digital footprint or a unique identifier. It can include real estate, artwork, intellectual property, and physical goods that are difficult to trade because of their limited supply and practicality.
NFTs can also represent fungible assets such as stocks, bonds and precious metals. In addition, NFTs can maintain clear ownership records, which helps ensure that the assets are not duplicated (a common problem with these types of assets). From this perspective, NFTs give artists and creators the upper hand to create a digital existence of their artwork and sell it exclusively to customers willing to buy. The most expensive NFT ‘500’ is nothing but just a collection of 5000 pictures captured every day from 2007 to 2020 minted in the form of digital Assets.
- NFTs can protect the ownership and exclusivity of an asset or content:
NFTs are protected by smart contracts on the Ethereum blockchain, which is public and transparent. Ownership of an NFT cannot be altered or modified by a third party. When an item is transferred to a new owner, the ownership records of that NFT are updated. It is not easy to use these tokens as they cannot duplicate them or claim ownership rights over another entity’s assets.
- NFTs are highly liquid:
The digital assets market has matured rapidly in recent years. As mentioned above, cryptocurrency exchanges are starting to trade mainstream digital assets such as stocks and commodities that represent real-world assets which were very difficult to trade before the introduction of blockchain technology.