107-761: A non-fungible token ( NFT ) is a unique digital identifier that is recorded on a blockchain and is used to certify ownership and authenticity. It cannot be copied, substituted, or subdivided. The ownership of an NFT is recorded in the blockchain and can be transferred by the owner, allowing NFTs to be sold and traded. Initially pitched as a new class of investment asset, by September 2023, one report claimed that over 95% of NFT collections had zero monetary value . NFTs can be created by anybody and require few or no coding skills to create. NFTs typically contain references to digital files such as artworks, photos, videos, and audio. Because NFTs are uniquely identifiable, they differ from cryptocurrencies , which are fungible (hence
214-506: A Ponzi scheme . At their peak, the three biggest NFT platforms were Ethereum , Solana , and Cardano . In 2022, the NFT market collapsed; a May 2022 estimate was that the number of sales was down over 90% compared to 2021. An NFT is a data file, stored on a type of digital ledger called a blockchain, which can be sold and traded. The NFT can be associated with a particular asset – digital or physical – such as an image, art, music, or recording of
321-465: A cigarette lighter . They uploaded (known as "minting" in the NFT scene) and sold the video as an NFT. The person who destroyed the artwork, who called themselves "Burnt Banksy", described the act as a way to transfer a physical work of art to the NFT space. American curator and art historian Tina Rivers Ryan , who specializes in digital works, said that art museums are widely not convinced that NFTs have "lasting cultural relevance." Ryan compares NFTs to
428-425: A financial crisis or debt crisis like the financial crisis of 2007–08 , where politically powerful actors may make decisions that favor some groups at the expense of others, and "the bitcoin blockchain is protected by the massive group mining effort. It's unlikely that any private blockchain will try to protect records using gigawatts of computing power — it's time-consuming and expensive." He also said, "Within
535-404: A proof-of-work system , where the chain with the most cumulative proof-of-work is considered the valid one by the network. There are a number of methods that can be used to demonstrate a sufficient level of computation . Within a blockchain the computation is carried out redundantly rather than in the traditional segregated and parallel manner. The block time is the average time it takes for
642-478: A speculative asset . The NFT buying surge was called an economic bubble by experts, who also compared it to the Dot-com bubble . In March 2021 Mike Winkelmann called NFTs an "irrational exuberance bubble". By mid-April 2021, demand subsided, causing prices to fall significantly. Financial theorist William J. Bernstein compared the NFT market to 17th-century tulip mania , saying any speculative bubble requires
749-530: A "fungible" token standard known as ERC-20. Curio Cards in May of that year is credited with being Ethereum's first art NFT project using the fungible standard and features artwork in the shape of a card among a variety of image types including satirized corporate logos The generative art project of 10,000 pixelated characters known as CryptoPunks emerged soon after in June and would later establish itself as one of
856-411: A '51 percent' attack on a private blockchain, as the private blockchain (most likely) already controls 100 percent of all block creation resources. If you could attack or damage the blockchain creation tools on a private corporate server, you could effectively control 100 percent of their network and alter transactions however you wished." This has a set of particularly profound adverse implications during
963-666: A buying frenzy. Within 24 hours, all tiles of the current version and a prior version, each hardcoded to 1 ETH ( US$ 0.43 at the time of launch), were sold for a total of US$ 1.4 million. In 2016, Rare Pepes a "semi-fungible" NFT project centered around the Pepe the Frog meme involving a collective of artists contributing their works into a curated directory, emerged on Bitcoin through a protocol known as Counterparty (which had been created in 2014 and used to create other assets). In 2017, several NFT projects emerged on Ethereum that utilized
1070-419: A central entity gains control of more than half of a network and can then manipulate that specific blockchain record at will, allowing double-spending . Blockchain security methods include the use of public-key cryptography . A public key (a long, random-looking string of numbers) is an address on the blockchain. Value tokens sent across the network are recorded as belonging to that address. A private key
1177-765: A centralized blockchain table feature in Oracle 21c database . The Blockchain Table in Oracle 21c database is a centralized blockchain which provide immutable feature. Compared to decentralized blockchains, centralized blockchains normally can provide a higher throughput and lower latency of transactions than consensus-based distributed blockchains. Currently, there are at least four types of blockchain networks — public blockchains, private blockchains, consortium blockchains and hybrid blockchains. A public blockchain has absolutely no access restrictions. Anyone with an Internet connection can send transactions to it as well as become
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#17327880348371284-519: A clear security model, proprietary blockchains should be eyed with suspicion." An advantage to an open, permissionless, or public, blockchain network is that guarding against bad actors is not required and no access control is needed. This means that applications can be added to the network without the approval or trust of others, using the blockchain as a transport layer . Bitcoin and other cryptocurrencies currently secure their blockchain by requiring new entries to include proof of work. To prolong
1391-440: A consensus. In the same month, OpenNIC was advised to drop support for .bit namespace owing to security concerns of Namecoin and PRISM Break developers. In July 2019, OpenNIC again voted on dropping the .bit namespace, citing "numerous problems with support of NameCoin domains" and recent animosity between the two projects. The vote passed. Namecoin developer Jeremy Rand welcomed the move, thanking OpenNIC and describing it as
1498-697: A core component of the cryptocurrency bitcoin , where it serves as the public ledger for all transactions on the network. In August 2014, the bitcoin blockchain file size, containing records of all transactions that have occurred on the network, reached 20 GB ( gigabytes ). In January 2015, the size had grown to almost 30 GB, and from January 2016 to January 2017, the bitcoin blockchain grew from 50 GB to 100 GB in size. The ledger size had exceeded 200 GB by early 2020. The words block and chain were used separately in Satoshi Nakamoto's original paper, but were eventually popularized as
1605-463: A corresponding free-software implementation and a supporting extension for Firefox . In October 2013, Michael Gronager, main developer of libcoin, found a security issue in the Namecoin protocol, which allowed modifying foreign names. It was successfully fixed in a short timeframe and was never exploited, except for bitcoin.bit as a proof-of-concept. Namecoin was also mentioned by ICANN in
1712-451: A cryptographic hash of the previous block, a timestamp , and transaction data (generally represented as a Merkle tree , where data nodes are represented by leaves). Since each block contains information about the previous block, they effectively form a chain (compare linked list data structure), with each additional block linking to the ones before it. Consequently, blockchain transactions are irreversible in that, once they are recorded,
1819-634: A cryptographically secured chain of blocks was described in 1991 by Stuart Haber and W. Scott Stornetta . They wanted to implement a system wherein document timestamps could not be tampered with. In 1992, Haber, Stornetta, and Dave Bayer incorporated Merkle trees into the design, which improved its efficiency by allowing several document certificates to be collected into one block. Under their company Surety, their document certificate hashes have been published in The New York Times every week since 1995. The first decentralized blockchain
1926-449: A decentralized blockchain is accompanied by the risk of centralization because the computer resources required to process larger amounts of data become more expensive. Finality is the level of confidence that the well-formed block recently appended to the blockchain will not be revoked in the future (is "finalized") and thus can be trusted. Most distributed blockchain protocols, whether proof of work or proof of stake , cannot guarantee
2033-492: A digital file asset. Ownership of an NFT is often associated with a license to use such a linked digital asset but generally does not confer the copyright to the buyer. Some agreements only grant a license for personal, non-commercial use, while other licenses also allow commercial use of the underlying digital asset. This kind of decentralized intellectual copyright poses an alternative to established forms of safeguarding copyright controlled by state institutions and middlemen within
2140-421: A distributed computing system with high Byzantine fault tolerance . A blockchain was created by a person (or group of people) using the name (or pseudonym ) Satoshi Nakamoto in 2008 to serve as the public distributed ledger for bitcoin cryptocurrency transactions, based on previous work by Stuart Haber , W. Scott Stornetta , and Dave Bayer . The implementation of the blockchain within bitcoin made it
2247-629: A distributed version of multiversion concurrency control (MVCC) in databases. Just as MVCC prevents two transactions from concurrently modifying a single object in a database, blockchains prevent two transactions from spending the same single output in a blockchain. Opponents say that permissioned systems resemble traditional corporate databases, not supporting decentralized data verification, and that such systems are not hardened against operator tampering and revision. Nikolai Hampton of Computerworld said that "many in-house blockchain solutions will be nothing more than cumbersome databases," and "without
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#17327880348372354-598: A hypothetical system called BitDNS and generalizing bitcoin. Gavin Andresen and Satoshi Nakamoto joined the discussion in the BitcoinTalk forum and supported the idea of BitDNS, and a reward for implementing BitDNS was announced on the forum in December 2010. On block 19200 Namecoin activated the merged mining upgrade to allow mining of Bitcoin and Namecoin simultaneously, instead of having to choose between one or
2461-482: A new kind of market for artworks that deviated from traditional gatekeeping norms and ushered in a different kind of collector. Artist Beeple sold an ERC-721 NFT of his composite artwork known as Everydays: The First 5000 Days at Christie's for $ 69 million and was the first instance of a legacy arthouse dealing in NFTs. The NFT market experienced rapid growth during 2020, with its value tripling to US$ 250 million. In
2568-706: A partnership to simplify the verification and security of metadata for digital content, including NFTs. In 2021, a cryptocurrency exchange Binance , launched its NFT marketplace. In 2022, eToro Art by eToro was founded, focusing on supporting NFT collections and emerging creators. Sotheby's and Christie's auction houses showcase artworks associated with the respective NFTs both in virtual galleries and physical screens, monitors, and TVs. Mars House, an architectural NFT created in May 2020 by artist Krista Kim , sold in 2021 for 288 Ether (ETH) — at that time equivalent to US$ 524,558. NFTs can represent in-game assets . Some commentators describe these as being controlled "by
2675-544: A path, with the namespace preceding the name of the record. The key d/example signifies a record stored in the DNS namespace d with the name example and corresponds to the record for the example.bit website. The content of d/example is expected to conform to the DNS namespace specification. As of 2015 , the fee for a record was 0.01 NMC and records expired after 36000 blocks (~200 days) unless updated or renewed. .bit
2782-400: A permanent split, a majority of nodes using the new software may return to the old rules, as was the case of bitcoin split on 12 March 2013. By storing data across its peer-to-peer network , the blockchain eliminates some risks that come with data being held centrally. The decentralized blockchain may use ad hoc message passing and distributed networking . In a so-called "51% attack"
2889-410: A private blockchain there is also no 'race'; there's no incentive to use more power or discover blocks faster than competitors. This means that many in-house blockchain solutions will be nothing more than cumbersome databases." The analysis of public blockchains has become increasingly important with the popularity of bitcoin , Ethereum , litecoin and other cryptocurrencies . A blockchain, if it
2996-673: A proposal to the International Organization for Standardization to consider developing standards to support blockchain technology. This proposal resulted in the creation of ISO Technical Committee 307, Blockchain and Distributed Ledger Technologies. The technical committee has working groups relating to blockchain terminology, reference architecture, security and privacy, identity, smart contracts, governance and interoperability for blockchain and DLT, as well as standards specific to industry sectors and generic government requirements. More than 50 countries are participating in
3103-596: A public report as the most well-known example of distributing control and privacy in DNS . A 2015 study found that of the 120,000 domain names registered on Namecoin, only 28 were in use. In December 2018, a proposal was tabled on the OpenNIC mailing list to drop support for Namecoin .bit domains., citing Spamhaus ' (and by extension other antivirus software ) blocking of several of their servers owing to spread of malware from some .bit domains, as well as concerns about potential child pornography. The vote did not reach
3210-399: A record that compels offer and acceptance . Logically, a blockchain can be seen as consisting of several layers: Blocks hold batches of valid transactions that are hashed and encoded into a Merkle tree . Each block includes the cryptographic hash of the prior block in the blockchain, linking the two. The linked blocks form a chain. This iterative process confirms the integrity of
3317-413: A reference implementation. ERC-721 provides core methods that allow tracking the owner of a unique identifier, as well as a way for the owner to transfer the asset to others. Another standard, ERC-1155, offers "semi-fungibility" whereby a token represents a class of interchangeable assets. Because the contents of NFTs are publicly accessible, anybody can easily copy a file referenced by an NFT. Furthermore,
Non-fungible token - Misplaced Pages Continue
3424-486: A shared proof-of-work system was proposed to secure new cryptocurrencies with different use cases . Namecoin's flagship use case is the censorship-resistant top level domain .bit , which is functionally similar to .com or .net domains but is independent of the Internet Corporation for Assigned Names and Numbers , the main governing body for domain names. In practice, the top level domain
3531-560: A significant demand and interest in blockchain technology. In 2019, the BBC World Service radio and podcast series Fifty Things That Made the Modern Economy identified blockchain as a technology that would have far-reaching consequences for economics and society. The economist and Financial Times journalist and broadcaster Tim Harford discussed why the underlying technology might have much wider applications and
3638-673: A single word, blockchain, by 2016. According to Accenture , an application of the diffusion of innovations theory suggests that blockchains attained a 13.5% adoption rate within financial services in 2016, therefore reaching the early adopters ' phase. Industry trade groups joined to create the Global Blockchain Forum in 2016, an initiative of the Chamber of Digital Commerce . In May 2018, Gartner found that only 1% of CIOs indicated any kind of blockchain adoption within their organisations, and only 8% of CIOs were in
3745-429: A sports event. It may confer licensing rights to use the asset for a specified purpose. An NFT (and, if applicable, the associated license to use, copy, or display the underlying asset) can be traded and sold on digital markets. However, the extralegal nature of NFT trading usually results in an informal exchange of ownership over the asset that has no legal basis for enforcement, and so often confers little more than use as
3852-427: A status symbol. NFTs function like cryptographic tokens, but unlike cryptocurrencies, NFTs are not usually mutually interchangeable, so they are not fungible . A non-fungible token contains data links, for example which point to details about where the associated art is stored, that can be affected by link rot . An NFT solely represents a proof of ownership of a blockchain record and does not necessarily imply that
3959-593: A supermajority decision approves it, the block is irreversibly committed into the blockchain. A modification of this method, an "economic finality", is used in practical protocols, like the Casper protocol used in Ethereum : validators which sign two different blocks at the same position in the blockchain are subject to "slashing", where their leveraged stake is forfeited. Open blockchains are more user-friendly than some traditional ownership records, which, while open to
4066-535: A technological advance for people to "get excited about", with part of that enthusiasm coming from the extreme predictions being made about the product. For regulatory policymakers, NFTs have exacerbated challenges such as speculation, fraud, and high volatility. NFTs, as with other blockchain securities and with traditional art sales, can potentially be used for money laundering . NFTs can be used for wash trading by creating several wallets for one individual, generating several fictitious sales and consequently selling
4173-471: A validator (i.e., participate in the execution of a consensus protocol ). Usually, such networks offer economic incentives for those who secure them and utilize some type of a proof-of-stake or proof-of-work algorithm. Some of the largest, most known public blockchains are the bitcoin blockchain and the Ethereum blockchain. A private blockchain is permissioned. One cannot join it unless invited by
4280-522: A vulnerability in its code. In this case, the fork resulted in a split creating Ethereum and Ethereum Classic chains. In 2014 the Nxt community was asked to consider a hard fork that would have led to a rollback of the blockchain records to mitigate the effects of a theft of 50 million NXT from a major cryptocurrency exchange . The hard fork proposal was rejected, and some of the funds were recovered after negotiations and ransom payment. Alternatively, to prevent
4387-488: Is "trusted" more than any other. Transactions are broadcast to the network using the software. Messages are delivered on a best-effort basis. Early blockchains rely on energy-intensive mining nodes to validate transactions, add them to the block they are building, and then broadcast the completed block to other nodes. Blockchains use various time-stamping schemes, such as proof-of-work , to serialize changes. Later consensus methods include proof of stake . The growth of
Non-fungible token - Misplaced Pages Continue
4494-467: Is a top-level domain , created outside the commonly used Domain Name System , and is not sanctioned by ICANN. The .bit domain is served via Namecoin infrastructure, which acts as a decentralized domain name system. Proposed potential uses for Namecoin besides domain name registration include notary / timestamp systems. In September 2010, a discussion was started in the BitcoinTalk forum about
4601-456: Is a type of blockchain that combines elements of both public and private blockchains. In a consortium blockchain, a group of organizations come together to create and operate the blockchain, rather than a single entity. The consortium members jointly manage the blockchain network and are responsible for validating transactions. Consortium blockchains are permissioned, meaning that only certain individuals or organizations are allowed to participate in
4708-423: Is as a distributed ledger for cryptocurrencies such as bitcoin ; there were also a few other operational products that had matured from proof of concept by late 2016. As of 2016, some businesses have been testing the technology and conducting low-level implementation to gauge blockchain's effects on organizational efficiency in their back office . Blockchain is seen as a pivotal technological advancement of
4815-447: Is like a password that gives its owner access to their digital assets or the means to otherwise interact with the various capabilities that blockchains now support. Data stored on the blockchain is generally considered incorruptible. Every node in a decentralized system has a copy of the blockchain. Data quality is maintained by massive database replication and computational trust . No centralized "official" copy exists and no user
4922-418: Is marginal. The use of a blockchain removes the characteristic of infinite reproducibility from a digital asset . It confirms that each unit of value was transferred only once, solving the long-standing problem of double-spending . A blockchain has been described as a value-exchange protocol . A blockchain can maintain title rights because, when properly set up to detail the exchange agreement, it provides
5029-459: Is private and untraceable, thus leading many actors to use it for illegal purposes. This is changing now that specialised tech companies provide blockchain tracking services, making crypto exchanges, law-enforcement and banks more aware of what is happening with crypto funds and fiat -crypto exchanges. The development, some argue, has led criminals to prioritise the use of new cryptos such as Monero . In April 2016, Standards Australia submitted
5136-448: Is public, provides anyone who wants access to observe and analyse the chain data, given one has the know-how. The process of understanding and accessing the flow of crypto has been an issue for many cryptocurrencies, crypto exchanges and banks. The reason for this is accusations of blockchain-enabled cryptocurrencies enabling illicit dark market trading of drugs, weapons, money laundering, etc. A common belief has been that cryptocurrency
5243-406: Is used by a handful of functional websites. As of 2019, OpenNIC no longer supports the .bit domain. A peer-to-peer network similar to handles Namecoin's transactions, balances and issuance through a based proof-of-work scheme (they are issued when a small enough hash value is found, at which point a block is created). Each Namecoin record consists of a name and a value. Each name is actually
5350-864: The National Institute of Standards and Technology (NIST), the European Committee for Electrotechnical Standardization (CENELEC), the Institute of Electrical and Electronics Engineers (IEEE), the Organization for the Advancement of Structured Information Standards ( OASIS ), and some individual participants in the Internet Engineering Task Force (IETF). Although most of blockchain implementation are decentralized and distributed, Oracle launched
5457-525: The US federal government seized through research on the blockchain and forfeiture. Governments have mixed policies on the legality of their citizens or banks owning cryptocurrencies. China implements blockchain technology in several industries including a national digital currency which launched in 2020. To strengthen their respective currencies, Western governments including the European Union and
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#17327880348375564-667: The United States Treasury assessed that there was "some evidence of money laundering risk in the high-value art market", including through "the emerging digital art market, such as the use of non-fungible tokens (NFTs)". The study considered how NFT transactions may be a simpler option for laundering money through art by avoiding the transportation or insurance complications in trading physical art. Several NFT exchanges were labeled as virtual asset service providers that may be subject to Financial Crimes Enforcement Network regulations. In March 2022, two people were charged for
5671-949: The net art fad before the dot-com bubble . In July 2022, after the controversial sale of Michelangelo 's Doni Tondo in Italy, the sale of NFT reproductions of famous artworks was prohibited in Italy. Given the complexity and lack of regulation of the matter, the Ministry of Culture of Italy temporarily requested that its institutions refrain from signing contracts involving NFTs. No centralized means of authentication exists to prevent stolen and counterfeit digital works from being sold as NFTs, although auction houses like Sotheby's , Christie's , and various museums and galleries worldwide started collaborations and partnerships with digital artists such as Refik Anadol , Dangiuz and Sarah Zucker . NFTs associated with digital artworks could be sold and bought via NFT platforms. OpenSea , launched in 2017,
5778-525: The 21st century, with the ability to impact organizations at strategic, operational, and market levels. In 2019, it was estimated that around $ 2.9 billion were invested in blockchain technology, which represents an 89% increase from the year prior. Additionally, the International Data Corp estimated that corporate investment into blockchain technology would reach $ 12.4 billion by 2022. Furthermore, According to PricewaterhouseCoopers (PwC),
5885-457: The ERC-721 draft, the word deed was given consideration among other alternatives including distinguishable asset, title, token, asset, equity, ticket. Ultimately, through Entriken's initiative under the moniker "Fulldecent," a vote was held during the paper's drafting phase to decide which word would be used in the published version and "NFT" was chosen by the stakeholders. The term "NFT" and
5992-678: The United States have initiated similar projects. Namecoin chainz .cryptoid .info /nmc / Namecoin ( Abbreviation : NMC ; sign : N {\displaystyle \mathbb {N} } ) is a cryptocurrency originally forked from bitcoin software. It uses proof-of-work algorithm. Like bitcoin, it is limited to 21 million coins. Namecoin can store data within its own blockchain transaction database . The original proposal for Namecoin called for Namecoin to insert data into bitcoin's blockchain directly. Anticipating scaling difficulties with this approach,
6099-459: The alteration of all subsequent blocks. This allows the participants to verify and audit transactions independently and relatively inexpensively. A blockchain database is managed autonomously using a peer-to-peer network and a distributed timestamping server. They are authenticated by mass collaboration powered by collective self-interests . Such a design facilitates robust workflow where participants' uncertainty regarding data security
6206-485: The art world thinks they have acquired. They definitely do not own the copyright to the underlying work unless it is explicitly transferred." Certain NFT projects, such as Bored Apes , explicitly assign intellectual property rights of individual images to their respective owners. The NFT collection CryptoPunks was a project that initially prohibited owners of its NFTs from using the associated digital artwork for commercial use, but later allowed such use upon acquisition by
6313-506: The associated artwork file on the blockchain due to the large size of such a file and the limited processing speed of blockchains. Such a token functions like a certificate of ownership, with a web address that points to the piece of art in question; this however makes the art itself vulnerable to link rot . Blockchain A blockchain is a distributed ledger with growing lists of records ( blocks ) that are securely linked together via cryptographic hashes . Each block contains
6420-407: The awareness of the ERC-721 standard received significant exposure and adopted use through the popularity of CryptoKitties in 2017. While using the standard, CryptoKitties earned the recognition of being the first mainstream NFT dApp; the game's usage was significant enough to have overwhelmed Ethereum's processing power at the time. During the height of the breakout success of CryptoKitties and
6527-467: The blockchain protocol that is not backward compatible and requires all users to upgrade their software in order to continue participating in the network. In a hard fork, the network splits into two separate versions: one that follows the new rules and one that follows the old rules. For example, Ethereum was hard forked in 2016 to "make whole" the investors in The DAO , which had been hacked by exploiting
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#17327880348376634-593: The blockchain, bitcoin uses Hashcash puzzles. While Hashcash was designed in 1997 by Adam Back , the original idea was first proposed by Cynthia Dwork and Moni Naor and Eli Ponyatovski in their 1992 paper "Pricing via Processing or Combatting Junk Mail". In 2016, venture capital investment for blockchain-related projects was weakening in the USA but increasing in China. Bitcoin and many other cryptocurrencies use open (public) blockchains. As of April 2018 , bitcoin has
6741-539: The chain can vary based on which portions of centralization and decentralization are used. A sidechain is a designation for a blockchain ledger that runs in parallel to a primary blockchain. Entries from the primary blockchain (where said entries typically represent digital assets ) can be linked to and from the sidechain; this allows the sidechain to otherwise operate independently of the primary blockchain (e.g., by using an alternate means of record keeping, alternate consensus algorithm , etc.). A consortium blockchain
6848-558: The challenges that needed to be overcome. His first broadcast was on June 29, 2019. The number of blockchain wallets quadrupled to 40 million between 2016 and 2020. A paper published in 2022 discussed the potential use of blockchain technology in sustainable management . Most cryptocurrencies use blockchain technology to record transactions. For example, the bitcoin network and Ethereum network are both based on blockchain. The criminal enterprise Silk Road , which operated on Tor , utilized cryptocurrency for payments, some of which
6955-678: The collection's parent company. The first known "NFT", Quantum , was created by Kevin McCoy and Anil Dash in May 2014. It consists of a video clip made by McCoy's wife, Jennifer. McCoy registered the video on the Namecoin blockchain and sold it to Dash for $ 4, during a live presentation for the Seven on Seven conferences at the New Museum in New York City. McCoy and Dash referred to
7062-485: The data in any given block cannot be altered retroactively without altering all subsequent blocks. Blockchains are typically managed by a peer-to-peer (P2P) computer network for use as a public distributed ledger , where nodes collectively adhere to a consensus algorithm protocol to add and validate new transaction blocks. Although blockchain records are not unalterable, since blockchain forks are possible, blockchains may be considered secure by design and exemplify
7169-415: The emergence of ERC-721 tokens in 2017, an NFT marketplace called OpenSea emerged to capitalize off of the new non-fungible token standard. It positioned itself early in the NFT market landscape and grew to a $ 1.4 billion market cap in 2021 during the then-ongoing NFT boom. In 2021, ArtReview's Power 100 ranked ERC-721 at the #1 spot, praising it as "the most powerful art entity in the world" for creating
7276-465: The execution of a million-dollar NFT scheme through wire fraud . The European Commission announced in July 2022 that it was planning to draw up regulations to combat money laundering by 2024. Several blockchains have added support for NFTs since Ethereum created its ERC-721 standard. ERC-721 is an "inheritable" smart contract standard, which means that developers can create contracts by copying from
7383-407: The finality of a freshly committed block, and instead rely on "probabilistic finality": as the block goes deeper into a blockchain, it is less likely to be altered or reverted by a newly found consensus. Byzantine fault tolerance -based proof-of-stake protocols purport to provide so called "absolute finality": a randomly chosen validator proposes a block, the rest of validators vote on it, and, if
7490-680: The financial markets, the Journal said "NFTs are among the most speculative." In December 2022, a programmer named Casey Rodarmor introduced a new way to add NFTs to the Bitcoin blockchain called "ordinals". By February 2023, the popularity of ordinals had led to an increase in bitcoin's payment fees and may have also partially contributed to an increase in bitcoin's price. A September 2023 report from cryptocurrency gambling website dappGambl claimed 95% of NFTs had fallen to zero monetary value. NFTs have been used to exchange digital tokens that link to
7597-415: The first digital currency to solve the double-spending problem without the need for a trusted authority or central server . The bitcoin design has inspired other applications and blockchains that are readable by the public and are widely used by cryptocurrencies . The blockchain may be considered a type of payment rail . Private blockchains have been proposed for business use. Computerworld called
7704-484: The first three months of 2021, more than US$ 200 million were spent on NFTs. In the early months of 2021, interest in NFTs increased after a number of high-profile sales and art auctions. In May 2022, The Wall Street Journal reported that the NFT market was "collapsing". Daily sales of NFT tokens had declined 92% from September 2021, and the number of active wallets in the NFT market fell 88% from November 2021. While rising interest rates had impacted risky bets across
7811-435: The form of NFTs. Artists involved in the entertainment-industry can seek royalties through NFTs. So far, NFTs have often been used in both the music- as well as the film-industry. By February 2021, NFTs accounted for US$ 25 million of revenue generated through the sale of artwork and songs as NFTs. On February 28, 2021, electronic dance musician 3lau sold a collection of 33 NFTs for a total of US$ 11.7 million to commemorate
7918-418: The formally published version of the standard in 2018. While experiments around non-fungibility have existed on blockchains since as early as 2012 with Colored Coins on Bitcoin, a community-driven paper called ERC-721: Non-Fungible Token Standard was published in 2018 under the initiative of civic hacker and lead author William Entriken and is recognized as pioneering the foundation for NFTs and enabling
8025-479: The growth of the wider eco-system. It introduced the formalization and defining of the term Non-Fungible Token "NFT" in blockchain nomenclature by establishing a standard for smart contracts known as "ERC-721" whose tokens would have unique attributes and ownership details, ensuring no two tokens are alike. The creation of derivative standards followed from its influence on Ethereum (like ERC-1155 enabling semi-fungibility) and other blockchains. Its versatility enabled
8132-479: The highest market capitalization . Permissioned blockchains use an access control layer to govern who has access to the network. It has been argued that permissioned blockchains can guarantee a certain level of decentralization, if carefully designed, as opposed to permissionless blockchains, which are often centralized in practice. Nikolai Hampton argued in Computerworld that "There is also no need for
8239-473: The history so that one with a higher score can be selected over others. Blocks not selected for inclusion in the chain are called orphan blocks. Peers supporting the database have different versions of the history from time to time. They keep only the highest-scoring version of the database known to them. Whenever a peer receives a higher-scoring version (usually the old version with a single new block added) they extend or overwrite their own database and retransmit
8346-493: The improvement to their peers. There is never an absolute guarantee that any particular entry will remain in the best version of history forever. Blockchains are typically built to add the score of new blocks onto old blocks and are given incentives to extend with new blocks rather than overwrite old blocks. Therefore, the probability of an entry becoming superseded decreases exponentially as more blocks are built on top of it, eventually becoming very low. For example, bitcoin uses
8453-469: The marketing of such privatized blockchains without a proper security model " snake oil "; however, others have argued that permissioned blockchains, if carefully designed, may be more decentralized and therefore more secure in practice than permissionless ones. Cryptographer David Chaum first proposed a blockchain-like protocol in his 1982 dissertation "Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups". Further work on
8560-486: The most commercially successful NFT projects. In December, a clipart based collection featuring images of rocks called EtherRock emerged. in November 2017, the widely acclaimed blockchain game on Ethereum known as CryptoKitties launched and is credited with pioneering what is considered to be the first bona fide non-fungible token standard, known as ERC-721. It used an early version of ERC-721 that differed from
8667-428: The name non-fungible token). Proponents claim that NFTs provide a public certificate of authenticity or proof of ownership , but the legal rights conveyed by an NFT can be uncertain. The ownership of an NFT as defined by the blockchain has no inherent legal meaning and does not necessarily grant copyright , intellectual property rights, or other legal rights over its associated digital file. An NFT does not restrict
8774-410: The network administrators. Participant and validator access is restricted . To distinguish between open blockchains and other peer-to-peer decentralized database applications that are not open ad-hoc compute clusters, the terminology Distributed Ledger (DLT) is normally used for private blockchains. A hybrid blockchain has a combination of centralized and decentralized features. The exact workings of
8881-399: The network to generate one extra block in the blockchain. By the time of block completion, the included data becomes verifiable. In cryptocurrency, this is practically when the transaction takes place, so a shorter block time means faster transactions. The block time for Ethereum is set to between 14 and 15 seconds, while for bitcoin it is on average 10 minutes. A hard fork is a change to
8988-443: The network. This allows for greater control over who can access the blockchain and helps to ensure that sensitive information is kept confidential. Consortium blockchains are commonly used in industries where multiple organizations need to collaborate on a common goal, such as supply chain management or financial services. One advantage of consortium blockchains is that they can be more efficient and scalable than public blockchains, as
9095-419: The number of nodes required to validate transactions is typically smaller. Additionally, consortium blockchains can provide greater security and reliability than private blockchains, as the consortium members work together to maintain the network. Some examples of consortium blockchains include Quorum and Hyperledger . Blockchain technology can be integrated into multiple areas. The primary use of blockchains
9202-489: The other; this fixed the issue of miners jumping from one blockchain to another when the profitability becomes favorable in the former. Two years later, in June 2013, NameID was launched. NameID allows to associate profile information with identities on the Namecoin blockchain, and an OpenID provider to allow logging into existing websites with Namecoin identities. The main site itself is accompanied by an open protocol for password-less authentication with Namecoin identities,
9309-405: The owner possesses intellectual property rights to the digital asset the NFT purports to represent. Someone may sell an NFT that represents their work, but the buyer will not necessarily receive copyright to that work, and the seller may not be prohibited from creating additional NFT copies of the same work. According to legal scholar Rebecca Tushnet , "In one sense, the purchaser acquires whatever
9416-414: The ownership of an NFT on the blockchain does not inherently convey legally enforceable intellectual property rights to the file. It has become well known that an NFT image can be copied or saved from a web browser by using a right click menu to download the referenced image. NFT supporters disparage this duplication of NFT artwork as a "right-clicker mentality". One collector quoted by Vice compared
9523-490: The pioneering of numerous use cases, including digital artwork, deeds to physical items, real estate (including virtual), access passes, and game assets. Ultimately, the emergence of ERC-721 is recognized for having fundamentally changed the landscape of digital verification, authentication, and ownership. The term NFT, prior to the blockchain game CryptoKitties' adoption of ERC-721, is not known to have been used for earlier projects. Through discussion among stakeholders for
9630-424: The previous block, all the way back to the initial block, which is known as the genesis block (Block 0). To assure the integrity of a block and the data contained in it, the block is usually digitally signed . Sometimes separate blocks can be produced concurrently, creating a temporary fork . In addition to a secure hash-based history, any blockchain has a specified algorithm for scoring different versions of
9737-519: The public, still require physical access to view. Because all early blockchains were permissionless, controversy has arisen over the blockchain definition. An issue in this ongoing debate is whether a private system with verifiers tasked and authorized (permissioned) by a central authority should be considered a blockchain. Proponents of permissioned or private chains argue that the term "blockchain" may be applied to any data structure that batches data into time-stamped blocks. These blockchains serve as
9844-587: The respective NFT to a third party. According to a report by Chainalysis these types of wash trades are becoming popular among money launderers because of the largely anonymous nature of transactions on NFT marketplaces. Looksrare , created in early 2022, came to be known for the large sums generated through the sale of NFTs in its earliest days, amounting to US$ 400,000,000 a day. These large sums were generated in large part through wash trading. The Royal United Services Institute said that any risks in relation to money laundering through NFTs could be mitigated through
9951-456: The respective events or artists performing there to receive royalties on the resale of each ticket. NFTs have been proposed for purposes related to scientific and medical purposes. Suggestions include turning patient data into NFTs, tracking supply chains and minting patents as NFTs. The monetary aspect of the sale of NFTs has been used by academic institutions to finance research projects. NFTs representing digital collectables and artworks are
10058-503: The respective industry. Digital art is a common use case for NFTs. High-profile auctions of NFTs linked to digital art have received considerable public attention; the first such major house auction took place at Christie's in 2021. The work entitled Merge by artist Pak was the most expensive NFT, with an auction price of US$ 91.8 million and Everydays: the First 5000 Days , by artist Mike Winkelmann (known professionally as Beeple)
10165-490: The second most expensive at US$ 69.3 million in 2021. Some NFT collections, including Bored Apes , EtherRocks , and CryptoPunks , are examples of generative art , where many different images are created by assembling a selection of simple picture components in different combinations. In March 2021, the blockchain company Injective Protocol bought a $ 95,000 original screen print entitled Morons (White) from English graffiti artist Banksy and filmed somebody burning it with
10272-401: The second-largest professional services network in the world, blockchain technology has the potential to generate an annual business value of more than $ 3 trillion by 2030. PwC's estimate is further augmented by a 2018 study that they have conducted, in which PwC surveyed 600 business executives and determined that 84% have at least some exposure to utilizing blockchain technology, which indicates
10379-475: The sharing or copying of its associated digital file and does not prevent the creation of NFTs that reference identical files. NFT trading increased from US$ 82 million in 2020 to US$ 17 billion in 2021. NFTs have been used as speculative investments and have drawn criticism for the energy cost and carbon footprint associated with some types of blockchain, as well as their use in art scams . The NFT market has also been compared to an economic bubble or
10486-451: The short-term "planning or [looking at] active experimentation with blockchain". For the year 2019 Gartner reported 5% of CIOs believed blockchain technology was a 'game-changer' for their business. A blockchain is a decentralized , distributed , and often public, digital ledger consisting of records called blocks that are used to record transactions across many computers so that any involved block cannot be altered retroactively, without
10593-836: The standardization process together with external liaisons such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the European Commission , the International Federation of Surveyors , the International Telecommunication Union (ITU) and the United Nations Economic Commission for Europe (UNECE). Many other national standards bodies and open standards bodies are also working on blockchain standards. These include
10700-584: The technology as "monetized graphics". This explicitly linked a non-fungible, tradable blockchain marker to a work of art, via on-chain metadata (enabled by Namecoin). In October 2015, the first NFT project, Etheria, was launched and demonstrated at DEVCON 1 in London, Ethereum's first developer conference, three months after the launch of the Ethereum blockchain. Most of Etheria's 457 purchasable and tradable hexagonal tiles went unsold for more than five years until March 13, 2021, when renewed interest in NFTs sparked
10807-636: The three-year anniversary of his Ultraviolet album. On March 3, 2021, an NFT was made to promote the Kings of Leon album When You See Yourself . Other musicians who have used NFTs include American rapper Lil Pump , Grimes , visual artist Shepard Fairey in collaboration with record producer Mike Dean , and rapper Eminem . A paper presented at the 40th International Conference on Information Systems in Munich in 2019 suggested using NFTs as tickets for different types of events. This would enable organizers of
10914-632: The use of " KYC best practices, strong cyber security measures and a stolen art registry (...) without restricting the growth of this new market". Auction platforms for NFTs may face regulatory pressure to comply with anti-money laundering legislation. Gou Wenjun, the director of a monitoring centre for the People's Bank of China , said that NFTs could "easily become money-laundering tools". He pointed to unlawful exploitation of cryptographic technologies and said that illicit actors often presented themselves as innovators in financial technology. A 2022 study from
11021-438: The user" instead of the game developer if they can be traded on third-party marketplaces without permission from the game developer. Their reception from game developers, though, has been generally mixed, with some like Ubisoft embracing the technology but Valve and Microsoft formally prohibiting them. NFTs have been proposed for use within the film-industry as a way to tokenize movie-scenes and sell them as collectibles in
11128-432: The value of a purchased NFT (in contrast to an unpurchased copy of the underlying asset) to that of a status symbol "to show off that they can afford to pay that much". The "right-clicker mentality" phrase spread virally after its introduction, particularly among those who were critical of the NFT marketplace and who appropriated the term to flaunt their ability to capture digital art backed by NFT with ease. This criticism
11235-408: Was conceptualized by a person (or group of people) known as Satoshi Nakamoto in 2008. Nakamoto improved the design in an important way using a Hashcash -like method to timestamp blocks without requiring them to be signed by a trusted party and introducing a difficulty parameter to stabilize the rate at which blocks are added to the chain. The design was implemented the following year by Nakamoto as
11342-562: Was one of the first marketplaces to host various types of NFTs. In July 2019, the National Basketball Association , the NBA Players Association and Dapper Labs, the creator of CryptoKitties , started a joint venture NBA Top Shot for basketball fans that let users buy NFTs of historic moments in basketball. In 2020, Rarible was found, allowing multiple assets. In 2021, Rarible and Adobe formed
11449-416: Was promoted by Australian programmer Geoffrey Huntley who created "The NFT Bay", modeled after The Pirate Bay . The NFT Bay advertised a torrent file purported to contain 19 terabytes of digital art NFT images. Huntley compared his work to an art project from Pauline Pantsdown and hoped the site would help educate users on what NFTs are and are not. NFTs that represent digital art generally do not store
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